South Africa should take note of current challenges facing European cold stores

Image source: Cold Chain Federation

One UK cold store manager told me recently that they had fixed their electricity costs until 2024 and were pretty relaxed about the current uncertainties. That is until they started negotiating a replacement fixed price contract. For starters, the contract term would be shortened from the current three years to just 6 months.  Kilowatt hour rate negotiations started at a levels six times higher than previously. Qualified Truck drivers are difficult to find so existing staff are being retrained and learnerships are provided in an attempt to attract talent.  Pay rates for existing cold store staff have increased by around 10% simply to retain personnel.

Some cold storage companies who have already been hit with energy cost increases have passed them on to their customers as a surcharge.  They too are suffering from staff shortages and increased labor costs.

As energy and labor are among cold stores’ largest cost centers their impact on the bottom line will be devastating.  While South African stores haven’t seen this magnitude of sudden energy increases, ESKOM prices continue to rise while load shedding means an additional huge unbudgeted cost from running generators, not to mention the effect of diesel cost increases on refrigerated trucking operations. Skilled cold store labor is also difficult to find  but labor rates are driven more by inflationary pressures.  Although South Africa’s power shortages have a different driver, they will continue at least for the medium term. Although diesel prices have fallen recently, the obsession with reducing SA’s carbon footprints will have additional negative outcomes, and coal fired generation is retired.

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So, what can south African cold stores do to meet the challenge?

  1. Make their existing operations as energy efficient as possible. Doors into freezer stores are a good place to start. Doors are the greatest energy wasters in cold stores. We have seen an uptick in interest for pallet conveyors as cold air lost due to door openings as well as incoming moisture is significantly reduced. Reduce the number and height of entry doors. Remember a reach truck door can be closed all day with product across it.

Allow the reach truck to move through one door and the product on a pallet through another. Don’t forget air curtains and high speed doors.

New Australian roll up insulated door
  1. Also look at conducting case picking and storing picked pallets inside freezer stores and loading them only when the truck has docked. Multi-tier picking mezzanines are a popular UK solution.
  2. Upgrade refrigeration plants to increase energy efficiency.
  3. Consider roof mounted PV panels to reduce monthly electricity bills.
  4. Install phase change systems in the depth of the top rack beam level.  If the temperature of the phase change material is reduced during cheap rate periods, the refrigeration requirements can be reduced during peak electricity periods.

As far as cold store labor is concerned, isn’t it time that our refrigeration industry had its own training school?