Analyst Insight: The frozen and refrigerated food and beverage market is booming. Many factors are contributing to this shift, including continued COVID-19-era consumer behaviors, tighter household budgets, more convenience dining in, higher demand for fresh pet food and increasing pharmaceutical storage needs.

This growth will continue for the foreseeable future. Both manufacturers and shippers must examine and optimize their cold logistics operations if they wish to compete and capture this financial opportunity.

However, the cold chain presents a number of challenges that you need to be aware of and address to achieve success. 

There are so many more factors at play when dealing with frozen and refrigerated products compared to shelf-stable goods. Shorter shelf lives necessitate much more precise storage, handling, and transportation infrastructure and processes.

If this isn't taken seriously, the consequences could be severe. Non-compliance can result in poor taste and quality, excessive spoilage and wasted product, all of which are unnecessary costs that can impact your bottom line, and cause real harm to consumers and your long-term brand reputation.

Be sure to understand the many regulations you're required to follow as a food shipper, and align practices accordingly to ensure compliance with regulatory bodies like the USDA and FDA.

You can also utilize smart sensor technologies to monitor and log temperatures across every stage of the cold chain, from initial production to final destination. This data will help you swiftly address any problematic loads and minimize damage.

With so many touchpoints involved in the typical cold chain, informational and operational silos can become a problem. Various suppliers combine to manage different stages, indirectly causing data fragmentation. This lack of visibility and coordination inevitably leads to poor customer outcomes.

To combat this, find ways to improve your alignment of data, processes, and resources. For example, one unified information system will help you uncover new efficiency opportunities and more precisely forecast consumer demand fluctuations.

You can also dramatically reduce costs by using a 3PL's cold storage and fleet solutions instead of buying, training, maintaining, and operating your own. Remember: Frozen/refrigerated warehouses and reefer trailers cost significantly more than dry trailers, require more maintenance, and necessitate more specialized operators.

Time is critical in the cold chain. Longer dwelling or transit increases energy usage, handling costs, and spoilage risk. Rising labor, fuel and transportation costs should make reducing unnecessary miles one of your highest priorities.

Your storage location should align closely with both production origin and end markets to avoid inefficient routing. Be sure to evaluate routing frequently, given that rate swings in trucking, rail and ocean can dramatically change cost-to-serve. Alternatives that shorten transit time like inland hubs, intermodal access, or facilities closer to major transportation corridors will help dramatically.

Also, consider your port strategy, as different gateways offer varying levels of reefer capacity, congestion, and carrier reliability. Tariffs and trade dynamics may also shift which ports or lanes make the most financial sense. Assess total landed cost, not just storage rates. Transportation, drayage, detention/demurrage, energy and accessorials all factor into the bottom line.

Resource Link: https://america.cjlogistics.com

Outlook: There’s a lot to contend with when building an effective cold chain strategy. But if you’re proactive and take serious measures to optimize your operation, you'll be rewarded with higher demand, lower costs, and increasing profits.