E-Commerce Drives Cold Chain Innovation

How is Online Shopping Impacting Cold Chains?

Nicola Twilley writes in her book, Frostbite, “Our mastery over cold will determine our success.” Humans have always leveraged the cold as a means of safeguarding food harvests. From ice cellars deep in the ground to cold pot storage systems in waterways, we have found innovative methods for storing up food supplies for the off season.

Even the Sumarians used ice houses. The Romans influenced the development of ice production and distribution. And the Greeks used water to cool homes. But could any of these ancient societies have conceived of the cold chain technology we use today??

Nicola Twilley’s words ring true. Cold chain innovations have reshaped our global networks of trade and consumers often take for granted the fact that they can enjoy exotic fruit from a far-off place just by clicking a button and having it delivered to their door.? Cold chain technology has made this possible.? But as e-commerce demands faster delivery times, transparency and the highest quality products, continuing to master the cold is essential.

Buying Digitally

The practice of buying digitally has increased tenfold since pandemic dynamics urged people to shop online rather than in store. Grocery delivery services, curbside pickups or at home delivery, have increased by 56% since 2022; a statistic that appears to be driving a growing demand for faster delivery times.? A recent report shows that consumers will abandon online shopping carts if delivery times are too long.? It's a sign that shoppers are thinking about what they want or need in the next several hours rather than planning weeks in advance; and it’s changing the game for retailers.

Food retailers have little choice these days but to respond to consumer demands with incentives and strategies that support a quick delivery pace. For dry goods that have longer shelf lives the situation isn’t quite so dire, but in cold chain logistics the implications are significant. There are more cold storage facilities popping up in more locations across the country, and more refrigeration trucks to transport groceries to shoppers as fast as possible. The cold chain logistics market has grown to ten times its size since 2019 with more than 3.3 million square feet worth of construction projects underway.? It's a market that is expected to continue to grow around the world and value upwards of $375 billion.

Third Party Logistics

But it's not food companies who are undertaking these massive construction projects. Instead, they use third party logistics companies (3PL) to help them handle the fast-paced grocery delivery industry. It is no longer a pallet in, pallet out method of inventory where retailers sell what they have available and wait for the next shipment of goods.? Inventory lulls can result in lost sales from shoppers who simply can’t wait that long. The profit goes to the retailer who has the most seamless cold chain.

Retailers may offer options online that they do not have in the store or rely on cold storage facilities to hold additional product in close range to reduce the risk of running out of items. Moving temperature-controlled goods quickly requires organization between storage, transportation and laborers and is a workload few food companies can absorb without taking a financial loss or jeopardizing the quality of goods.?

Profit loss occurs from those missed sale opportunities, but money is also forfeited when food companies or retailers have inadequate cold storage space, out of date energy inefficient refrigeration equipment and lack of expertise in navigating cold chain disruptions. Partnerships with 3PL companies have surged in recent years as food retailers work to deliver the variety of goods consumers expect as well as the quality of products, they’ve built their reputation on.

On the other side of the equation, any unused cold storage space would be considered energy wasted, an unnecessary expense for retails. It is rarely feasible for a retailer to invest in additional storage space. Third party facilities act as the middleman and are better equipped to handle the surge in seasonal demand for specific goods than individual retailers are. Retailers can pay as needed for services rather than attempt to bear the labor and financial loads of operating their own cold storage facility.

Precision Data

The future mastering cold might not be about building infrastructure but instead, implementing precision data collection and shaving off a variety of minor inefficiencies for the sake of both delivery speed and profitability. We’re likely to see the next surge take place in precision data with options like smart packaging and cold chain monitoring systems which will allow food companies and retailers to access real time information about the quality of goods and adjust the movement and pricing of items accordingly.

Door to door grocery delivery should become more feasible as cold chain technology works to support a growing ecommerce demand. Packaging itself could have additional temperature controlling components and also provide consumers with the option to trace their goods through supply chains. Robotics could continue to find a place in precision cold chain technology and reduce the element of human error as produce, meat and dairy products make their way along supply routes. And all of these precision tools will help us unlock new ways to master the cold.