The importance of the temperature controlled logistics sector is highlighted by the fact that the velocity of its operations is increasingly being adopted in ambient grocery. But the sector is facing challenges of its own. Malory Davies reports.
It’s hard to imagine a logistics sector that is more critical to the well-being of all of us than food and drink. In 2008, an article in the “Daily Mail” proclaimed: “Nine meals from anarchy – how Britain is facing a very real food crisis”.
This reflected the results of an earlier study by Professor Alan McKinnon who worked out how long it would take for different systems to break down if all road haulage operations ceased.
McKinnon looked at eight commodity groups, including groceries, and found that, even in the absence of panic buying, the economy would be near collapse within three to four days. (Life without lorries, “Commercial Motor”, 2005).
Not surprising then, that Chris Sturman, chief executive of the Food Storage and Distribution Federation, highlights the fact that over the past few years supply chains have become more efficient and the amount of inventory in the chain has gone down.
And the techniques used in chilled distribution to provide a day one for day two service have increasingly been adopted to increase velocity in the ambient chain.
But the temperature controlled sector faces some significant challenges, says Sturman, including a shift from frozen to chilled as well as the fact that for the big grocery retailers, volumes have declined at their large supermarkets, while home delivery and foodservice has been increasing.
In London, Mayor Sadiq Khan’s plan to cut road freight by ten per cent by 2026 will create major challenges in chilled and frozen distribution particularly to ensure that supermarket shelves do not simply run out of food.
And the elephant in the room, as for the rest of logistics is Brexit. Sturman points to a number of critical issues including the large number of EU nationals working in chilled and frozen warehouses in the UK as well as driving lorries. The end of cabotage could also have a significant impact, says Sturman. “The British agricultural industry could be devastated by the absence of Eastern European workers.”
Jon Miles, country director at NewCold, highlights the reduction in capacity in frozen warehousing. “Very nearly 100,000 frozen storage locations have been taken out of service due to the de-commissioning of old cold stores. This is reducing capacity as new build is not keeping up with de-commissioning. It is expected this trend to continue for at least the next five years. This may drive prices higher.”
At the same time, says Nick Winder, director of transport operations at NFT: “Demand for temperature controlled logistics is strong and continuing to increase, “although the players and what they are offering are definitely changing in the market. Alongside this, the overall chilled logistics solutions are also becoming more sophisticated around rework, mixing, traceability and provenance. “We see this trend continuing and retailers expecting these services from their preferred logistics partner. NFT’s heritage in being the intelligent link between retailer and manufacturer means it has been able to offer these services as part of its core proposition.”
For Scott Dargan, managing director northern Europe & service EMEAR at Carrier Transicold, the biggest change is the increase in urban distribution. “In line with this we are seeing an increased demand for refrigerated transport systems on vehicles best suited for inner-city operations.”
The shift has been primarily seen across four key segments, he says, home delivery, convenience shopping, food service, and fast food. Dargan points out that almost half of UK shoppers are now doing some kind of grocery shopping online, which is dramatically changing the way people shop, while consumers are using the large out-of-town supermarkets less, with shoppers choosing instead to use the convenient ‘local’ versions – buying less, more often.
George Ralph, managing director of Marshall Fleet Solutions, says: “It is surprising to think that online ordering has been around since 1984, although it took the expansion and developments of the internet to kick start the service, starting with Tesco and then Ocado. The demand has a two-fold impact, both with the initial supply of equipment and then the subsequent service and maintenance. Overall annual market volumes have increased significantly over the last decade, although seemingly plateauing recently.
“Service delivery used to be a challenge, with service delivery demands requested in areas away from traditional clients, such as inner cities, however establishing service networks to match store footprint has been a focus over the last few years,” says Ralph.
The growth in these new markets means that demand for refrigeration systems is increasing, says Dargan. “For home delivery operators, uptime is critical; they need reliable systems that can handle the heavy asset utilisation. However, when it comes to choosing the right temperature control equipment, weight is of paramount importance.
“Any home delivery operation should remain at the 3.5-tonne level; this is critical. If they go above this weight they can’t use car drivers and are falling into O-Licence territory. Every kilogram counts; any excess weight effectively means fewer bags of groceries can be carried, which equates to lost revenue opportunities for the retailer.
“Anywhere they can shave a bit of weight becomes vitally important, and the refrigeration systems are not exempt from that. “The key therefore is balancing the trade-off between weight, reliability and efficiency while respecting the integrity of the cold chain and being able to offer a sustainable solution.
“An interesting recent development we see in this respect is that the Department for Transport has just launched an industry consultation to evaluate the offering of a derogation for electric vans to offset the impact of additional battery weight. This would mean that the current 3.5-tonne limit would be extended to 4.25-tonne while still keeping it within the current driving licence regime and outside of O-Licence legislation.
“This could potentially be a game changer in terms of accelerating the take up of electric vehicles for urban distribution and particularly within the home delivery sector.”
Carrier Transicold offers the Pulsor unit, with E-Drive all-electric technology in these segments rather than the traditional mechanical compressor drive systems. “This is ideally placed to interface with such vehicle electrification and can therefore help meet the operators’ current challenges of meeting future legislation requirements,” says Dargan.
Winder highlights the challenges in last mile delivery: “The issues we predict will be mainly in the last mile. Constrained vehicle sizes needed to meet urban multi-drop, delivery requirements will create a trade-off against the temperature regimes needed to properly present customers with the on board products. As more electric and hybrid vehicles emerge in this arena, then the power requirements for temperature-control will cause challenges especially on after-dark deliveries.”
Both Ralph and Dargan have seen a move over the past few years from frozen to chilled. Ralph says: “Generally, as a nation we are buying less frozen product and purchasing more chilled and fresh produce; over the last 20 years, sales of frozen product has substantially reduced however this trend seems to be reversing with the introduction of premium products across retailers.”
Dargan highlights the fact that while frozen might not be growing as quickly, “we are seeing certain retailers who are expanding their frozen options, but in different segments than we’ve perhaps seen in the past. The growth in smoothies is just one example of healthy eating trends which has seen an increasing demand for specially prepared frozen fruit and vegetable combinations.”
“We see increasing demand from the pharmaceutical segment for controlled ambient temperatures— where products are not chilled or frozen but have to be kept at a very specific positive temperature, and where it is vitally important that temperatures are kept constant,” adds Dargan.
Pharmaceuticals is a key user of temperature controlled logistics and has some specific issues to deal with. Dave Sharp, head of pharmaceutical division at GBA Services, says: “The entire sector has now moved towards compliance, generally adopting WHO GDP (Good Distribution Practice) as its standard. As a result, vehicles must now be temperature-mapped and calibrated, and that has now been written into our own procedures. All GBA vehicles have now been mapped, and the results were entirely satisfactory – endorsing our decision to buy only high-specification vehicles with additional insulation throughout.
“Although we are aware that the mainstream market is increasingly moving product in bulk, rather than using express services, this is not true of our own niche – where urgency, value and absolutely consistent temperatures are the critical factors. So we are still called upon to move dedicated full trailers of palletised TC controlled drugs to customer RDCs, and also to operate vans with critically urgent single small consignments direct to clinics and patients,” says Sharp.
Automation is becoming increasingly important factor in the temperature controlled sector. In fact, ask NewCold’s Jon Miles about the most important key technological development in the market and the answer in unequivocal: “Automation, and that is our speciality.”
Partner Logistics also specialises in automated frozen food warehousing. UK operations manager Dave Mayne says: “Over a number of years, Partner Logistics has invested in the latest technologies, with the increased use of automated facilities providing the foundation of our constant desire for improvement in our operations.
“In the logistics, supply chain and storage industry, it is a fact that these technologies can do some jobs quicker and more efficiently, leaving less room for ‘human error’. We have heavily invested in some of these services which include repacking, order picking and repalletisation. As a result, our productivity and efficiencies in certain areas have significantly improved.”
However, Mayne argues that there is not necessarily a conflicting choice between people and automation.
“On the contrary, we consider our commitment to increased automation in our operations as a necessity, not only for delivering the best service for our clients, but to also support our employees by improving the environment in which they work in. “The future of Partner Logistics under our new owner Lineage Logistics will continue to be linked closely to automation; it is simply invaluable to any logistics, supply chain and warehousing business in the 21st Century,” says Mayne.
However, a note of warning is sounded by NFT’s Nick Winder. “Anything is possible in chilled automation, however in addition to the usual business case built around labour, investment, wages etc, there are the increased costs of maintenance in often harsh conditions and the risk of more frequent failures in components. The physical characteristics of components and lubricants and sensitive electronic equipment present many challenges. Over time these will be overcome and the price will level-out, so we will see more technology in low temperature warehouses especially around the movement of stock.”
Developments in the retail market are also having an impact on temperature controlled vehicle and trailer technology.
George Ralph says: “One of the biggest innovations to really change the market will be connectivity. Telematics now comes standard on Thermo King equipment, allowing operators, and potentially service providers such as MFS, to remotely monitor alarms, temperature and operating hours, as well as delivering standard telematic features. Pre-emptive maintenance is a potential additional benefit, reducing operator downtime and improving efficiency.”
Dave Sharp of GBA Services, agrees: “Telematics are playing an ever greater role in TC transport. Where state-of-the-art once meant GPS tracking alone, GBA now has all its vehicles fitted with a comprehensive, customised system that provides real-time feedback to base on vehicle location, load space temperatures by compartment, and alerts of door openings. We are now talking to our system provider about the addition of load space cameras to monitor loading and unloading, and help prevent damage to goods, and we believe this will anyway become a GDP requirement in due course.”
The challenges surrounding the reduction of inner-city air pollution levels is a key concern for Scott Dargan. “This is driving the demand for cleaner burn and more efficient engine technology. In line with this, the upcoming NRMM Stage V emissions regulation which comes into effect in January 2019 will mean that the engines used in upcoming transport refrigeration units are the cleanest ever. We are also offering the option of engines powered by natural gas.
“Alongside this we are also seeing increasing interest in our engineless solutions. Rather than use a dedicated transport refrigeration engine, these systems harness their power via an ECO-DRIVE module, which is driven by the truck’s clean burn Euro VI engine itself and converts this mechanical energy into electricity to drive the refrigeration system at a constant speed. The interesting thing here is that the system can also be interfaced with alternative vehicle fuel platforms such as natural gas and electricity.”
Dave Sharp points out that there is certainly a lot of discussion about silent-running fridges, bio-fuel replacing diesel, and solar power as a replacement for diesel-powered fridges, “but we are not aware of any such options available commercially as yet. We will be working with our trailer providers to explore this kind of technology for future vehicles.
“It will be interesting to see how this ambition will fit into the (now) much bigger question of how the trucks themselves will be powered, as more countries follow the lead of France and the UK to ban internal combustion engines in road vehicles over the next two decades.”
100 exhibitors to show at TCS&D
More than 100 companies will be exhibiting at the Temperature Controlled Storage and Distribution Exhibition in Coventry later this month.
The event will include a series of seminars. Speakers include: Nick Hay, chief executive of Fowler Welch; Tim Ward, Freight and fleet communications & engagement manager at Transport for London; Chris Sturman, chief executive of the FSDF; Justin Laney, general manager – central transport at John Lewis Partnership; Alan White, managing director of Fresh Logistics; and Bob Jane, sales manager at SSI Schaefer.
The Temperature Controlled Storage and Distribution Exhibition takes place at the Ricoh Arena in Coventry on 13th -14th September.
Facing the climate change challenge
Operators of chilled and frozen warehouses can receive discounts of up to 90 per cent if they meet government agreed energy efficiency improvement targets in a scheme operated by the Food Storage and Distribution Federation.
Eligible companies must meet an 11.7 per cent target for reducing energy use between 2008 and 2020.
In the temperature controlled storage sector, companies will have to monitor, measure and report on their power consumption and cold storage volume at the sites that have a CCA. Details of site location, production processes and site plans will also need to be compiled.
The FSDF has also played a key role is supporting the industry through the process of switching from ozone-depleting refrigerants such as hydrofluorocarbons to alternatives like ammonia.
George Ralph, managing director of Marshall Fleet Solutions, says: “Probably the biggest current challenge for both cold store technology as well as the transport refrigeration industry is the introduction of production quotas for R404a, one of the key refrigerants used industry wide.
“R404a has a very high Global Warming Potential (GWP) and is now subject to significant reductions in production in the EU towards 2025. MFS is already seeing significant double digit monthly price increases; as a result we are now recommending switching to a drop-in alternative for transport refrigeration units. Unfortunately for cold store systems, this option is not necessarily available and may need a wholesale switch to CO2 or Ammonia systems.”