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Construction Ahead for PRW Industry As Business Booms -- or Doesn't.

North American operators eager to build new facilities, even though they report inventories and turnover relatively flat. Asians even more eager, despite slow turnover and inventories. European construction needs to catch up to demand.

Build we must. That's what refrigerated warehouse operators are saying around the globe. Even in Europe, where construction plans are the most modest, operators representing half the survey sample plan to build new facilities for -29 [degrees] C storage.

In North America, operators representing 22% of the sample plan to build new -29 [degrees] C warehouses, and 51% new -18 [degrees] facilities. Rates are 23% and 42% in the same categories for planned additions, and this despite the fact that 72.8% of the weighted sample sees turnover remaining the same and 44.4% projects the same for inventories.

Projected construction for 2001 is running far ahead of that a year ago, when only six percent of the North American sample planned new -29 [degrees] and 15% new -18 [degrees] facilities. The rate of planned new construction is also up in Asia and the Pacific Rim, at 34% for -29 [degrees] C and 62% for -18 [degrees] C projects, compared to 25% each in last year's survey returns.

In Asia and the Pacific Rim, PRW operators are busy with construction plans (34% for -29 [degrees] units, 62% for -18 [degrees] C), even though only 38% of the weighted sample there reported turnover and inventories on the upswing. In Europe, where some warehouses are bulging at the seams (71% of the weighted sample reports upward trends in inventories and turnover), 50% of the weighted sample plans new construction of -29 [degrees] C facilities -- but there is little interest in construction or additions in higher-temperature units.

IARW Likes What It Sees

In North America, there were also increases in purchasing plan rates for any number of staple equipment items. Some 89% of the weighted sample plans to buy standard racks this year, for example, compared to 59% last year. Ammonia compressors are being eyed by 85% of the sample, versus 24% last year, and polyurethane panel insulation by 36% versus 20%.

"In almost all categories of the survey, we see continued expansion of the PRW industry," said William T. Gee, chairman of the International Association of Refrigerated Warehouses (IARW), which co-sponsors the Global Frozen Foods Refrigerated Services Trade Survey with Quick Frozen Foods International. "It is evident that the strong reliance on the PRW industry by the food companies continues to grow. It is encouraging to see that the industry continues to add value to the food distribution chain."

"As chairman of the IARW Trends Committee, I am very interested in these figures and what they imply for the future of the PRW industry," commented Gregory P. Hanson. "From all signs, we see not only continued reliance on third party warehousing and distribution providers, but a strong vote of confidence in them."

Although the returns from Europe were fragmentary compared to those from the two other regions, Theo W.M. van Sambeeck, the IARW's European Division director, thought that at least some of the responses confirmed significant trends. Automatic rack purchases are planned by 54% of the sample, for example, and European PRWs need them because they are moving more into distribution -- which means getting the goods in and out as quickly as possible.

As for construction plans being limited almost entirely to -29 [degrees] C warehouses, he said, this reflects a trend to deep-frozen as opposed to refrigerated storage -- bananas don't rule the racks any more. Van Sambeeck also considered it significant that one of the applications of computers showing the greatest increase is energy management. Only 17% of the warehouses in the weighted sample had implemented computerized energy management at the time of the survey, but the projected rate for the near future was 71%. A number of European countries are mandating energy management, he said, and PRWs have to get with the program.

Some anomalies in the 2001 survey surely reflect changes in the sample base, especially for Asia and the Pacific Rim, where some statistics -- especially for computer utilization -- show a steep drop from last year. That was because China, which has a lot more warehouses than Japan, weighed in this year. Chinese warehouses are smaller than average, and not as well equipped -- yet, as construction plans attest, the Chinese PRW industry is optimistic about the future even if current inventories are off.

The Asia-Pacific Rim response this year included PRW operators from Australia and India as well as China and Japan, while one operator from South Africa was thrown in with Europe because there was no other place to put it. Most European respondents were small companies with one to four warehouses, and that may have biased the results. Van Sambeeck doubted, for example, that cross docking is actually as prevalent in Europe as shown in the sample. On the other hand, the 71% weighted response for growing inventories and turnover finds support elsewhere.

Vacant space is hard to find in European coldstores these days, at least in the Netherlands, which is a port of entry for the entire continent. Eurofrigo, a Dutch unit of Japan's Nichirei, reported last winter (QFFI, January 2001) that its facilities were so full that it just couldn't take any more meat, fish or french fries. Part of the reason was that it had to turn over one of its coldstores to sister company HIWA, which didn't have enough room for all the orange juice concentrate coming in from Brazil.

Kloosterboer, another Dutch cold storage company, expanded one of its Rotterdam facilities by 60,000 meters last year for a total of 285,000 -- but it too is finding it hard to keep up with demand and is putting another 60,000-cubic meter addition onto its 925,000-cubic meter warehouse at Vlissingen to better compete for the frozen orange juice business. The company also runs a 70,000-cubic meter juice blending operation. Indications are that the Dutch situation parallels that elsewhere in Europe, where major PRW chains are reportedly expanding their operations.

There are a number of areas in which purchasing plans by PRWs in Europe are running ahead of last year's. For example, 71% plan to buy polyurethane insulation panels this year compared to 60% last year, and 54% are looking for screw compressors (none last year)and 58% for condensers (50% last year). Air curtain doors are sought by 46% this year (38% last year and plastic strip curtains by 75% (50%).

Planned purchases in North America for ammonia (85%) and screw (82%)compressors are way ahead of those for 2000 (24% and 19%), and there is also more interest in standard items like condensers (77% versus 34%), coils (76% vs. 49%) and fans and blowers (77% vs 36%). North Americans also want more lift trucks and doors of all kinds.

When it comes to computer usage, North American figures are probably more reliable than others because so many more companies responded than from those other regions. Even so, some of the changes may reflect changes in the sample as much as actual trends.

For example, 80% reported that they have bar coding technology now, compared to just 23% last year. The fact that 20% now report using desktop computers compared to 45% last year might indicate a big rush into networking, but the percentage for networked desktops this year is 74%, only a little ahead of 71% last year.

Still, the across the board gains for computer utilization in areas that were previously neglected like management information systems (97% versus 52%), traffic and routing (73% versus 23%) and energy management (85% versus 48%) must surely have a basis in reality. Moreover, 75% of the North American sample now reports having logistics software packages, compared to 33% a year ago.

Public refrigerated warehouses need to talk to their customers and suppliers, and increasingly they do it through computer connections like EDS and WINS. The percentage for North Ameriac is 96% this year compared to 83% a year ago, although fax usage has also increased from 93% to 97%. Direct links with both customers and suppliers are way up as well.

Remember telexes? They're still listed on the survey form, but few use them any more. And more and more refrigerated warehouses are on the Internet, which they use for everything from e-mail, advertising and marketing, and posting e-brochures to logistics management, market research, checking out prices on hardware they want to buy, and even services like customer access to inventories.

Service is more and more important to the PRW industry. More and more refrigerated warehouses around the world are offering on-site freezing: 89% in North America, 92% in Europe and 97% in Asia and the Pacific Rim. On-site repacking is also on the upswing, with 96%in Asia and the Pacific Rim, 74%in North America and 75% in Europe now engaged.

On the other hand, rental of processing space (78%)shows up only among North American facilities this year. Moreover, there has been little or no increase -- except in North America -- in the number of warehouses renting office space to customers or others. Rates went from 41% to 86% and from 34% to 72%, respectively, for those services in North America.

Cross docking is almost universal among PRW operators, and that didn't change this year. Direct sales, never a popular option, didn't gain any popularity this year. But a few operators mentioned additional services, such as weight verification, meat inspection, sampling, pick-and-pack, customs and export services, etc.

Everybody wants to have some proof of quality and performance, but once-touted programs like ECR and TQM seem to have fallen by the wayside. HACCP (Hazard Analysis, Critical Control Points) is by far the favorite, especially in the USA -- where it has government sanction. ISO programs get a lot of support in Europe and Asia and the Pacific Rim, but rated a lowly 11% participation in North America for the second year in a row.

Back to School in Leuven

European coldstore operators honed their skills last month at the annual Education Day and Strategy Day in Leuven, Belgium, sponsored by the IARW's sister group, the World Food Logistics Organization (WFLO). Marketing of logistics services, which is far more advanced in North America than in Europe -- Van Sambeeck estimated that three quarters of European operations are still strictly in the storage business -- was a prime topic.

Other subjects covered at the two-day affair included the burgeoning of the foodservice (catering) market, applied technologies like automated order picking on a layer-by-layer basis, an update on the Internet and e-logistics, and the possible threat to the PRW industry of multinational transportation companies setting up their own warehouses. There were workshops on everything from warehouse construction to blast freezing techniques and energy management.

There was at least one fringe idea floated at the get-together: Frank van Dijk of the RBK Group argued the case for using carbon dioxide as a refrigerant in place of ammonia as well as freon. It would be cheaper, he said, as well as safer and better for the environment.

One of the guest speakers was Thomas Schachner, McDonald's Europe director of distribution and logistics, who explained how the fast food chain maintains the cold chain even in Third World countries -- but may have had other things on his mind (See Mad Cow disease coverage elsewhere this issue). Besides the educational programs, there was a trade show that gave PRW operators a chance to meet suppliers of products and services to the industry.
WAREHOUSE CONSTRUCTION PLANS, 2001

By Percentage of Regional Facilities

 Asia/ North
 Pacific America Europe Grand
Activity Rim Total & Africa Total

New Construction

Warehouse -29 [degrees] C 34% 22% 50% 35%
Warehouse -18 [degrees] C 62% 51% 4% 39%
Warehouse 0 [degrees] C 50% 13% 4% 22%
Office -- 9% -- 3%
Other -- -- 4% 1%

Additions

Warehouse -29 [degrees] C -- 23% 17% 13%
Warehouse -18 [degrees] C 3% 42% -- 15%
Warehouse 0 [degrees] C -- 4% 4% 3%
Office -- 4% 4% 3%
Other -- -- -- --

Renovations

Warehouse -29 [degrees] C -- -- -- --
Warehouse -18 [degrees] C -- 8% -- 3%
Warehouse 0 [degrees] C -- 4% -- 1%
Office -- -- -- --
Other -- -- -- --

Net Freezer Space Gain 65% 59% 4% 43%

Source: Quick Frozen Foods International;

* Responses insufficient to draw meaningful conclusion
MATERIALS HANDLING PURCHASING PLANS, 2000

By Percentage of Regional Facilities

 Asia/ Europe Grand
 Pacific North &
Item Rim America Africa Total

Racks

Standard 3% 89% 21% 38%
Gravity -- 18% -- 6%
Automatic 34% 2% 54% 30%
Other -- 1% -- .3%

Conveyor Systems 34% -- 54% 29%
Conveyor Belts -- -- 4% 1%
Cranes 62% 1% 4% 22%
Pallets 96% 42% 58% 65%
Slip Sheets -- 35% -- 12%
Metal Dock Boards 34% 26% 54% 38%

Lift Trucks 37% 95% 63% 65%
Lift Truck Batteries 34% 53% 63% 50%
Battery Rechargers 34% 46% 63% 48%

Doors

Automatic 3% 72% 29% 35%
Mechanical 96% 54% 46% 65%
Manual 62% 68% 4% 45%
Air Curtains 96% 82% 46% 75%
Plastic Strip Curtains 99% 73% 75% 82%
Dock Locks 35% 77% 54% 55%

Source: Quick Frozen Foods International
Turnover Trends
 Down Up Same

Combined 1% 44% 48%
Europe/Africa 71% 8% 0%
USA 1% 23% 73%
Asia/Pacific Rim 0% 38% 62%

Note: Table made from a bar graph.
Inventory Trends

 Down Up Same

Combined 37% 19% 16%
Europe/Africa 8% 71% 4%
USA 42% 14% 44%
Asia/Pacific Rim 0% 38% 62%

Note: Table made from a bar graph.
INSULATION PURCHASING PLANS, 2001

Percentage of Regional Facilities

 Asia/ North Europe Grand
Item Pacific Rim America & Africa Total

Polyurethane Panels 99% 36% 71% 69%
Polyurethane Sheets -- 18% 33% 17%
Polyurethane Foam 34% 15% -- 16%

Styrene Panels 34% 3% 42% 26%
Styrene Sheets -- 18% -- 6%
Styrene Misc. -- 12%(*) -- 4%

Glass Fiber Sheet 34% 2% 42% 16%
Glass Fiber Misc. -- 12%(*) -- 4%

(*) pipe

Source: Quick Frozen Foods International
REFRIGERATION EQUIPMENT, 2001

By Percentage of Regional Facilities

 Asia/
 Pacific North Europe Grand
Item Rim America & Africa Total

Compressors
 Ammonia 34% 85% 63% 61%
 Fluorocarbon 65% 1% 8% 25%
 Screw 34% 82% 54% 57%
 Reciprocating 99% 6% 50% 52%
 Packaged -- 12% 17% 10%
 Central -- 13% 33% 15%
Condensers 34% 77% 58% 56%
Coils 34% 76% 50% 60%
Fans/Blowers 99% 77% 50% 75%

Source: Quick Frozen Foods International
COMPUTER FACILITIES, 2001

By Percentage of Regional Facilities

 Asia/ North Europe Grand
 Pacific Rim America & Africa Total

Status:
 Own Mainframe 34% 75% 71% 60%
 Shared Mainframe -- 14% 4% 6%
 Mini Computer 34% 20% 63% 39%
 Desktops 37% 20% 41% 33%
 Networked Desktops 34% 74% 58% 55%
 Bar Coding Technology 35% 80% 58% 58%

Plans:
 Upgrade System 4% 41% 29% 25%
 Replace System -- 5% 4% 3%
 Add Terminals 1% 13% 29% 14%
 Get Hardware 1% 9% -- 3%
 Get Software 1% 21% 13% 24%

Utilization:
 Mgt. Info. Systems (MIS) 37% 97% 71% 68%
 Traffic Routing 37% 73% 88% 66%
 Energy Management 37% 85% 67% 63%
 Payroll 99% 97% 79% 72%
 Analysis Modeling 37% 92% 92% 74%
Logistics Package 37% 75% 50% 54%

Source: Quick Frozen Foods International
SERVICES/QUALITY CONTROL, 2001

By Percentage of Regional Facilities

 Asia/ North Europe Grand
Asia/Pacific Rim Pacific Rim America & Africa Total

Freezing 97% 89% 92% 94%
Repacking 96% 74% 75% 82%
Rent Processing Space -- 78% -- 26%
Rent Offices (customers) 97% 86% 17% 67%
Rent Offices (other) 96% 72% 8% 59%
Direct Sales -- 2% -- 1%
ECR/TQM Programs -- 13% -- 4%
Cross-Docking 97% 77% 75% 83%
ISO 100% 11% 83% 65%
HACCP 100% 83% 75% 86%
Other -- 9% -- 3%

Source: Quick Frozen Foods International
COMMUNICATIONS, 2001

Percentage of Regional Facilities

 Asia/ North Europe & Grand
Systems Pacific Rim America Africa Total

Computer/Modem 37% 96% 75% 69%
Fax 98% 97% 63% 67%
Direct Suppliers 37% 63% 71% 86%
Direct Customers 37% 92% 87% 72%

Source: Quick Frozen Foods International
Worldwide Top 20 Refrigerated
IARW Refrigerated Warehouse Operations

Member/Facility Country Subtotal

 (cubic feet)

AmeriCold Logistics USA
CS Integrated/Frigoscandia
CS Integrated USA 175,958,000
Frigoscandia Europe 191,337,360
Total CS Integrated/Frigoscandia
Millard Refrigerated Services USA
Nichirei Corporation
Nichirei Japan 123,110,000
Eurofrigo/Hiwa Europe 31,856,000
Total Nichirei Corporation
John Swire & Sons Ltd.
United States Cold Storage USA 105,000,000
Frigomobile Australia 9,326,000
Woodmason Australia 14,773,000
South Australian Cold Storage Australia 8,223,350
Swire Pacific cold Storage Vietnam 1,059,441
Total John Swire & Sons
Atlas Cold Storage
Atlas Cold Storage USA 66,544,491
Atlas Cold Storage Canada 50,562,239
Total Atlas Cold Storage
P&O Cold Logistics
P&O Cold Logistics Australia 32,900,000
P&O Cold Logistics New Zealand 6,200,000
P&O Cold Logistics Argentina 6,600,000
P&O Cold Logistics USA 50,000,000
Total P&O Cold Logistics
Christian Salvesen United Kingdom
MUK Logistics Germany
Versacold USA 3,544,568
Versacold Canada 54,455,432
Total Versacold
Nordic Refrigerated Services USA
ColumbiaColstor, Inc. USA
Interstate Warehousing USA
Burris Refrigerated Logistics USA
Total Logistic Control USA
Henningsen Cold Storage USA
Zero Mountain USA
Gruppo Marconi Italy
Hanson Cold Storage USA
Cloverleaf Cold Storage USA

TOTAL TOP 20

Member/Facility World Totals

 cubic feet meters

AmeriCold Logistics 479,182,000 13,568,997
CS Integrated/Frigoscandia
CS Integrated
Frigoscandia
Total CS Integrated/Frigoscandia 367,295,360 10,400,703
Millard Refrigerated Services 191,840,000 5,432,333
Nichirei Corporation
Nichirei
Eurofrigo/Hiwa
Total Nichirei Corporation 154,966,000 4,387,900
John Swire & Sons Ltd.
United States Cold Storage
Frigomobile
Woodmason
South Australian Cold Storage
Swire Pacific cold Storage
Total John Swire & Sons 138,381,791 3,918,557
Atlas Cold Storage
Atlas Cold Storage
Atlas Cold Storage
Total Atlas Cold Storage 117,106,730 3,316,111
P&O Cold Logistics
P&O Cold Logistics
P&O Cold Logistics
P&O Cold Logistics
P&O Cold Logistics
Total P&O Cold Logistics 96,200,000 2,726,046
Christian Salvesen 84,592,964 2,395,419
MUK Logistics 68,774,940 1,947,500
Versacold
Versacold
Total Versacold 58,000,000 1,642,386
Nordic Refrigerated Services 47,730,000 1,351,570
ColumbiaColstor, Inc. 44,480,375 1,259,684
Interstate Warehousing 39,300,232 1,112,865
Burris Refrigerated Logistics 34,235,472 969,446
Total Logistic Control 33,736,703 955,443
Henningsen Cold Storage 32,839,637 929,920
Zero Mountain 30,444,000 862,083
Gruppo Marconi 28,251,580 800,000
Hanson Cold Storage 26,608,150 753,463
Cloverleaf Cold Storage 23,431,660 663,514

TOTAL TOP 20 2,097,397,594 59,393,940


About This Survey

This article is based on 39 responses to Quick Frozen Foods International's Annual Global Refrigerated Services Survey of members of the International Association of Refrigerated Warehouses and other coldstore operators around the world. The editors wish to thank IARW President J. William Hudson and his staff for their cooperation in conducting this poll.
COPYRIGHT 2001 E.W. Williams Publications, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2001 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Global Frozen Foods Refrigerated Services Trade Survey
Comment:Construction Ahead for PRW Industry As Business Booms -- or Doesn't.(Global Frozen Foods Refrigerated Services Trade Survey )
Author:PIERCE, J.J.
Publication:Quick Frozen Foods International
Geographic Code:100NA
Date:Apr 1, 2001
Words:3137
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