Today’s Class:

Cold storage and e-grocers: Changing environments

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Thomas Goldsby

Professor

James A. Haslam, II Chair of Logistics

The University of Tennessee Knoxville

Speakers

Joe Couto

Chief Executive Officer, Latin America, Asia-Pacific, and Africa

Körber Supply Chain

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Why are we here? What are we trying to accomplish?

Cold Storage Trends - Class Schedule:

• June 9: Cold storage and e-grocers: Changing environments

• June 11: Traceability and food safety in cold storage

• June 16: Labor recruitment challenges in cold storage

• June 18: Improve energy efficiency in cold storage warehouses

• June 23: How does automation drive cold storage efficiencies

Supply Chain Master Class: Cold Storage Trends

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All phone lines are muted

Recording of today’s class and slides will be email to you within 48 hours

Questions:

• Ask questions during today’s class in the GoToWebinar Questions window

• Questions will be addressed at the end of today’s class or we will follow up with questions via email after class

Poll Question: Do you anticipate using a 3PL provider in the future for outsourcing your cold storage needs?

Handout: 3rd party logistics and ecommerce

Housekeeping

Source: 2020 COVID Cold Chain Business Impact Survey Summary, GCCA, May 2020

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How do you believe the pandemic will change trends in the cold chain industry? (relative to pre-COVID operations)

46%

74%

48%

41%

53%

24%

50%

54%

1% 2% 2%5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Outsourcing bycustomers

Growth of e-commerce Diversification of temp-controlled products

New modern warehouses

Increase Stay the same Decrease

Multi-national survey

of 170 Global Cold

Chain Alliance

(GCCA) members

Source: 2020 COVID Cold Chain Business Impact Survey Summary, GCCA, May 2020

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How do you believe the pandemic will change trends in the cold chain industry? (relative to pre-COVID operations)

58%

27%

66%

36%

46%

33%

6%

27%

1%

0%

10%

20%

30%

40%

50%

60%

70%

Growth Rate of Cold ChainIndustry

Global Trade Expansion Data & Predictive Analytics

Increase Stay the same Decrease

Multi-national survey

of 170 Global Cold

Chain Alliance

(GCCA) members

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Do you know your Cold Chain food?

What’s the number ONE frozen food in the United States.

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Do you know your Cold Chain food?

Frozen potatoes: French fries, Hash Browns, etc…

Source: Top Potato Producer Executive

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Some of the challenges facing the cold chain industry

1. Pandemic or Economic Crisis

2. Increased demand for food as a result of global population growth

3. Increased demand of e-commerce

4. Changing consumer preferences

5. Diversification of temperature-controlled products within the food industry

6. Global trade expansion

7. Can automation & technology address some of the challenges & trends.

Source: Global Cold Chain Alliance

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Some of the challenges facing the cold chain industryFocus Points Today

1. Pandemic or Economic Crisis, how does it impact consumer purchases.

2. Increased demand for food as a result of global population growth

3. Increased demand of e-commerce

4. Changing consumer preferences

5. Diversification of temperature-controlled products within the food industry

6. Global trade expansion

7. Can automation & technology address some of the challenges & trends.

Source: Global Cold Chain Alliance

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Pandemic or Economic Crisis, how does it impact consumer purchases.

Consumers will change their retailers in order to reduce their grocery bill.

Typically consumers will move to the next lower level price point retailer.

This occurred during the 2008 Economic Crisis and is likely happening now

due to the Covid-19 Pandemic.

1.Wholefoods

2.Target

3.Walmart / Aldi

4.Dollar Plus

Source: Richard Tracy Cold Chain Consultant/Educator

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Increased demand in e-Commerce temperature controlled foods

Retailers and on-line food companies are challenged with the increase in demand with on line shopping

There is a wide variety of goods & temperature zones needed, to maintain

proper food safety & quality.

You need volume and suitable automation to have a cost effective cold chain.

Some countries do not have Food Safety legislation so you have improper cold

practices.

Covid 19 has challenged on line and retail stores due to cold chain sales surge.

Source: Global Cold Chain Alliance

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During Covid19 we saw sharp increase for e-Commerce frozen foods

Source: Global Cold Chain Alliance

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Omni channel adoption is expected to continue post Covid 19

Source: Rabo Research

Covid 19 has accelerated Omni Channel adoption & it’s expected the many consumers will continue with

on-line shopping post Covid 19.

There will be a growing demand for specialized cold chain infrastructure.

Facilities need to be located in hotspots with growing population within urban & suburban cities.

Retailer/3PL’s will need to partner with specialized technology providers who design facilities for omni-channel grocery retail

Retailer/3PL’s will need to invest in micro-fulfillment centers that cater specifically to grocery delivery companies.

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Changing consumer preferences.

There are various factors that impact consumer preferences.

As disposable income increases, people consume more animal based proteins.

Chicken, Pork, Beef & Fish

As disposable income increases even higher people trend towards more fresh foods if available.

During Covid19 frozen food categories saw the largest increase, with YoY growth of 93% during the peak of March, and sustained a 30% - 50% growth even into May.

Frozen foods have a longer shelf life and offer a large variety of meal options in place of take-out.

Source: Global Cold Chain Alliance & Rabo Research

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Can automation & technology address some of the challenges & trends.

Yesit Can

Source: Global Cold Chain Alliance

Collaborations Americold and Ahold.

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The need to operate modern automated, efficient facilities.

“We are thrilled to partner with Ahold Delhaize USA to design, build and operate these strategically-located retail distribution fulfillment centers over an initial term of the next 20 years. With state-of-the-art automation, these two facilities will deliver a combined 59,000 pallet positions to support the local brands of Ahold Delhaize USA in the Northeast and Mid-Atlantic regions,” said Fred Boehler, President and Chief Executive Officer of Americold.

In addition, the new facilities enable Ahold Delhaize USA to innovate in new frozen storage warehouse design, including transforming facilities to enhance automation and leverage technology advancements, such as an integrated transportation management system and end-to-end forecasting and replenishment technology, designed to support the omnichannel experience and multi-channel growth.

Questions & Discussion

June 11:

Traceability and food safety in cold storage

Traceability in all areas of the supply chain has become increasingly important. The global food supply chain today has evolved into a tangled web as companies seek to enhance their capabilities to feed the world’s growing population. As the general population becomes more informed about the food they are eating, consumers and federal regulators require a heightened amount of information on the path the food follows from growth to consumption.

Learn more about how food safety problems affect public health and the livelihoods of industries, companies and employees and how food traceability requirements are changing.

Contributor:

Matt Deep

Vice President, Services and Technology

Körber Supply Chain (DMLogic)

Next Supply Chain Master Class

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