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This a guest post from Maddie Horton, product marketing manager at Smart Warehousing. She helps brands find the right fulfillment solution through email communication, case studies, and more. Outside of work, she enjoys spending time with her dog and exploring new restaurants.
As more consumers use online ordering to tether themselves to brands, companies are increasingly shipping their products across state and country lines. In the last few years, we’ve seen a large uptick in food subscription boxes and other temperature-sensitive items alone. As the demand for such items grows, so does the need for robust logistics. To keep up with this trend, more and more brands will have to master their cold chain shipping.
Cold chain logistics is the transportation of temperature-sensitive products at a consistent temperature and humidity level. It’s an integral part of the distribution of perishable food and supplies to ensure they maintain their quality.
It’s commonly used in the pharmaceutical, food and beverage, and cosmetics industries, as temperature-sensitive goods must remain within a certain temperature range to ensure quality, freshness, and safety.
Often, perishable products require frequent deliveries to locations while avoiding long travel times. As such, a reliable cold chain shipping strategy is essential for maintaining product integrity. In this guide, we’ll walk you through the advantages of cold chain shipping and its impact on supply chains and related technology.
The rise in global trade and demand for perishable goods has increased the importance of reliable cold chain shipping in recent years. It’s essential to ensure perishable products are delivered safely and on time. Shipping temperature-sensitive goods has a number of advantages over traditional shipping methods, including improved safety, extended shelf life, reduced waste, and, sometimes, cost savings. Most importantly, it reduces the risk of spoilage due to temperature fluctuations, which can cause serious health issues or even product recalls.
By controlling the temperature and humidity of the product environment, cold chain shipping allows items to be transported over longer distances without compromising quality. This helps businesses maintain inventory levels more effectively, as well as ensures products reach their destination on time and in perfect condition.
Typically, the cold chain process operates based on the following aspects:
Shippers and third-party logistics (3PL) providers continuously adapt to consumers, and that includes cold chain shipping: NTT Data’s 2023 27th Annual Third Party Logistics Study found 67% of shippers and 72% of 3PLs are expanding their cold chain capabilities and capacity over the next three years. It’s anticipated that, by 2030, the global chain logistics market will reach about $801.26 billion and grow at a CAGR of 14.07% from 2022 to 2030.
Two increasingly influential industries, grocery delivery and micro-fulfillment, are contributing to this expansion as they broaden their logistical capabilities to include cold chain shipping.
Due to the Covid-19 pandemic, eCommerce and online grocery services have gained a larger share of the cold chain industry. Over the next five years, online grocery sales will see a compound annual growth rate (CAGR) of 11.7%, bumping e-commerce’s share of overall grocery spending from 11.2% in 2022 to 13.6% in 2027. This trend will continue as customers are now used to the convenience and time savings of grocery delivery. Moreover, eCommerce is predicted to account for 20% of the U.S. grocery market by 2026.
While this growth is exciting, grocery retailers feel pressured to deliver products to customers quickly and while meeting increasing demands. To support service deliveries and operations, brick-and-mortar stores now look to cold chain shipping for guaranteed food freshness.
Micro-fulfillment involves establishing smaller-scale warehouses in populous urban or suburban locations. By shortening the physical distance between consumers and goods, businesses reduce their last-mile delivery time. This is especially important to the cold chain, as it improves supply chain efficiency and lowers the costs and risks associated with temperature-sensitive shipments.
Micro-fulfillment centers typically carry enough inventory to last a few days’ worth of orders. They rely heavily on inventory management software and customer-driven analytics to determine what SKUs are most often purchased, by which customers, and in what geographic area. This ensures product availability and eliminates wasted storage and stagnant inventory.
The first documented use of cold chain technology dates back to 1797, with British fishers using ice to preserve their catch. It’s continued to evolve since then, with its present-day incarnation allowing companies to track shipments in real time and guarantee products are stored and transported at optimal temperatures throughout their journey.
Advancements in artificial intelligence and machine learning have led to analytics tools that can dive into data points to deliver actionable insights, like predicted inventory, transportation time, consumer demand, and spoilage probability.
Software products as well can monitor the trailers used during transportation between distribution centers to ensure temperatures remain consistent. Previously, cold chain shipping employed passive temperature sensors. These often battery-powered thermometers would monitor the food containers rather than the trailers. However, new technologies now allow products to ship in ideal temperature conditions as well as provide real-time data on temperature fluctuations.
Adopting Bluetooth Low Energy (BLE) trackers, for example, enables users to monitor the temperature and climate of transportation containers remotely with real-time insights like temperature, humidity, movement, data entry, and analytics. This reveals any issues concerning suboptimal conditions that businesses can improve with GPS, RFID, and barcodes (to track items in real time).
If goods arrive spoiled, it can be difficult to pinpoint where the breakdown occurred without sophisticated software. Advanced tracking systems continuously track temperature and humidity to alert users if pre-configured limits are breached, thus proactively preventing damage. Often, location-based insights like GPS will inform you where the goods are when they’re harmed. This helps you trace the timeline back to ensure accountability and avoid repeating these mistakes.
Cold chain shipping is a complex process, as you have to maintain the temperature of the product, ensure timely delivery, and manage costs associated with this type of shipping. Perishable goods are sensitive to temperature changes; even the slightest variation can spoil or damage products.
To ensure items remain in good condition and hold steady at a safe temperature, cold chain shipping requires products to have storage units. A storage unit can be anything from a refrigerator to an insulated box and is crucial for transporting these goods at their original temperature.
Cost can be another major challenge for companies, as cold chain logistics is more costly than ambient. Its expenses include specific packaging and some kind of coolant, and you usually have to pay for expedited shipping to ensure the product arrives quickly and doesn’t spoil en route to its destination. All of these elements increase your overall costs, so finding ways to lower them is essential for businesses shipping temperature-sensitive items. One way to do so is to outsource this process to a 3PL.
It’s easy for problems to arise in cold chain shipping. To avoid headaches and ensure well-oiled operations, cold chain shippers must adhere to best practices.
With cold chain shipping increasing in use, 3PLs are also expanding their cold chain management services. As such, more and more retailers want to outsource their cold chain warehousing and distribution to encourage their business growth. Because it requires specialized labor, warehousing, and transportation, a 3PL with experience and expertise in managing sensitive products can save brands significant costs.
When looking at 3PL providers, it’s important to evaluate:
When you’re ready to scale your brand, first look at what elements are most important to achieve your goals. Which ones can you handle internally and which can you outsource? If your brand’s growth is dependent on incorporating great cold chain shipping, you need to dedicate time and energy into either perfecting your logistics processes or finding a great 3PL partner to handle it for you. Cold chain shipping will continue to corner the market as consumer preferences fluctuate due to the introduction of new products and brands. Take advantage of this growth to expand your brand and achieve greater success (and revenue).