NEWS

August 21, 2019

Trend report: Online grocery shopping habits spur growth in cold storage industry

When it comes to food production, whether through fisheries or farming, Washington state is a leader nationwide. The Puget Sound region, in particular, contains a gateway market for imports and exports, with products coming from and going to locations all over the world.

This is why food storage and distribution companies in the Puget Sound — Bellingham Cold Storage among them — have been so diligent at rising to meet the needs of the state “cold chain,” from food producers to grocery retailers.

BCS has a long history of serving manufacturers and food producers, both in Washington state and just across the border in Canada. Their success comes from continual efforts to align with industry trends and the needs of food producers.

A June 2019 report from the commercial real estate and investment firm CBRE highlights some of the trends companies like BCS are paying attention to in the cold storage industry.

Lots of space, with more needed

In terms of total cold storage capacity, Washington trails only California among all 50 states. And on a per-capita level, Washington dwarfs California, with nearly four times as much cold storage space per person.

According to the CBRE report, the demand in Washington state for cold storage space is only going to increase — and soon, due to a shift in consumer shopping habits.

Today, just 3 percent of grocery spending occurs online, according to the report, but that number is expected to rise to 13 percent — a leap of more than 300 percent — by 2022, just three years from now. That would account for an estimated $100 billion in U.S. online grocery sales, the report states, citing FMI and Nielsen.

Obviously, that growth in online grocery sales would rely heavily on a robust storage and distribution network. Space will be needed to store, process and ship perishable items.

CBRE’s estimate is that as much as 100 million additional square feet of cold storage space could be added to meet the increasing demand nationwide. Washington state, given the high need here for cold storage, could account for a large portion of that growth.

With leased warehousing and build-to-suit development space along Interstate 5 in Bellingham and easy access to marine, rail and road transportation options, Bellingham Cold Storage is ready to meet the logistical needs of online food and beverage distributors.

Outsourcing cold storage to companies who do it right

Another interesting piece of data from the report is that food retailers and wholesalers have a natural tendency to outsource their cold storage needs. Nearly 80 percent of the country’s refrigerated storage capacity “is outsourced by food producers, distributors, retailers, e-tailers and other participants” to cold and dry storage companies such as BCS. Due to increasing costs and rising levels of sophistication, it’s smarter for producers and distributors to let those experienced in warehousing and logistics handle their storage and distribution tasks.

The report goes on to say that local cold storage companies (like BCS) are designed to “provide longer-term storage to meet seasonal demands and provide inventory management and value-add services primarily for frozen food storage.”

In fact, BCS’s proprietary WebOPTICS inventory management platform offers a great boon to companies by offering complete product storage and recall management. With the simple click of a button, managers can have their product prepared and loaded for shipment.

Cold storage companies provide room to grow for manufacturers and retailers

The report concludes: “Overall, the market forces fueling the cold storage industry are expected to generate growing demand for refrigerated warehousing. Gateway markets will continue to capture much of the demand for cold storage space, while smaller metro areas with growing populations likely will see a greater need for these types of facilities. Grocery stores are becoming smarter and developing ways to get food to consumers quicker and easier; consequently, online grocery shopping is expected to become a much greater portion of retail sales, driving refrigerated warehouse demand.”

The cold storage market is strong and growing, driven largely by external needs for frozen, chilled and dry storage services. That’s great news not only for Bellingham Cold Storage but also for the Bellingham and Whatcom County economies, of which BCS is an integral part.

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