June 1, 2005
by Lynn Petrak
The role of public refrigerated warehouses in cold-chain management grows with inventories and distribution channels.
The dairy industry always has been unique in the food chain because of the perishability of its products. When dairy foods and beverages were stored for distribution, it usually wasn’t for very long.
For many processors, the same holds true today. But as manufacturers offer more products with a longer shelf life and branch into dairy-based ingredients, they are pursuing a broad range of warehouse options, including off-site locations managed by third-party operators and sites fitted with increasingly sophisticated technologies. Just like other aspects of dairy production, storage is being driven by the need for more efficient, cost-effective and customized solutions.
The Pros of PRWs
One way dairies are thinking outside their own box, so to speak, is to look beyond private facilities to a public refrigerated warehouse (PRW). A variety of cold-storage companies specialize in PRW networks for the storage and handling of frozen and chilled dairy products.
It is a business that continues to expand, quite literally. According to recent industry research, there are currently 3.1 billion cubic feet of cold storage capacity in the United States, nearly twice the space that was available two decades ago.
Public cold-storage sites are an appealing option for a number of reasons. “PRWs play a vital role for food processors of all types. They offer flexibility, lower costs and elimination of warehouse management issues,” says Jerome Scherer, vice president of national sales, marketing and government affairs for Cherry Hill, N.J.-based United States Cold Storage (USCS), which provide storage, order selection and distribution services for frozen and chill products, including ice cream and novelties, butter, cheese, yogurt and powdered milk, among other items.
The ongoing expansion of dairy product lines is another factor in the growing interest in using PRWs in addition to or in place of private cold-storage areas. Bill Daniel, corporate communications for full-service, multi-temperature storage company Henningsen Cold Storage Co., Hillsboro, Ore., cites more diverse inventories and more sophisticated distribution channels. “Food and dairy processors need to focus on production, quality control and getting their products to market in a timely manner. PRWs play a big part in that, as we can act as their main storage partner as well as having forward distribution centers,” he says, adding that the company works with dairies that manufacture frozen and chilled items, including ice cream, milk, butter and cottage cheese.
Meanwhile, just as the dairy industry has expanded and consolidated in recent years, so too have customers in the distribution, retail and foodservice industries. In turn, their demands have had an impact on the cold supply chain. “Most grocery outlets won’t buy whole truckloads of dairy products because of their short shelf life,” Daniel says. “Having a PRW in the mix to store full truckloads, then shipping smaller quantities to the grocery distribution centers, helps the processor move large quantities of product to multiple locations taking advantage of full truckload savings and not having to worry as much about short shelf life on their products.”
Just as appealing as the convenience and flexibility of a PRW is the relative cost, say some providers. “Processors do not always want to make the major investment required to build a large scale refrigerated warehouse,” Scherer says.
A PRW is not a solution for every processor, of course, and the choice is often made based on the inventory itself. “It depends on the product. Products like milk, butter and sour cream all have to hit the shelves as quickly as we can get them there. But for longer shelf-life items, a lot of companies would opt to send it to a PRW,” reports Chris Palumbo, vice president of the food group at The Facility Group, an Atlanta-based multi-service design and construction management firm. Although Palumbo says most of the company’s work is dedicated to fixed or private cold storage facilities, there are a number of processors looking for PRW storage of ESL products, bulk aged cheeses and dairy ingredients like whey powder.
As they would with any on-site facility, dairies that use PRWs for either short-term storage of fresh dairy products or longer-term inventory of ingredients, bulk cheeses and shelf-stable items rely on cold-storage suppliers to provide the proper environment.
Temperature control is obviously critical in cold storage environments. “Manufacturers are good at manufacturing and we are good at cold air,” Daniel says. “We have HACCP programs and we conduct mock recalls with some of our dairy customers to ensure absolute safety of the food chain and only the highest quality products reach the consumer.”
Scherer also underscores the ability of PRW suppliers to provide state-of-the-art temperature features. “PRWs are run by professionals who are completely focused on the issues of proper handling, storage and rotation of products no matter the temperature requirement,” he says, adding that the dairy industry is distinct in some ways compared to other food and beverage processors. “The biggest challenge in serving the dairy industry is the super-low temperatures required — minus 20 degrees Fahrenheit for ice cream storage — and the need to properly track date codes of fast-moving chilled items to assure proper rotation.”
Even shelf-stable products like dairy ingredients require proper temperatures to ensure freshness and quality, especially if those products are to be exported. “Products like whey powders require temperature and humidity control,” Palumbo says.
In addition to temperature control, PRW operators have pursued other types of technologies to help customers better manage their inventories of frozen and chilled products. Automated storage and retrieval systems are one example, and are being used in both public and private cold-storage sites to monitor and track inventories and save on labor and time expenditures. “Automation is something people are looking at more,” Palumbo says.
The ability to trace and track products through the supply chain is keeping up with the pace of technology, too. “We are very specialized with the very latest in technology for warehouse management systems, transportation management systems and real time information services via the web,” Scherer says, noting that the use of identification and tracking systems have improved dramatically in recent years. “We have implemented radio frequency barcode systems for inventory control at all 30 of our facilities nationwide. We are also working with major customers to help them develop their RFID (radio frequency identification) strategies.”
Linked with traceability is food safety, a concern taken just as seriously by third-party providers responsible for the products under their roofs. In addition to temperature control and HACCP systems, many cold storage sites are subject to audits, from both third parties and from customers.
Because safety encompasses security issues these days, PRWs also have taken steps to bolster security measures at their sites. One example is Canadian cold storage company Versacold, with a U.S. site in Lake Geneva, Wis., which recently reported security changes like installing video surveillance cameras with Web-based monitoring capabilities and adding secure swipe-card access systems. The company, which warehouses ice cream among other frozen products, has worked to improve and comply with cross-border security measures as well.
Beyond constructing bigger and better warehouses, cold-storage companies are offering a broader range of services to PRW users. The Facility Group, for example, supplies facility planning, program management, architecture, engineering, construction management, operations consulting and financing services. In addition to warehouse management and operations, USCS offers transportation management, import/export services and value-added services such as quick freezing, storage of bulk commodities and retail and foodservice products, order selection, and distribution through its freight consolidation program.
Meanwhile, beyond its 37 million cubic feet of frozen and refrigerated warehousing space, Henningsen is a resource for services such as specialized product handling, cross docking, transloading, import/export services, shipment consolidation, load pooling and physical distribution.
To be sure, as cold-storage companies tout their high tech, diversified capabilities and as dairies begin to move products away from their own property for storage, the dynamics of the cold chain management are shifting. Although many dairies have concentrated on modernizing their private warehouses, PRW providers report brisk business. “Our company is growing rapidly every year with annual new construction expenditures between $50 million and $75 million,” Scherer says.
Daniel says managing the growth has become a focus for cold-storage operators like Henningsen. “Growth is a challenge in today’s climate,” he observes. “The PRW business is very competitive today and there are many challenges still ahead, whether you operate one warehouse or 1,000 warehouses.”
Finally, those who supply technology and services to PRW operators and private warehouse operators agree that cold storage is at a crossroads of sorts. “The real challenge for the cold storage facility people is, do they become part of that cold chain management or don’t they?” says Ron Cropsey, marketing manager for Realcold Milmech, USA Ltd., a Kansas City, Mo.-based supplier of automated carton freezers for private and public warehouses. “Historically, both like a bit of independence. But both bodies are moving closer together, with the big cold-storage companies moving closer to the client and the client allowing it to happen.”
Lynn Petrak is a freelance journalist based in the Chicago area.$OMN_arttitle="Public Displays";?>