by Matt Ott / President and CEO of Global Cold Chain Alliance
Global Cold Chain Alliance members ensure that the vital links in the cold chain stay connected. That means keeping food safely stored, packaged and shipped.
In this column, we are going to focus on the storage and third-party logistics, or 3PL, side of the business and the efforts of our core partner, the International Association of Refrigerated Warehouses.
When the IARW was founded, third-party logistics was in its infancy and highly commoditized. The acceleration of changing global conditions in the 20th century created demand for an increased integration of the cold chain industry, which in turn initiated closer relationships among all trading partners in the supply chain.
One of the main drivers of change is consumers demanding food safety at all levels of the supply chain. In this age of social media, food companies face an increased pressure to protect their brands.
Our members know all of our customers, including food and retail companies, expect their 3PL partners to do their utmost in protecting their brands and ensuring food safety. In fact, we’ve found in our research that this need has eclipsed just about every other priority. That includes reporting, sustainability and cost.
An unmistakable truth today is that 3PLs are extensions of their customer’s brand. Food retailers and wholesalers see value in their partners “owning” that role.
Over the years, we have seen increasing integration in the business models of our members, from warehousing to logistics providers. Refrigerated warehouses have invested in trucking assets and pursued varied arrangements and structures with customers in the U.S. and abroad.
As we did more work in emerging economies, we saw that a single company would operate all aspects, from food production to delivery.
In many countries, the third-party provider is a developing concept, and the cold chain had to take on the development of all links, from post-harvest handling and processing to retail. Brand protection is not just a U.S.-based phenomenon.
And the demand for value-added services in the cold chain is growing around the globe, as increasing warehouse capacity numbers show. In the U.S. and Canada alone, about 260 billion pounds of perishable food moves through our member’s facilities throughout the year.
Our research shows that the total capacity of refrigerated warehouses worldwide is 719 million cubic meters. That is 16.7 percent greater than the capacity reported in 2018.
Despite the turmoil in our operating environment, the GCCA and IARW continue to focus on the core needs of the industry and our members. As GCCA members grow, the global cold chain is strengthened, improving access to fresh foods all around the world, reducing food loss and increasing food security.
Market conditions for the cold chain continue to improve, and there is opportunity to more closely align all of the players – 3PLs, food companies, retailers, suppliers and transportation and logistics – to address challenges and to grow market demand.
While half of the refrigerated warehouse professionals responding gave the industry high marks, a quarter perceive the cold chain industry is not sufficiently aligned to address challenges and meet market demand. Improving alignment throughout the chain to grow demand is a principal mandate for industry executives.
Where do we go from here? Our research shows that changing market dynamics will create new opportunities and future industry growth in several areas.
Those areas include the use of automation and robotics, increased demand for food as a result of global population growth and the rise of e-commerce. They also include the diversification of temperature-controlled products in the food industry and the demand for data and predictive analytics.
As opportunities and challenges present themselves in the months and years ahead, collaboration and communication will be vital in ensuring continued success for all parties.
Now more than ever, GCCA is committed to assisting our IARW 3PL members in their efforts to showcase value and strengthen relationships with retailers, wholesalers and CPG companies.
In the near future, we will be launching initiatives that seek to improve our trading partner relationships to help better serve consumers. On behalf of the GCCA membership, we look forward to engaging the food industry in this endeavor.
GCCA is based in Arlington, Virginia.
