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How to Navigate the High Demand of Cold Storage Warehousing

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Okay, we’ve all heard it. The demand for freezer space at cold storage warehouses may soon exceed the capacity nationwide. It’s a problem. One that you need solved because you’ve got a business that needs freezer space. Don’t worry. We’re here to help. Here’s what you should understand to ensure you’re making good decisions for your business:

How Did We Get Here?

One of the most important steps of being part of the solution and protecting your business during the cold storage shortage is knowing what caused the complication. The health food industry has been emphasizing the need for fresh, never frozen produce and meat since the early 2010s. But at the same time, large corporations have been buying up smaller farms to build large monocultures that require further travel and longer cold storage than local producers. Together, these were already exploding the cold storage industry.

Then the pandemic came, and with it grew the prominence of home cooking ingredients and eventually a huge need for subzero pharmaceutical storage. Warehousing businesses with experience in the field were given grants and loans by the government to build new storage facilities the same time that construction began to experience a shortage of supplies and workers, which drove up costs and pushed back timelines. When these facilities finally were finished, the stipulation of the loan was for the facility to provide storage for COVID-19 vaccines, which created even more of a squeeze for private businesses that has yet to be alleviated. Storage for the private sector simply hasn’t been built in a while.

What Will it Take to Normalize Demand?

Like everything in business, demand will normalize once there’s more supply to go around. And more cold storage is coming. According to FoodLogistics, 90 percent of 3PL providers have plans to build more cold storage in the coming months, but it will take time and money in the meantime. The typical warehouse costs approximately $100 per square foot to build, but a cold storage warehouse will cost closer to $220 per square foot. And the squeeze for labor and supplies that construction companies saw hasn’t subsided yet either. Even with these new facilities, the costs of cold storage will rise as companies need to quickly recoup costs to immediately begin another cold storage construction in order to keep up with demand.

What Should Your Business be Doing in the Meantime?

More cold storage is coming, but your business needs it now. Here’s what we suggest you consider while you’re looking for your storage solutions:

  • Take Extra Care to Vet Cold Storage Providers: This shortage has brought a lot of newcomers to the field that don’t have the experience to back up their services or provide security. Your best bet is to work with a business that has a long history in cold storage. But if you need to go another direction, make sure you’re doing your due diligence to ensure their safety systems meet industry standard and there are available and functional backup systems.
  • Be Aware Before Storage Hits the Market: Because cold storage is so hot right now, many businesses are letting their partners and even the general public know about available space before it has finished construction. Signing on to these projects early is one of the most reliable ways to secure your business a large amount of space, and your resources can help bring cold storage to new markets where you need it most quickly.
  • Protect Your Assets with Human Capital: All over the US, we’re seeing unfairly treated workers taking action through strikes and unionization. These kinds of disruptions can be especially damaging to businesses that rely upon cold storage solutions for perishables. So, it’s important to take care during your vetting to ensure your warehouse is creating careers not jobs and providing a safe work environment for employees.

Your business needs freezer storage, and things are going to get dicey. Just remember that taking the time to choose the right warehouse will be a blessing to your customers. You don’t want to end up with spoiled product on your dock, and slow growth is better than shrinkage. Need some help finding a warehouse that meets your standards? Talk to our team. We’re here to help and have spent more than 70 years building industry knowledge.

Tags: Cold Storage, Supply Chain, Warehousing

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