Jul 02 2018
3PL is A Cool Way to Transport
Cold Chain Goods for Efficiency and Cost Effectiveness
Supply and demand -- the most fundamental element in any business or service -- has become an even greater challenge in the evolving and complex landscape of cold chain distribution. Meeting the needs of customers without sacrificing the quality of the product while maintaining an efficient method of cold storage and transport amidst rising transport costs, tariffs and numerous external circumstances make choosing the right 3PL partner all the more critical. Manufacturers and suppliers require end to end logistic services to maneuver through the complexities of the cold chain. Transportation and logistics in the cold supply chain require a commitment on the part of third-party logistics (3PL) and cold storage providers to continually optimize operations to meet cold chain shippers needs.
Less Worry More Money
3PL providers offer businesses an opportunity to focus on their core competencies, especially smaller companies. Cold chain distribution, given the delicate nature of the goods that are transported need to be handled with the utmost care and held to the highest standards to ensure quality once they reach the store shelves. It’s also important these products reach their destination in a timely manner due to their limited shelf life. Integrated customized solutions to ensure these standards are met are essential in keeping up with demand. One of the biggest issues in 3PL logistics, especially in regards to cold chain is skepticism that 3rd party providers lack understanding of individual companies’ operations. These operations can be internalized by the individual businesses supplying the goods, however they stand the risk of losing significant capital. In many instances there are not enough resources -- be it warehousing, equipment, or adequately trained personnel -- to handle it internally, making the operation inefficient. The infrastructure costs alone would be devastating. Bill Luttrell, senior locations strategist for Werner Enterprises states,“For most companies, owning or leasing manufacturing, warehousing, transportation and retail facilities represents the largest fixed-cost element of food businesses, despite this financial and competitive importance, too few companies in this space have a strategy to continually assess and optimize their supply chain networks to ensure they’re meeting their food distribution needs.”
3PL is Gaining Popularity
More processors and manufacturers are taking advantage of 3PL offerings in cold warehousing. Bill Hendricksen, a board member of the World Food Logistics Organization, and CEO of Lineage Logistics in Colton, CA, in an interview with trade publication Logistics Management offered the following, “Increasingly, we are seeing more retailers looking to outsource their warehousing and store delivery distribution requirements,” says Hendricksen. “This makes sense when you consider that the shipper can conserve capital for operations and expansion purpose.” As costs and government regulations continue to rise in North America, the best way to compensate with these circumstances is with a larger scale. With bigger platforms, it makes it easier to put capital back into tech to comply with new state and federal laws.This allows working with lender partners for growth opportunities.
The Amazon Effect
Cold chains are growing at twice the rate of other methods of shipping, and there may not be bigger newcomers to the space than retail giant Amazon. Their 2017 acquisition of Whole Foods began a trickle down effect amongst other grocery stores and their 3PL cold chain partners. Paul Weitzel, VP, Inmar Willard Bishop Analytics, an Ecommerce analytics company, in an exclusive interview with Logistics Management gave this insight. “ As Amazon becomes a major force in the food space, expect more direct buying opportunities and more direct
shipments to their existing facilities, as well as new forward-positioned food supply facilities. This will dilute volume now going to self-distributing retail warehouses and food wholesalers. If enough volume shifts, it will impact FTL efficiencies and delivery frequencies thus, increasing the cost-to-serve mid-tier grocery customers.” The cold chain is critical for grocery retailers, and how they store product is even more important. According to Weitzel
New facilities (e.g., supply hubs) will need to:
- Accommodate significant eCommerce growth (10 year vision)
- Leverage advanced picking and IT systems
- Play a commissary role or at minimum, support local commissary and fresh deliveries
- Accommodate frozen, chilled and dry goods
- Allow for easy access to major population areas and key travel arteries
- Support B2B locations as well
As the demand grows for more timely grocery delivery, e commerce grocery retailers will either need to build this infrastructure on their own to ensure they are keeping pace with the market, or rely on a 3PL with particular emphasis on cold storage and transport.
Oceanstar by Seldat not only provides all the services necessary to optimize cold chain supply, it helps to maximize efficiency while remaining vigilant in a rapidly changing industry. From cold storage, to freight forwarding Oceanstar provides the end to end solutions necessary to thrive. By outsourcing all of your logistics needs to us, we ensure your temperature sensitive commodities are in good hands. With the latest technology, best practices and industry experts with decades of experience ensuring the operation runs quickly and smoothly, our customers have piece of mind and can focus on what they do best -- run their business.