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New cold store construction continues as inventory turns, freezer demands gain.

New Cold Store Construction Continues As Inventory Turns, Freezer Demands Gain

More zero degree space means more new freezing equipment -- Ammonia-based systems on upswing though only a few claim any switch related to CFC controversy.

For the majority of this magazine's readers, frozen foods are, if not the raison detre of their professions, then a substantial element of them -- whether it be their development, production, packaging, transportation, storage or sale. Their storage is the central focus of this survey, though of course the broad view is on the current status of those facilities which are designed to store them well.

So it is fitting to inquire of the respondents worldwide how frozen foods are faring with them -- how are inventories standing up, and how actively are they moving, as measured by turnover.

While many respondents indicate different products gaining or falling in inventory and in turnover, a substantial number of those surveyed apparently match the two measures closely, indicating that when inventories of a product are trending upward or downward, so is the turnover of that product. Perhaps, and more logically, it is that principals make efforts to balance them, increasing inventories for those products that are moving well, and easing off on those that are not.

Worldwide, product inventories appear to be stabilizing, while turnover has increased somewhat compared to last year. Respondents reporting declining stocks measured 10.1% of those surveyed, compared to 14.3% last year, while only 31.9% reported increasing inventories, considerably fewer than the 46.4% who so noted in 1989. Those reporting stocks holding steady increased from 35.7% to 44.9%.

Meanwhile, 47.8% told of increasing turnover, up from 42.9% last year, and 37.7% say it's holding steady, a slight and perhaps not too significant drop from 39.3. The proportion of respondents indicating declining turnover doubled -- but not to worry. The figure rose from only 3.6% to 7.25%, and while this is not an insignificant change it is readily more than balanced by the increase in those who gained.

New World figures vary from the Global response by no more than a couple of percentage points either way, save for a 4-point difference on the high side, at 51.8%, for increasing turnover. This translates into a somewhat lower level for that segment among the Old World respondents, where it garnered 30.8% of those surveyed. Declining turnover got similar responses, at 7.14% in North America and 7.60% across the Atlantic, but 46.2% of the European/Middle Eastern group told of steady turnover while only 35.7% did in North America.

Greater percentages of Old than New World cold store operators have found inventories holding steady (53.9% to 42.9%) and declining (15.4% to 8.9%); thus on balance it may be seen that more find them increasing on the Western side of the Atlantic (33.9% to 23.1%).

Within the U.S., that increasing trend in inventories is heavily weighted toward the West Coast, where 60% of the responses so noted and 20% show them steady; none indicated declines. The East North Central region also reported no declines, but 53.9% indicated steady inventories and 38.5% said there were gains.

Turnover appears to be gaining most strongly in the West Central and Mountain region, with 61.5% there noting increases, especially when compared with 1989 when only 27.8% showed it picking up.

Respondents were asked to indicate their view of the directions specific types of inventory were taking. On a global basis both retail and foodservice (catering) products were seen to be generally gaining, with just over 30% seeing them both in a gradual increase. Only 5.8% saw retail product inventories rising rapidly, while 24.6% saw them holding steady, 7.3% felt they were starting to slip, and just 2.9% thought they were dropping more heavily.

With foodservice products, 21.7% felt they were maintaining their levels, 4.4% saw them spiraling upward, and, on the down side; 5.8% thought they were easing down while only 1.5% perceived them dropping faster than that. Bulk products were seen by 27.5% as holding steady, but those viewing them as either slipping or gaining were nearly evenly matched at 13% on the downside, 14.5% for the upward trend -- and 2.9% each saw them in rapid movement up and down.

Government-owned commodities, termed intervention goods in Europe, were generally seen as on the decrease, with 23.2% viewing them as strongly so, 20.3% as just slipping, and only 15.9% as holding steady. Only 1.5% each saw them as increasing slowly or rapidly.

Demands on Space

Inventory requires space to store it in, and if inventory levels change then the demands on space will vary. In this survey, warehousemen were also asked about trends in the demand on the various types of storage they provide: Freezer, cooler, dry, and convertible, and on leasing public space.

The reports on all of these were weighted toward stable demand, followed by slight increases. Response on freezer storage was greatest at 81.2%, and out of that 37.7% reported stable demand, followed by 27.5% showing some gain, while 10.1% indicated strong increases. Of the 76.8% who replied concerning cooler space, 31.9 points went toward stability and 24.6 to gradual gains; again 10.1% found demand comparatively heavy. None were seeing any real drops in freezer demand, though some 5.8% found some decline, while 8.7% reported some slippage for cooler space, and 1.5% a heavier drop.

Convertible space was touched on by only 44.9%, of whom 24.6% were at status quo and 11.6 were seeing some increase, while 2.9% were losing some call and for 1.5% it was dropping more strongly.

Construction Projects

To some degree many of the changes in freezer space between 1989 and 1990 just described probably owe to differences in the mix of respondents, but the industry is volatile, and considerable expansion and development of properties is continuously going on, to meet the inventory changes and demand explained earlier. For instance, approximately 28% of all surveyed plan to build new zero-degree warehouse space and 26.5% intend to add to their present low-temperature cold storage. Renovations are to be performed on some 7.4% of such current facilities.

For new construction, these responses are up from their equivalent numbers in last year's survey, when the 25% intended to build and 22.6% to add to current space. But renovation is at about half of last year's 15.5% response.

New mid-range temperature warehouse construction, identified in the survey as 32 [degrees] F space, is in the works at 10.3% of the operations, with additions at 4.4% and renovations at under 3%. These are close to or a little down from last year's which were 11.9%, 7.1% and 6.0% respectively.

It would seem that North America is moving ahead on new freezer storages faster than its neighbors across the water, with the response adding to 32.1% compared to their 7.7%. On balance, it might be noted that 15.4% of their responses noted new 32 [degrees] facilities on the drawing boards to America's 8.93%. Both are doing substantial additions to zero-degree space, with the North American response at 28.8% and the European also at 15.4%. Neither group is doing much with adding to their chilled space; there is slightly more activity in renovation in both freezer and chilled space.

On the subject of the trends in public versus private cold storage space under new construction, out of over 68% of the global response regarding public space, some 30.7% saw little change, 23.1% perceived some increase and over 10% saw stronger gains. Only 55.1% touched on private space, but 36.2% saw this as holding steady while just 13% thought there was some gain. Under 3% saw any decreases in either area, and only 1.5% thought the private sector would move up strongly.

Insulation

Separate acquisition of insulation is related more closely to renovation of refrigerated facilities than to new construction, and thus the responses to this area of the survey were down somewhat relative to those in 1989. The perennially popular polyurethane panels, for instance, were on the shopping list of just 30.4% of the respondents worldwide, compared to 38.1% last year. Styrene foam panels, which garnered some 19% of the response in 1989, were checked off by only 11.6% this time.

Sheets composed of styrene foam were marked by 10.1%, while polyurethane sheets and polyurethane foamed into place each took 5.8%. Fiberglass sheets were the next at 4.4%, followed by 2.9% who checked off the box for foamed-into-place styrene, and, lastly, fiberglass panels, which gathered less than a 1.5% response.

It was recently pointed out to QFFI that little fiberglass is used in cold storage construction these days, nor is the foaming-into-place technique done to any great extent. It is more than possible that those who checked these items have found them valuable or inexpensive in the past, or, alternatively, these -- especially the fiberglass insulation -- will be used in some alternate area of the company's facilities. Foam-in-place polyurethane will be called for by 15.4% of the Europe/Middle East contingent, for instance, so this may still be a viable technique there.

Levels of usage of all of these is comparatively weighted toward the East Coast and across the Atlantic.

Freezing Equipment

There were substantial increases in refrigeration equipment acquisition plans to go along with the gains in cold storage construction. Ammonia compressors in particular showed a considerable upswing from 1989, with 62.3% of the worldwide response going for these compared to just 47.6% last year. Fluorocarbon based compressors, on the other hand, declined from a 9.5% response to 4.35%.

This is probably to some extent a result of the anti-CFC sentiment that has burgeoned anew, backed by legislation, since public awareness of the destruction of the ozone layer sharpened with the discovery of the giant hole over the Antarctic. QFFI specifically asked warehousemen about that in this survey, inquiring if they had been forced to make any changes as a result of the controversy, and if so to comment on it.

Almost 58% indicated that it had not affected them, with over 20% saying it was not applicable to their operation. Some did not address the question at all. Over 10%, however, acknowledged that it had made a difference to them, with most comments indicating that there were plans to convert their systems. One noted that their system utilizing Freon composed approximately 10% of their total current refrigeration, and that it was to be changed over to ammonia-based like the rest of it. Another reported succinctly, "Planning away from CFC's for the future." But others indicated intentions to go for R-22 or R-502 refrigerants; one said that conversion from R-12 to R-22 was under way and that a rolling program had begun some 11 years ago.

One respondent, who indicated without comment that the controversy would not affect any plans, was among those who indicated plans to acquire a fluorocarbon-based system.

None of the latter were in the Europe & Middle East group, where 53.9% of the respondents look to acquire ammonia-based compressors. Within the States, over 50% of the respondents in all groups are going for these, with the East North Central group leading the pack at 76.9%.

Product Handling

The days when commercial products of any sort were just stacked one on top of the other in whatever storage rooms were set aside for them, until there was no more space -- or until its own weight destroyed it -- are, one may hope, lost in the forgotten annals of antiquity. But, sometimes, in a new storage facility that was still waiting for shelving or racks to be installed, this reporter has seen frozen product stacked two or three pallet-loads high.

For many years in the course of these surveys, lift trucks and the pallets that they are used with to move their product loads have led the lists of this category of warehouse equipment, followed, as a rule, by standard racks on which to store the product. Only the batteries required to power the lift trucks shared their levels of acquisition -- sometimes, as last year, even leading the pack.

This year is essentially no different, on the global level, save that the standard racks have moved up into the spotlight after lift trucks, bumping pallets to fourth place. Lift trucks took 71% of the international response, very little change from 1989's figure; however, the batteries for them, which had garnered a strong 72.6% last year, were on the books of only 60.9% this time. Pallets drew a 55.1% response, two points down from 1989. But whereas standard racks were desired by just 47.6% of those surveyed last year, this time a strong 63.8% checked them off.

It is worthy of note that the Europe/Middle East respondents were primarily interested in standard racks this year, these leading their lists at 69.2%, followed by pallets at 61.5%, with lift trucks and lift truck batteries which gathered 53.9% each.

Glancing at the trend inquiry for product handling, the use of slip sheets were reported by 23.2% as stable and 18.8% as picking up somewhat, but 8.7% said it was slipping and another 8.7% said such use was dropping considerably. Palletization was found by 30.43% to be stable and an equal number to be rising, with another 11.6% showing it gaining rapidly; less than 3% thought it was slipping and none considered on the way out.

Less than half the respondents commented on modularization, but out of that number 29% consider it stable and 10.1% on the upturn. On the other hand, use of stretch wrap is definitely on the rise, with 47.8% showing it gaining somewhat and 17.4% picking up fast, while 10.1% consider it holding steady and 1.5% feel it's dropping -- but only a little.

Bar code scanning is apparently holding on the stable side, with 30.4% so reporting, while 18.8% thinking it is gaining some, and another 7.3% consider it rising faster. But few think it's dropping, with 2.9% saying it's dropping fast and less than 1.5% who think it's just slipping.

Harking back to the discussion of inventories and turnover, inventory turns were marked by 42% as gaining somewhat and 23.2% as stable. There were 8.7% who felt they were really moving up and another 2.9% who thought they were dropping rapidly; none felt they were only easing off.

Transportation

The viewpoint on trends in transportation sees stability and gains in all but rail travel. Common carrier use seems most at the status quo with 44.9% so indicating, out of the two-thirds of the respondents who commented. None found this moving either rapidly up or down, but 13% felt there was some increase, while 8.7% thought it might be dropping off a little. Contract hauling appeared somewhat on the rise -- 30.43% so noting, while an equal portion felt it was stable; none thought it was gaining rapidly, but although 2.9% felt it was declining quickly, none thought it was just easing off.

Back-haul, once a controversial topic, now appears by 29% to be at an even keel, with 14.5% seeing it increasing somewhat and half that number seeing it decreasing slightly. Under 3% each viewed it as either gaining or falling off rapidly. Direct store delivery is stable for 21.7% and rising a little for an equal percentage, while 5.8% believe it is declining. Again, less than 3% see it moving at either extreme.

Truck carraige is seen by 27.5% as at status quo and another 27.5% as on the rise, with only 5.8% feeling it's moving rapidly ahead. Here 2.9% see it as slipping but none as falling off rapidly. Rail transport got mixed reviews, though most -- at 17.4% -- see it as on the decline, and 14.5% consider it on the way out. Another 14.5% consider it stable, while yet another 13% perceive it as moving up a little. Only 1.5% gauge it as a force yet to be reckoned with.

Computerization

The age of computers is with us, and much of the excitement of the last decade of growth in this area, that came with the development of relatively inexpensive computer systems, has leveled off. As noted here last year, it is now time to be concerned rather with maximizing the capabilities of already installed and operating systems.

Many respondents noted that they've had their own mainframe installations for a number of years -- several for well over a decade, and a substantial number share them.

Only a few -- about 7.25% of those surveyed -- are anticipating their first installation of a computer system, though 21.7% intend to upgrade a current system and another 15.9% expect to replace one. There are 21.7% who will add terminals, and 24.6% are looking to get new software. Among the latter, some specified warehouse packages; communication, distribution and inventory control, and even such standard business packages as word processing, spreadsheets and accounting software. Specific brands, such as Argus, were mentioned; and `WINS' was noted by another, who plans to join the many North American firms who abide by the Warehouse Industry Network Standard. Some even have the expertise at hand to develop their own software for such areas as inventory and distribution.
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Title Annotation:Warehousing World
Author:Chamberlain, Ross
Publication:Quick Frozen Foods International
Date:Apr 1, 1990
Words:2977
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