Cold Chain Logistics: The Current State & Opportunities

We spoke to Matt Zarzycki, CCLP, COO of Amplify Logistics about the state of the cold chain in Canada, its challenges, and where he sees it going from here

The concept of cold chain logistics is certainly not a new one.  In fact, the term “cold chain” was reportedly first used in 1908 to describe mobile refrigeration by boat and train using ice, a method that was in place as far back as the mid-19th century. Despite this long-standing tradition, the basic challenge of keeping cold shipments cold still continues to hound our industry into the modern era.

To help understand the challenges of the present state of cold chain logistics, we chatted with Matt Zarzycki, CCLP, COO of Amplify Logistics. He also shared some thoughts on a number of emerging solutions to help tackle those challenges.

Matthew Zarzycki, CCLP
COO
Amplify Logistics

What exactly is cold chain?

According to Matt, cold chain is the same thing as regular supply chain, with a temperature control element. Essentially, it all comes down to keeping perishable goods cold—getting fresh produce from a farm to a warehouse to a supermarket shelf, ice-cream from a factory to distribution centre to a convenience store, etc.

Another key market, and one that gave cold chain a media spotlight during the COVID era, is pharmaceuticals. As you’ll recall, midway through the pandemic, when temperature-sensitive vaccines began to be shipped, the lack of cold chain solutions made headlines everywhere.

According to Zarzycki, food transport takes up about 80% of cold chain capacity, however.

“I would say it's an 80/20 split where the majority of the cold chain sits on food and food distribution, with 20% pharma. Why? Because of the constant churn of everyday life. We’re constantly eating.”

As populations grow, the need for cold chain logistics is only set to grow. As it does, so too will the complexities of what in all reality is an essential service.

Getting food to the table: the challenges

1. Working reefers

Challenge number one is the same one faced by the logistics community back in the 19th century—maintaining consistently cold temperatures. In today’s era, that means reefers, that work.

“Reefers have to be properly maintained,” Zarzycki continued. “On top of that, there are different types of reefers, all of which are more likely to breakdown due to mechanical issues, which adds another layer of complexity. When you have dry goods, temperatures can fluctuate. But when you’re transporting broccoli, for example, temperatures fluctuate either too cold or high, and you might end up with a claim against the shipment.”

2. Runaway costs

Cold chain logistics also comes with another complicating factor—runaway costs based on reefer and storage availability, coupled with the time-sensitive aspect of the goods shipped.

“Let’s say Watermelon season hits Florida. Now you see transportation prices start increasing because trucks will migrate for inflated prices. If a truck going from Miami to Toronto is typically $$3200 USD, all of a sudden, we’re looking at  3 x to 4x that. We’ve even seen scenarios where produce from Laredo, Texas which would normally ship to the GTA for around $4000, went for up to $12000. For producers, they start asking, ‘am I going to dump product, or pay whatever it costs to ship’.”

This brings us to another big challenge: warehousing.

3. A lack of refrigerated warehousing

Even if a fleet is running a full complement of fully functioning reefer trucks, once they reach a transit hub there’s no guarantee they’ll find enough refrigerated warehouse space to drop their loads—vacancy rates are extremely low.

“Toronto has a vacancy rate of only .5% of all warehousing”, Zarzycki said. “Factor in the niche of cold chain warehousing on top of that and the percentage of available space is even smaller. Vancouver is said to have even less than a .5% rate. It’s a serious problem when we’re talking about perishable goods.”

4. Excess waste

Due to the difficulties in maintaining rigid temperatures, waste is also huge issue for the cold chain industry. According to Zaryzcki, the U.S. alone is responsible for roughly 60 to 100 million pounds of food waste every year. That equates to roughly 5000 truckloads per day of spoiled food just being thrown out.

The problem goes beyond mere refrigeration, however. To further use the watermelon analogy, he explained that the issue of cost can also lead to more waste. 

“Say I’m holding watermelons. I’ll hold out as long as I can for the best price. Eventually I move it at a week or two later than I expected, but the watermelon isn’t as good anymore.”

Driving Solutions

A logistical Renaissance: hub and spoke

Thankfully, innovative solutions are being explored by the industry and among them, a relook at an older way of doing things—the hub and spoke model.

“What we’re going through right now, I call a Renaissance. Where before everything was really focussed on time and logistics to get everything somewhere on time, we’re shifting back to the old hub and spoke model. People are saying, let’s have an inventory of product, and try to weigh out the ebbs and flows.”

For producers this could potentially alleviate waste by allowing them to maintain an always available, temperature-controlled warehouse where they could maintain first-in, first-out stock, condense operations and create their own schedules rather than rely on the current, problematic network.

Last Mile Refrigeration

Another interesting idea being put forward, and one with unlimited opportunities for growth, is Last Mile shipping for e-Commerce.

As Zarzycki sees it, companies like Uber Eats, Skip the Dishes or various supermarket chains offering delivery, can’t all offer properly temperature-controlled transport to get from the shipping point to the customer’s door. Understandably, a number of companies are currently trying to solve the issue.

“It’s a real growth opportunity. I know there's a few companies out there that are really working on trying to incorporate refrigeration into that space. That said, it's a lot harder in gig economies because most delivery people already have a car but. What they don’t have is a refrigerated car.”

Multi-temp shipping

Which brings us to another development currently being explored by cold chain industry players: multi-temp shipping services. According to Zarzycki:

“We feel multi-temp shipping is the niche that’s really going to help reduce waste. It’s going to allow multiple temperatures on a trailer that can be segmented. That will mean, for example, that I can have a full trailer going to Walmart in Boucherville from Toronto with three or four different temperatures on the trailer. Now I can deliver it all to one consolidated spot versus running three or four different smaller trucks and having more trucks on the road.”

At the end of the day, the need to ship temperature sensitive products is only going to increase as populations grow.

Ultimately, what will the future of cold chain logistics finally look like? Stay tuned.