If your warehouse or manufacturing facility handles products that need to be held in sub-freezing temperatures, you probably are already familiar with the challenges that presents. Employees are required to work in severe conditions. Costs for power to constantly maintain temperature are already high and are always escalating. And the regulatory oversight involved with holding products below freezing can be a significant concern.
One solution an increasing number of companies are turning to today is outsourcing their cold storage to a third-party logistics provider (3PL). These are outside storage facilities that are owned and operated by somebody else, but that will hold and manage your frozen inventories for you, often at a fraction of the cost of warehousing them yourself.
Cost-Effective Cold Storage Options
Because there are more 3PLs available to companies today than ever before, prices are down and the quality and level of services they provide are up due to the increased competition, said Carlos Oliver, president of Frazier Industrial Company, a manufacturer of steel pallet rack systems.
“For a long time, while people were working to outsource cold storage, the competition was not as high as dry goods storage,” Oliver told Modern Materials Handling. “But in the last five years, there’s been much more competition, there’s less capacity available, and the same people are competing for smarter customers.”
As a result, manufacturers and warehouse managers are finding some of the best bargains and getting more services than in the past.
Competition is Creating Efficiencies
Many operators of 3PLs are currently updating their warehouse management systems (WMS) in response to changing US Department of Agriculture rules that regulate cold storage of food products. They also are trying to integrate their WMS with their customers in order to provide additional services that will make them more competitive, according to Jeff Hedges, president of OPEX Corporation, a manufacturer of materials handling automated equipment.
“If you can offer a WMS the client can somehow interface directly to, you can develop a bond with the customer and it might be harder for the to shop around for alternatives,” Hedges said.
Occupancy of 3PLs Rising
As the top operators of 3PLs scramble to provide additional services and better customer interaction, the beneficiaries are the companies outsourcing their cold storage. Perhaps that’s why occupancy of cold storage warehouses that are members of the North American International Association of Refrigerated Warehouses (IARW) was up, 79.19% in 2012 compared to 77.9% in 2011.
Given the growing number of benefits to outsourcing your cold storage to a 3PL, there has never been a better time to consider making the move that could both save you money and increase your operational efficiency.