The refrigerated warehouse industry, like the rest of the cold chain, came through the recession without the dramatic drops in business seen in the rest of the global economy, and recovered lost business more quickly than other industry sectors. But growth has slowed this year, according to the International Association of Refrigerated Warehouses.
“Just as we expected, we saw moderate growth on the warehousing side of the industry,” said Corey Rosenbusch, vice president of the Global Cold Chain Alliance, which includes the IARW. “The food industry tends to be very resilient, and our survey numbers bear that out.”
Revenue was essentially flat in the second quarter compared to the previous two quarters, according to the IARW, which conducts periodic surveys of its members’ financial performance.
The average revenue growth rate of the 21 companies responding to the IARW survey was just 0.45 percent, down significantly from average growth of 2.4 percent reported for the second quarter of 2010.
The companies that responded remain anonymous, but include some of the major companies in the industry. Four of the companies reported revenue was rebounding, with growth rates of 11 percent or higher. Another four companies indicated revenue has been declining at double-digit rates. Several companies said the current season is regularly a slower period of business than the previous two quarters, and they expect revenue to remain steady or to increase soon.
Although revenue remained flat, profits grew an average of 6.3 percent. While not all companies reported growth in profitability, the ones that did said the increases averaged 30.8 percent.
The companies said their facilities had an occupancy rate for goods that averaged 78.6 percent, lower than the 82 percent industry average for 2008 and 2009.
The IARW said it contacted 45 companies in the United States, including the 25 largest, and received 21 responses.
With electricity representing a major cost center, one way public refrigerated warehouses are attempting to boost profitability is to improve energy efficiency.
The Glouchester City Marine Terminal in New Jersey, owned by Holt Terminals, recently installed what industry sources say is the largest rooftop solar installation in North America. The refrigerated terminal facility now includes enough solar panels to power 1,500 homes annually. CEO Leo Holt said the investment will provide most of the energy needed to keep the facility cold for refrigerated cargoes.
Americold, North America’s largest refrigerated warehouse company, is seeking energy efficiencies across its 132 North American locations. It has signed a three-year contract with Cascade Energy to provide energy management services.
Portland, Ore.-based Cascade Energy, which focuses exclusively on energy efficiency consulting for the industrial sector, will provide monitoring, utility bill analysis, reporting and Web-based monitoring to Atlanta-based Americold. Financial details of the agreement were not disclosed.
Americold joins Cascade’s roster of major industrial clients, a list that also includes Sysco, Supervalu and Kroger.
Cascade Energy, which has 75 employees, signed an agreement in April to become the energy management service partner for the IARW. Americold is the association’s largest member.
“We’re collaborating with the IARW to find out what their members want and support them,” said Marcus Wilcox, president of Cascade Energy.
He said the demand for energy efficiency services is growing in the industrial sector. “Sustainability is being pounded into them by stockholders, by investors and by the market,” Wilcox said.
After a few years of stagnant activity in the cold chain’s real estate sector, companies are starting to jump in again. Before the recession, refrigerated facilities built on speculation were routine — a practice that ground to a halt in 2009.
In September, a massive multiparty deal was announced for a $91.5 million cold storage distribution center in Southern California’s Inland Empire.
CB Richard Ellis arranged the sale to Cole Real Estate Investments on behalf of USAA Real Estate. The Riverside, Calif., facility is now under long-term lease to Wal-Mart Stores. The facility is a 496,000-square-foot, LEED-certified, freezer warehouse built in 2011.
Cold storage warehouse vacancy in Southern California is estimated at less than 2 percent, according to Darla Longo of CB Richard Ellis.
“The food industry is one of the most rapidly growing industries in the economy, yet the vast majority of the cold storage warehouse supply is older, functionally obsolete, mechanically inefficient and in need of repair and replacement,” she said.
Features of the cross-dock building include 60,000 pallet positions and a roof equipment penthouse design that offers maximum use of the available cubic storage. The building also features 97 dock-high doors, specialized load levelers, a large yard for trailer storage and 10,000 amps of power.
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