North American PRW Operations
Generally Report Stable Business
By JOHN J. PIERCE, QFFI Associate Editor

Turnover increases most in Midwest and outside USA; among new survey questions, dominance of “best of breed” WMS stands out. Expansion continues in some areas.

More than half the refrigerated warehouses in North America responding to the 2007 Frozen Foods Refrigerated Services Trends Survey report turnover is expected to stay about the same.

Less than 40% are anticipating an increase, according to the survey, co-sponsored by Quick Frozen Foods International magazine and the International Association of Refrigerated Warehouses. But none say they are losing business.

Only 11.1% of the sample, weighted by the number of warehouses per company, plans new construction at -20° F (-29° C), and while the percentages are higher for -10° F (-18° C) and 32° F (0° C) at 21.4% and 22.1%, respectively, most of the planned activity is outside the United States.

It is also only outside the United States that the weighted sample showed a majority (68%) expecting increased turnover this year, with the US Midwest response being 46.9%, the US West 26.9% and the US East only 8.8%. But none of the largest operators in the United States or Canada took part in the survey this year.

United States Cold Storage, one of those largest, must be expecting more business – it has a new facility, billed as the largest expansion in its history, under construction in Fresno, California. It features 3.36 million cubic feet of -20° F space, plus +35/-20° F convertible space. In addition, the unit will be capable of blast freezing 240,000 pounds of product per day and providing cross-docking services with a 60-foot refrigerated dock area.

Atlas Cold Storage, now part of the global Eimskip network, just expanded its warehouse and distribution center in McDonough, Georgia. Smaller regional chains are also in a growth mode, as witness Hanson Logistics with a new facility under way in Chicago, and Everest Cold Storage with a unit in Montreal and two to come elsewhere in Canada.

Among warehouses taking part in the QFFI-IARW survey, US Midwest reported a 59.4% rate for anticipated increases in inventory, versus 38.5% in the US West, 12% outside the US and a mere 2.9% in the US East. Some 76.4% of the US East warehouses expect inventories to remain the same, versus 57.7% in the West, 15.6% in the Midwest – and 88% outside the US.

Mentioned most frequently as increasing in inventory were seafood, pies, vegetables, “finished products,” exported meats and ice cream. The only specific decline mentioned was in turkeys. Increased turnover was cited in retail processed meats, ice cream, seafood products and baked goods; the only decline any operator specifically cited was in imported beef.

This year’s sample may not be as representative as last year: although there were 37 returns overall for the Americas, compared to last year’s 36, the respondents represent only 117 units compared to 179 a year ago, because none of the largest operators took part. That doubtless accounts for lower than expected numbers in construction and purchasing plans.

In a revised section on information technology, it is impossible to compare this year’s results to last year’s in key areas. But with smaller operators dominating the returns, there are still contrasts that may be relevant. For example, a weighted 23.9% is reported using bar coding for product tracking but only 6.8% own up to using RFID for anything.

In choosing warehouse management systems, 50.4% chose “best of breed” solutions and 21.4% ERP extensions. Only 28.2% reported using transportation management systems, divided about evenly between the US Midwest and outside the US, and none reported freight management systems. But 13.6%, all in the Midwest, reported using automated material handling systems.

Some 57.3% reported plans to upgrade their computer systems this year, with only 8.5% planning to replace them. Getting new software was the option for 21.4% and new hardware for 17.1%; adding terminals was mentioned by 12%. Only 26.5% had anything to say about what they are doing with their websites, and hardly any filled in anything about uses of EDI. Few (8.5%) reported using consultants.

Among functions cited for websites were inventory access for customers, WMS and dispatch, order reporting, EDI, customer interaction with IMS, rates and driver applications, and basic information and contact only. Reasons for taking on consultants included sales management, engineering, RMPP and PSM and island technology.

In freezing equipment, ammonia compressors remain the favorite for purchase this year, at 57.3%. But fluorocarbon compressors scored a surprising 21.4%, mostly outside the US. Some 44.4% specified screw compressors, and among other types only central station units, with 1.7%, drew any response at all.

But 51.3%, mostly in the East and outside the US, plan to buy new condensers; and 47, largely in the East are looking for refrigerant. Fans and blowers drew a 35.9% response, but only 18.8% are interested in coils and 12.8% in heat recovery systems.

When it comes to materials handling equipment, standard racks win hands down, with 59% mentioning them in purchasing plans. Only 15.4%, all outside the US, mention mobile racks, and hardly any cite gravity or other (pushback) racks. There was a small response this year for stacker cranes and conveyor belts, but none for conveyors. Pallets are sought by 40.1% and slip sheets by 12.9%.

Lift trucks remain popular, with 72.6% opting to buy them this year, and lift truck batteries are even more popular at 82.1%, while 53% are looking for battery rechargers.

Strip curtain doors seem to be the most popular means of ingress and egress, with 55.5% planning to buy them this year. Automatic doors come in second at 50.4%, followed by manual at 20.5%, mechanical at 12.8% and air curtain at a paltry 2.6% (all in the West).

Panels of one kind or another are the overwhelming favorites for insulation to be sought this year, at 53%. Foam and other (including cork!) rated a mere 1.7% each.

On terms of services, just about everybody (94.9%) does case selection, and most (79.5%) do some freezing on premises. Favorite products for on-premises freezing are poultry, pork, beef, strawberries, juice in drums, “seafood by tenants” and vegetables.

Only 17.1% reported doing repacking on premises, but 48.7% rent out space for processing of one kind or another – the few products mentioned are pretty much the same as for initial freezing – and 34.2% rent out office space to their customers.

Cross-docking is popular at 69.2%, but not as universal as suggested in previous surveys, again doubtless due to smaller operators dominating the response. Hardly any of the respondents had pursued ISO-9000 or other quality certification, and few volunteered details about other services – these included arranging LTL shipments, pooling shipments and getting export certificates.

There were scattered returns this year from Europe and the Pacific Rim, but not enough for a credible statistical base. The number of warehouses represented totaled about 11 and seven, respectively.

Efforts are being made to solicit more responses, so that a more detailed follow-up can be published in the July issue of QFFI.

Although high-rise coldstores are common in Europe, only a single company in Southeast Asia checked that off – the same company is also the busiest with construction plans, with a new blast freezer.

One European operator reported plans to upgrade its bar code system this year, and that its services include container-to-container as well as container-to-truck cross docking. Poultry inventories are up, but fish inventories down, the PRW operator also reported. Another in southern Europe said turnover is declining in raw meat and seafood, but up in bake-off, ready meals, vegetables and ice cream.