Americold Logistics

Business

Americold stores and transports frozen food and some cooler products. Cooler products include dairy and fresh meat, where dating is critical (some is tracked to the hour). Distribution of frozen foods is the heart of the business. Most cooler products are local and this part of the business is seasonal and produces lower profits.

Americold has over 100 distribution centers around the US. They have to be close to their customers because chilled transportation is so expensive. Transportation is their main service. They consolidate tranportation and so offer lower costs than a customer would get by shipping less-than-truckload (LTL), which costs about four times as much.

There are two main barriers to market entry: The large capital costs for refrigeration; and the fact that Americold and the few other large companies have already consolidated the shipments and so can offer cheaper service.

In the frozen foods section of a typical grocery chain there are about 1,600 skus from about 400 vendors. Americold simply stores and transports these; it does not manage the inventory.

Operations

This facility is about 600K square feet and 11 million cubic feet (an important number in a refrigerated building). There are about 150 people working 6 x 24. Shift 1 is devoted to inbound, shift 2 to outbound, and shift 3 to prepositioning product. There are 50 forklifts but no control of deadheading and so forks are loaded no more than half the time.

The owner of the product (the shipper, such as Conagra) pays a handling charge when product arrives, then 30 days rent for space. Rent is paid in advance in monthly increments.

Product turns about once a month and totals about 55 million pounds. About half of the handling units ship as straight pallet, half as cases (that may be palletized). Most shipments are to the distribution centers of grocery stores.

Guess the fastest-moving product! Americold receives 6-8 railcars each day of frozen french fries. These occupy about 40 percent of the facility and are owned by Conagra and bound for McDonalds, Burger King, and other fast-food restaurants.

The shipping and receiving dock is kept at 35F (2C), the coolers at -20F (-29C), and the blast freezer, which is used to bring fresh product down to temperature, achieves -40F (-40C). The trailers in which product is shipped maintain a temperature of -20F (-29C) to protect ice cream. It takes six weeks to cool the warehouse from ambient to operating temperature and so a power failure could be catastrophic. Electricity for the facility costs about $40,000 per month. A trailer can be cooled to temperature in two hours.

Inventory is physically counted twice a year. It costs $25,000 to inventory just Pillsbury products.

Americold Logistics Americold distributes frozen foods to grocery stores.	Refrigerated space Americold has 600,000 sq ft of refrigerated space. To protect it, it is divided into independent rooms, each using one entry/exit.	High and deep Refrigerated space is very expensive and so it is essential to get good space utilization.
Drive-in rack Drive-in rack allows pallets to be stacked both high and deep for good space utilization.	Congestion Americold wants to cool product, not empty space. Consequently, aisles are narrow and there can be congestion.	Blast cells Americold freezes product for some customers in a blast cell that quickly chills to -40F (-40C).
Shipping dock The shipping dock must also be cooled; therefore it is very narrow (maybe 10 meters), with resultant congestion.	Loading a trailer Note the fog of ice crystals in the trailer. This was summer in Atlanta and the outside temperature was about 95F (35 C).	Inspecting the trailer It is always winter inside this distribution center. This is hard on both people and equipment.
Chilled trailer The chute near the ceiling recirculates cold air, as do the deep grooves on the floor.	Backup generators A significant amount of space in the distribution center is devoted to hosting a backup power supply to protect refrigeration.