The consequences of the pandemic are prompting food retailers and logistics service providers to think more about the automation of deep-freeze warehouses - and to plan specific projects. TGW Logistics Group has experienced this in recent months. "The growing consumer appetite for frozen vegetables or pizza and the fact that more people are cooking for themselves during lockdowns than before are trends that are increasing throughput. However, the most important reason for automation projects is the worsening shortage of labor in this logistics sector," emphasizes Michael Schedlbauer, Industry Manager for the food sector at TGW. According to TGW, sustainability goals, rising energy costs and digitalization are also at the top of the list of the most important arguments put forward by companies.

Both in the USA and in Europe, refrigerated warehouses are currently well filled. The Association of German Cold Storage and Refrigerated Logistics Companies (VDKL), for example, reports that the cold storage facilities of its members were 1.3% fuller in 2020 than in 2019 (80.1%), with an average total capacity utilization of 81.4% - and overall as full as they were 18 years ago.

Labor shortage as a driver of automation

The biggest challenge in the industry is the harsh working conditions at -25 degrees Celsius or colder. Warehouse workers prefer jobs in non-refrigerated distribution centers, although in many countries they not only receive regular warm-up breaks, but also legally regulated bonuses for their work. "There are now plants in Western Europe that almost exclusively employ people from Ukraine or other Eastern European countries," explains Schedlbauer. Finding, training and retaining new employees costs companies a lot of time and money. The business case for a manual refrigerated warehouse is therefore worse compared to a non-refrigerated facility. "This is why investments in automation projects are even more profitable in this logistics sector than in others," emphasizes retail expert Schedlbauer.

Save up to two thirds of energy costs

Investments in automated systems are put into perspective when companies consider the total cost of ownership. An automated warehouse, which is designed to be much more compact than a manual solution, can save up to two thirds of energy costs. Data from TGW shows that productivity can also be almost doubled and process quality significantly improved.

High energy savings and emission reductions can also be achieved when companies centralize several distribution centers. TGW customer COOP in Switzerland, for example, merged three distribution centers into a single facility in Schafisheim. The result: the Swiss company saves up to 10,000 tons of carbon dioxide per year with its optimized supply chain. "As many companies have set themselves ambitious sustainability targets, they cannot avoid automation. Logistics insourcing and centralization are also sure to remain two important future trends," says Schedlbauer.

More demanding customer expectations are also driving both retailers and their contract logistics service providers to automate and digitize. More and more consumers want to know where the products on offer come from and what the supply chain looks like. Food producers and retailers are therefore offering to digitally track the entire supply chain. "Seamless traceability is also made possible by the software solutions used in automated warehouses," explains Schedlbauer.

Long-term investments in automated warehouse structures

TGW assumes that even more companies and investors will invest in automated deep-freeze warehouses in the future. One example of this is TGW customer NewCold. "On the one hand, the cost of capital is currently low. On the other hand, even under pandemic conditions, the saying goes: there is always food and drink. That's why long-term investments in new, automated storage structures also promise a secure return," concludes retail expert Schedlbauer.

The article appeared in materialfluss 1-2/22.