Report: E-Commerce Set To Disrupt Cold Storage Capacity

by | Mar 19, 2018

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(Photo: Walmart’s Balzac Fresh Food Distribution Center. Credit: Walmart, Flickr Creative Commons)

Cold storage is heating up in the United States, according to a new report from CBRE Industrial and Logics. With e-commerce sellers like Amazon changing where food is stored and how it gets to consumers, analysts expect a major cold storage shift from retail to industrial properties.

Currently the country has approximately 3.6 billion cubic feet of food-commodity cold storage capacity covering 180 million square feet of industrial space, CBRE says. Compare that to the 2 billion cubic feet of similar capacity covering 300 million square feet of retail space.

That’s likely to shift by 2024. “Depending on the property type used to fulfill online grocery sales, up to 35 million square feet of cold storage for food distribution could be shifted from retail to industrial properties,” the report says.

During the same time period, online grocery sales in the United States are expected to reach $100 billion, up from $19 billion last year, according to FMI/Nielsen data. Globally, the cold chain market is predicted to be valued at $271 billion by 2022, Freight Waves reported.

The CBRE report lists the current top 10 states for industrial food-commodity cold storage in millions of cubic feet:

  1. California: 396.5
  2. Washington: 271.3
  3. Florida: 259.4
  4. Texas: 231.4
  5. Wisconsin: 228.1
  6. Pennsylvania: 213.5
  7. Illinois: 188.0
  8. Georgia: 183.5
  9. Oregon: 139.6
  10. New Jersey: 136.7

Wisconsin, Washington, and Oregon have the most square feet of industrial food-commodity cold storage per capita at 39.4, 36.6, and 33.7, respectively.

The cold storage shift takes place at a time when food retailers — e-commerce and brick-and-mortar alike — are taking closer looks at their refrigeration equipment. The HFC refrigerant phase-out is a factor. So is energy efficiency.

Another challenge as online grocery sales take off is consumer trust, Supply Chain Dive’s Kate Patrick pointed out. The food needs to be fresh, safe, and just what customers are expecting to receive.

In January, news broke about Walmart’s move to solve this issue. “The retail and e-commerce giant has a patent to allow consumers to view real-time photos of groceries they’re thinking of buying online,” Patrick wrote. “The store is clearly banking on consumers getting on board, because it’s expanding online grocery delivery to 100 cities.”

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