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FF inventory, turnover upturns support new coldstore construction resurgence.

FF Inventory, Turnover Upturns Support New Coldstore Construction Resurgence Refrigerated warehouses are again expanding storage space as frozen food activity grows worldwide, though some gains are localized.

Just 21.4% of all the warehouse operators who responded to this year's survey specified that they were 100% zero-degree freezer storages, which is a little down from last year's 25.5%. The previous year had drawn under 14% response, however, so it is unlikely that any trend inference may be taken from this.

In contrast, 27.4% of the global response noted that they were from 90 to 99.9% freezer storage this year, compared to 20.6% in this range last year -- and over 34% in the 1987 survey.

To some extent these differences may result from a different mix among those surveyed, particularly among the European contingent. Pointing this up is the fact that the North American responses were less divergent from to last year's, especially in the 100% freezer space area, with 20.3% compared to 20.9% in 1988. There was an apparent shift toward more freezer space as warehouses in the 90-99.9% range increased from 24.4% to 29.7%; while those in the 80-89.9% range slipped from 19.8% to 16.22%.

Indeed, the pattern throughout the North American regions, as reflected in the totals, was that they topped out in the upper 90-100% ranges. The international All Other Countries segment, on the other hand, was weighed toward the 80-89.9% range at 40%, dropping to 10% in the 90% set, then 30% at full 100% freezer storage.

Within the U.S., Pacific-state responses among 100-percenters essentially held their mark, at 18.8% from 19%, while those in the next 90 percentile category, gained 33.3 to 37.5%, at the expense of the 80-percentile group, which dropped from 19% to 12.5%.

Among the West Central states there was an even more pronounced presence of 90-99.9% freezer operations at 44.4% of the regional respondents compared to only 16.7% for 100% and only 11.1% in the 80-89.9% segment. These figures reflect gains in the top two groups, from 9.5% for all-freezer and from 23.8% for 90-99.9%, while the 80-percentile group declined from a 14.3% response last year.

In the eastern half of the country, however, the division was less weighted. On the East Coast both of the top segments got 23.8% each, and the next two, covering 70 to 89.9% freezer storage, took over 19% each. Last year the weight was divided, 21.1% each for 100% and 80-89.9%, while 15.8% were in between.

That was the pattern both this year and last for the East North Central region, where all three top segments declined-- though retaining majority status. Last year 28.6% of this area's surveyed operators were at 100% freezer space, and another 28.6% in the 80-89.9% range, with 19% in the intermediate 90s, 14.3% in the 70s, and under 5% each in the two segments that ranged from 50% to 69.9%. This time, there were 18.8% each in the 100% and the 80-89.9% ranges, and 12.5% each in the 90s and all three ranges from 50 to 79.9%.

Construction Projects

While many of these differences from last year's survey may have to do with different mixes among respondents, as noted earlier, there is also considerable expansion and development of properties in the industry as well.

Physical expansion plans are up among those surveyed this year, compared to last year. In large part this assessment is based on increased construction, addition or renovation plans in the Pacific coastal states of the United States, where 81.3% of the respondents indicated plans for such work, compared to 61.9% in 1988.

Worldwide, 60.7% of all the warehouse operators contacted intend some construction work, which is ahead of last year's 56.9%. With continued strength, 80% of all respondents outside of the U.S. and Canada so reported, matching last year's response of the similar group. Hence the growth is in the North American area, from 54.7 to 58.1%. Regionally within the U.S., 57.1% of those from the East Coast will build or renovate, also up over 52.6% last year, while the East North Central group remained essentially the same at 56.3% compared to 57.1%, and responses from the West Central area dropped from 47.6 to 38.9% this year.

Construction categories were broken out into new construction, additions to and renovation of current warehouse buildings, offices and other facilities. Consistent with past years, direct work on the warehouses themselves took the greatest number of responses, and in fact rose worldwide from 46.1% to 54.8%. Offices garnered 21.4% overall, a small slip from last year's 22.5%, while work on other facilities --such as docks and loading areas or engine rooms-- picked up very slightly to 10.7% from 8.8%.

Viewed regionally, the Pacific area of the U.S. led the pack once more in gains, moving up from 38.1% to take over the lead in the proportional number of respondents raising or working on warehouses, at 62.5%, and from 14.3 to 31.3% among those building or refurbishing office space.

Although East Coast operators gained only a little, they started from a larger base at 52.6% doing warehouse construction last year, reaching 57.1% this time, and only the Pacific bunch's leap eclipsed them to 2nd place. However, they moved to first in office construction or renovation, at 33.3%, up from 21.1% in 1988. The West Central group, starting alongside their Pacific neighbors in warehouse work at 38.1%, barely edged up to 38.9%, and dropped from 14.3% to nothing in office work. And the East North Central folks dropped a little in both areas-- from 47.6 to 43.8% in warehousing, and 23.8% to 18.8% in offices.

Elsewhere there were generally drops, although the "All Other" set as a group remained even with the overall construction tally at 80% in both years.

One change in the survey itself from last year included a breakout of zero-degree F (-18|C) and cooler (32|F or 0|C) storage in warehouse construction, to try to get a more accurate handle on changes in frozen food storage capability. No direct comparisons can be made with these breakouts, of course, but it can be conceded that overall new warehouse construction gained strongly worldwide: While last year 17.6% of the global response showed intentions of building new storages, and but one of the regional responses (All Other again, at 80%) ran above the teens, this year 25% of the grand total will be building 0| stores alone, and only two regional responses (West Central at 5.6% and East North Central at 18.8%) dropped below 20% for freezer storage.

In this respect, regionally, the East Coast led with a third of its respondents planning to build freezer space, and 19.1%, with some overlap, raising cooler space. Amid the Pacific group, 31.3% will construct 0| warehousing and 12.5% at 32|.

There were good responses as well in Australia, Europe, Japan and Latin America, resulting in a 50% positive response for freezer storage for the All Other countries listing. However, only respondents in Japan and Latin America intend new cooler storage construction, bringing this to an overall 20% response in the All Other group.

Inventories & Turnover

Business for the refrigerated warehousing industry appears to have picked up this year compared to last year. Asked whether trends indicated increases, declines or status quo levels in frozen food inventories and in FF turnover, more respondents this year than last were seeing gains in both inventories and turnover. Globally, 38.1% reported increased inventories, compared to 32.4% last year, while 42.9% noted increased turnover where 34.3% so indicated in 1988. Just 14.3% saw declining inventories, and 35.7% said that levels were holding steady; last year these were reported by 17.6% and 43.1% respectively.

In turnover, only 3.6% saw declines this year compared to 8.8% a year ago, while those reporting status quo levels dropped from 43.1% to 39.3%.

Looking at totals for North America and for the rest of the world, no surprises show up; there were gains in inventory and strong activity in countries all across the world. Within the U.S., however, it appears that most of the gains in both areas are strongest on the coasts.

For instance, 50% of the surveyed Pacific regional operations are seeing increased inventories and 43.75% of them find turnover picking up; on the East Coast, inventories are gaining at 38.1% and turnover too at 42.9%. All of these are larger figures than were reported last year, although this year, on the East Coast, the status quo response for inventories, at 42.86, is larger than the response for increases, and, for turnover, both status quo and increase numbers match, also at 42.9%.

In export and import holdings, 29.7% of the respondents worldwide hold product that is slated for import, 57.1% for export, and 82.1% carry product for domestic use. Obviously there is considerable overlap. Respondents were asked what percentages of their business was involved in each area. Although not everyone specified, among those who did there was a considerable variety, ranging from a few who hold as much as 70% for import or 90% for export (both, incidentally, in Europe) to those who are 100% across-the-board domestic.

Equipment & Supplies

Any on-going business will need to replace worn-out or obsolete equipment sooner or later, and this has to be included in budgetary plans for each year. If there is to be some expansion, or even just renovation in a warehouse operation, it will be appropriate to acquire new equipment for the refurbished facilities; new facilities will require a full range of some types of equipment.

In past years, when Quick Frozen Foods' old domestic edition ran predecessors to this survey, reports on the quantity and nature of such acquisitions were of special interest to marketers of such products, and today this is still undoubtedly of considerable value. But in addition, the overview of such plans this magazine provides can also help to create an image of the dynamics of the industry from the angle of others across the world who may share such needs or can compare them to their own.

For instance, a perennial leader on the lists of equipment that survey respondents plan to buy is the lift truck. These hardy machines, and the enormous batteries that it takes to run them (since their internal-combustion-powered brothers are no-nos in food storage locations), are run in constant, hardworking use day in and day out, and even the best maintenance cannot keep them going forever.

This year 71.4% of all those surveyed checked off lift trucks as among their purchasing plans for the next year or so, and 72.6% checked batteries for lift trucks. Last year, these ran only 58.8% and 60.8% respectively; it should be noted, however, that this was a drop from 1987 responses of 72.1% and 68%, so this might be considered more of a normal cyclic upswing rather than a significant change.

Another top item, closely associated, is pallets. These too are subject to wear and tear, but more significantly they are very often used to support stock while it is in storage, and thus they are tied up increasingly as inventory increases-- and they are taken away as stock is shipped out, sometimes never to return. So a warehouse operation that uses pallets must always maintain and occasionally replenish a supply.

Pallets were checked by 57.1% of those surveyed this year, which is slightly up from the 52% that noted them last year, though under the previous year's 61.5%.

These proportions are closely matched by the North American totals, though somewhat short of those registered beyond these shores, where almost all respondents checked them-- only the Australians evidenced no plans to acquire pallets this year.

There is some variation regionally, though with little strong departure from the overall patterns. Lift trucks were checked by 75% of the respondents in both the Pacific and East North Central regions, while batteries were marked by 76.2% of those on the East Coast. Elsewhere both garnered between 60 to 70 percent.

Pallets were checked by 71.4% of those on the East Coast, while other regions only managed responses in the 40s and 50s.

Doors, too, are popular items, and two-thirds of all the respondents plan to acquire them. Presumably doors are less subject to attrition than lift trucks and pallets, but there are different types of doorways used in controlled temperature warehousing operations, most designed to help maintain that control while still allowing ready access and egress. Thus they may in fact be subject to wear and tear and eventual replacement on occasion.

Automatic doors were checked by 35.7% of the respondents worldwide, mechanical doors by 20.2% and manual doors by 9.5%. All of these must be opened and closed as quickly and efficiently as possible; the popularity of the automatic varieties could be misconstrued as lethargy but in reality has more to do with economy of motion.

Two alternative approaches to keeping the cold air in and the hot air out while providing minimum interference to passage are very different: the air curtain and the plastic strip curtain. Air curtains are constantly running air-blowers set over an open door, using complex mathematically derived airflow patterns to maintain separate atmospheres.

Plastic strip curtains are simply that-- plastic strips hung across the doorway that one must brush through to get past. In some ways they are as technologically advanced, owing to the requirement that the strips remain flexible in low temperatures. But they do not require constant power to work, hence are somewhat more economical.

Thus it is that 34.5% of the respondents checked plastic curtains and only 4.8% checked air curtains this year.

Last year, 63.7% checked some type of door: 41.2% for automatic, only 16.7% mechanical, 13.7% for manual, and 8.8% checked air curtains. Although they have been around for some time, plastic strip curtains were new on the list this year.


And, speaking of keeping the cold in and the hot out, insulation is another major element in the acquisition plans of many warehouses, though here it is more a matter of application to new construction or to renovation of facilities.

QFFI asks about three basic types of insulation, polyurethane, styrene foam (most familiar as Dow's brand Styrofoam) and fiberglass, in three forms: panels, sheets and foamed-in-place. Of course, fiberglass does not get foamed in place, but it can be inserted in open wall space, and it is hoped that respondents think of that. This year no one checked that alternative.

Worldwide, 54.8% of all respondents will acquire some type of insulation, which is a fair gain over last year's 43.1%. The preferred type is polyurethane, at 38.1%, over styrene foam at 19% and fiberglass at 9.5%.

Most respondents want insulation in panel form, and prefer polyurethane-- 27.4% checked poly panels, compared to 15.5% who ticked off styrene panels, while 1.2% thought they would go for fiberglass panels.

Sheets, as opposed to panels, garnered more of a request for the fiberglass variety, at 8.3%, than polyurethane or styrene, both of which got a 6% request. Polyurethane foam for insertion in place got 9.5%, and styrene foam got 2.4%.

For the most part these preferences carried through regionally. The North American response came to 37.8% for polyurethane of all types, 16.2% for styrene and 9.5% for fiberglass, while the combined All Other Countries set rang in at 70%, 40% and 10% respectively. In the U.S., there was a particular surge on behalf of fiberglass sheets from the Pacific region, where 37.5% of the respondents were looking for them; none of the other regions sought any fiberglass insulation at all.

In the East North Central section, only panels were on the respondents' checklist; 31.3% of those surveyed from this region want poly, and 12.5% want them in styrene.

Making it Cold

With the wide variety of refrigeration equipment and supplies available, no overall category tallies would make much sense. Included in the survey were compressors, both ammonia (ticked by 47.6% of the global respondents) and fluorocarbon (9.5%), and ground-based (27.4%) and wall-slung (2.4%). There are also such items as rotary boosters (7.1%), condensers (32.1%), coils (26.2%) and fans (25%) and even heat recovery systems (7.1%). Walk-in freezers garnered a 4.8% response.

Large-scale low-temperature storage applications seem to be best served by ammonia-based refrigeration, while smaller-scale rapid-freezing applications can make good use of the beleaguered (chloro-)-flourocarbon refrigerants such as Freon. This is reflected by the worldwide preference reported for ammonia compressors in this and earlier surveys of the refrigerated warehousing industry. Nevertheless there are always some operations where CFC refrigeration is desirable. There are, of course, other refrigerants, but seldom as applicable to warehouse configurations.

Of the nations covered within the Other Countries group, those in Europe and Latin America stuck with ammonia compressors, while the remainder were only intersted in the fluorocarbon type. Overall, the group registered a 60% interest in ammonia units, and 20% for CFCs.

The North American response was very close to the world's, at 46% for ammonia and 8.1% for fluorocarbon. Reaction within the U.S. ranged from respective lows of 42.9% (East Coast) and 5.56% (West Central) to highs of 50% (East North Central) and 12.5% (Pacific).

Group-based units were preferred by an overwhelming majority across the board, closely reflecting the world response already noted-- the wall slung variety, which are somewhat specialized for particular applications, seem to be unheard of outside the United States.

Most systems have use for condensers, coils and fans, however, and the local preferences in the U.S. pretty much parallel the global. Elsewhere it is not too distant. Someone in each of the segments of the Other Countries group, for instance, wants condensers and fans this year, bringing the group response to 40% for condensers and 50% for fans, while not all of them are seeking coils, reducing the overall figure to 20% for that item.

Heat recovery systems are a little more specialized, and while any operation can make use of them to improve economy and efficiency in the overall operation, this may be more effective for some than for others, especially in colder climates. Respondents seeking such systems this year are in the Pacific and the East Coast regions of the U.S. with 18.8% of the former respondents and 9.5% of the latter so indicating, and a third of the Canadian respondents.

Computer Connection

The time is past when it was anything unusual or noteworthy to own or use a computer in one's business; it has reached a point where the question is how much can you do with the system you have? There are still companies who are jumping on the bandwagon, but they are getting fewer and farther between.

Worldwide, 54.8% of those surveyed this year own their own mainframe system, 21.4% have minicomputers, and 22.6% use individual microcomputers. While the total of those figures is close to 100, the fact is that many respondents checked more than one item and there is considerable overlap.

There are 7.1% who share the use of a mainframe computer-- a practice begun when these were to all practical purposes the only type of computer there was. Mainframe computers were and still are truly major investments, and are still quite practical in some circumstances, though more companies who want more power than individual microcomputers can offer now tend to go for the minicomputer instead. Many minicomputers these days have more power than mainframes of old. Indeed, there are some micros that can make that claim as well.

In another variation on sharing, there are 9.5% who are now using one of the newest concepts in computer use, the microcomputer network, often referred to as a LAN, for Local Area Network. These might be considered the next step beyond a mainframe or minicomputer with slave terminals distributed throughout a business complex. The LAN system is frequently installed in companies where many people are already using microcomputers. A central unit is designated as the file server and the remaining micros are tied in in such a way that, while they may continue to operate as independent units, they can draw on central memory and file storage. The file server unit--which could be a suitably equipped mini--usually incorporates hard drive storage accessable by the others as though it were theirs.

As far as respondents' plans for the next year to 18 months are concerned, there are 7.1% who are thinking of installing a new mainframe computer, (though none who are making plans to share one at this time), and 3.6% who will go for a minicomputer system.

Microcomputers are in the works for 10.7% of them, and 7.1% are contemplating the network option. But 16.7% will be adding terminals to current systems, and 20.2% will be otherwise upgrading their current systems, method unspecified.

The "information revolution" has come about because computers are perhaps the most versatile tool man has come up with since fire. Within the warehousing industry, most applications equate to or parallel those for other businesses; e.g., accounts payable and receivable, general ledger and billing. Each of these were acknowledged as currently among their uses by substantial proportions of those surveyed--accounts receivable by 64.3%, accounts payable by 54.8%, general ledger by 53.4% and billing by 67.9%. Moreover, of those who do not currently use their system for some of these, 16.7% plan to add accounts receivable, 15.5% accounts payable, 10.7% general ledger and 7.1% billing, sometime in the near future.

Other applications with specific warehousing aspects (albeit not necessarily exclusive to the field) include inventory management, checked by 64.3% of all the respondents as currently in use, and 13.1% as planned; inventory location, now used by 66.7% and expected by 9.5%, and traffic management, which fairly few use currently--6% all told--and less than 5% anticipate using.

Customer reports are generated on the computer by 64.3% of the respondents, or will be by another 8.3%, and the systems are used to develop analytical models (the classic spreadsheet "what if" study, for example) by 29.8%, with another 13.10% planning to add that to their present activities later on.

Communications are another developing element for computers, and by extension, with the increasing ability to generate information quickly, it is becoming more and more common for businesses to interact directly in more than one way. For instance, many of us have marveled at the seemingly overnight burgeoning of the facsimile machine, or "fax", worldwide.

Of those surveyed, 57.1% currently use a fax, and 8.3% intend to start soon. In contrast, only 26.2% checked that they use a telex and 1.2% plan to add that capability.

For a number of years now, in North America at least, a computer communications system called EDS for direct interaction between product suppliers and customers has been actively developed and applied, and a subdevelopment of it called WINS, especially designed for the warehousing industry, has also been under development. QFFI asked respondents if they used this or similar computer-related intercommunication approaches. There is evidently no comparable system outside of North America, or at least none of those who participated in our survey have become involved with such a system. Within the United States and Canada, however, 25.7% of the respondents said that they currently were so associated, and another 9.5% indicated their intentions to become so.

Some companies use direct wire communication with their customers, and some with their suppliers. Of those surveyed, 27.4% have such a link to their customers; 10.7% to suppliers, and for the future, such link-ups will be made by 13.1% and 6% respectively.
COPYRIGHT 1989 E.W. Williams Publications, Inc.
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Title Annotation:Warehousing World; frozen foods; includes related article by the head of the International Association of Refrigerated Warehouses
Author:Chamberlain, C. Ross
Publication:Quick Frozen Foods International
Date:Apr 1, 1989
Previous Article:More on egg on the junior minister's face; contrasting branding approaches at IFE '89.
Next Article:Filled to capacity, Ellerman to expand as South African cold store modernizes.

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