Looking Ahead to 2021—What Comes Next For the Food and Beverage Cold Chain?

img

Here are five trends to watch for in the maritime sector come 2021.

Undoubtedly, 2020 brought seismic change to the cold food and beverage logistics industry. The Coronavirus disease (COVID-19) pandemic that made its way to the United States in early 2020 sent the industry scrambling to meet the rising demand for refrigerated services, upending many of the time-honored processes and practices for transportation, cold storage and cold chain logistics. Is there an end in sight? Will the cold food and beverage logistics industry return to pre-pandemic normalcy sometime in 2021? Here are five trends to watch for in the maritime sector come 2021.

COVID-19 anxiousness to continue

With or without a vaccine for COVID-19 in 2021, demand will likely continue to be high for refrigerated services. In 2020, demand for cold food and beverage soared in response to the pandemic. Big box stores were hard-pressed to keep refrigerated and frozen foods on shelves. Juice sales increased by 40% as consumers sought nutritional beverages to boost their immune systems. Sales for off-premise consumption at home led to alcohol flying out of warehouses at staggering rates.

Unease about a potential second or even third wave of the pandemic will drive consumers to continue to predominantly cook and drink at home or order take-out, even as restaurants operate at limited or full capacity for indoor dining. In the last quarter of 2020, restaurant business started to increase, and certainly the availability of a vaccine in 2021 will instill more confidence in dining out. But, the mass transportation of a vaccine will put pressure on refrigerated capacity, cutting into refrigerated services already strained to meet the current surge in demand for cold food and beverage.

Ongoing upward cost pressure

Price, demand and capacity issues will continue to converge, especially into the first quarter of 2021, possibly extending into mid-year. The current demand for refrigerated trucks, cold bulk storage and intermodal transportation remain high as the industry contends with ongoing capacity shortages. Without enough capacity to transport cold food and beverage, more products are being held in already congested warehouses.

To mitigate upward cost pressure, cold chain logistics providers are negotiating rates. There will also likely be more forward-buying in 2021, as retailers and consumers anticipate additional virus waves, which could lead warehouses to prepare for disruption by securing more space longer term. All of this would compound the upward cost pressures the industry already faces.

Balancing price and quality

As more cold food and beverage are transported throughout the United States, the impetus will be on ensuring quality through temperature-controlled transport and that will likely drive up costs for logistics services. For instance, shippers today are willing to pay more to ensure products arrive with a high level of quality assurance. Not long ago, about 10% of dairy was transported in temperature-controlled containers from California to Hawaii. Today, it’s almost 100% refrigerated shipments. To combat rising costs, logistics services will likely start to consolidate refrigerated and dry freight where possible and optimize delivery routes and processes. They’ll also likely seek to secure more cold storage space, especially big box stores, to minimize the impact of potential future disruptions.

The pandemic has also reinvigorated the concern around the shrinking pool of truck drivers. Shippers will continue to use all the services they can — truck, rail, intermodal — to gain more flexibility and prevent situations where they can’t deliver services. Customer expectations for quality cold food and beverage products will also come into play, likely driving competitors in the cold chain logistics space to enter into joint ventures to ensure all service levels are met and costs are manageable. 

Further supplier consolidation and services expansion

Expect to see more trucking, cold storage and cold chain logistics consolidations to capitalize on market conditions in 2021. Larger enterprises will continue to purchase smaller organizations and sole cold chain players will exit the dry space entirely and build out fleets for temperature-controlled transport. Cold storage warehouses may expand services to offer refrigerated short-haul trucking and drayage.

The industry will also see shippers rationalizing the cold food and beverage production chains. For instance, many brewers tend to operate in a specific geographic area and truck product fresh from the breweries. Organizations will rationalize where they are making product to limit the amount of time it has to dwell somewhere before hitting the retail shelves. Furthermore, holiday spikes in demand may drive warehouses to add delivery services to their mix of offerings. Rather than parking cold food and beverages in cold storage waiting for cold trucks, warehouses will likely add trucking operations and take on deliveries. And, with e-commerce being a fast-growing market for cold food and beverage, warehouses may even start to take on last-mile deliveries if they can access refrigerated trucks.

Navigating safety and seasonality

When it comes to temperature control, shippers are increasingly required to prove that their facilities and vehicles comply with food safety regulations at every touchpoint all the way to their customer’s door. As a result, third-party audits have become increasingly common among shippers and warehouses. With the drive to secure additional storage space and more modes of transportation in the event of a second or third wave of COVID-19 as well as increased direct-to-consumer delivery, the industry can expect higher safety regulations and expectations for cold food product delivery in 2021.

Seasonality for cold food and beverage products has typically been very predictable. But, recovery times after seasonal demand spikes for items like spring produce, turkeys at Thanksgiving, ham at Easter and cold beverages for the Fourth of July will be shorter due to the consistently high demand caused by the pandemic. For instance, a warehouse might normally have an inventory of 1.5 million cases of alcoholic beverages during the month of September. But, the rise in demand during the pandemic has reduced inventories dramatically, in some cases down to 25% of historical volumes. However, the inbound volumes of product being cross-docked through the warehouses has increased well in excess of historical volumes. Moving into 2021, this will likely continue. The industry will still feel pressure during produce, beverage and other seasons, but large shippers will continue forward shipping inventories, keeping demand high between seasonal peaks. 
Source: www.foodlogistics.com

Member Testimonials

testimonial
X2 always thrives on raising the bar when it comes to connecting people. X2 conferences are one of a kind! As the founding member, we are happy to be in X2 Elite and the X2 Projects Network.
testimonial
"We believe in limiting memberships to a minimum and have found our home for projects as well as general cargo within the X2 family."
testimonial
I've been in the business for over 30 years, I have never had or experienced such and effort by the management team of the network to get members to participate and make their membership work for them.
testimonial
The professionalism and organisation shown from the X2 team totally blew us away.
testimonial
Richard is an innovator, what I find great working with him is that he can see the future.
testimonial
I was positively surprised from the amazing organization and specially the commitment of all X2 Team making this event incredible for everybody and in all complete fields.
testimonial
We have to skip the networks that are founded only for the benefits of the founders Quality and not quantity.
testimonial
We found the best way to build trust is to go to the conference and meet with people, talk to them and get to know them.
testimonial
As a new member of the X2 Network, we are very impressed by the organization and its professionalism and focus on mutual business development. X2 has already given us some great opportunities to work with likeminded partners across the globe on both project and general cargo.
testimonial
Great energy and drive throughout the X2 Team and high profile Network agents to complement each other’s business across the globe and help achieve positive results. Keep up the good work!
testimonial
X2 is like a family! We have met so many amazing partners. There has been so much success with the relationships we have developed throughout the years and most importantly friendships that will last a lifetime. And we love the networks' reach!
testimonial
We have been a member of X2 since 2014 and have attended six conferences. Richard and his passion for the network with his enthusiastic team have arranged all the conferences perfectly considering every single detail. We made many friends and found new global partners to work with at the conferences. X2 is one of the good solutions for our needs and we hereby thank them for their efforts.
testimonial
I have attended a lot of networks and annual meetings in the freight industry, but I have never come across a network like X2. This is another level. It is a pleasure to be a part of the X2 network - the professionalism, the attention to detail, the broad and knowledgeable staff - everything at the highest level.
testimonial
X2 is really an excellent logistics network, with a well-organized team that is always thoughtful and helpful. We are happy with X2 and expect a long journey together.
testimonial
"At X2 Network we found a group of partners that really want to build a long-term relationship. Companies are run by people that really care about your business and success. X2 Team has been really supportive and very active to develop new opportunities for your business''.

Our Partners

X2 Conference

Our special networking event is about smart freight forwarders coming together to grow and develop business within the group by providing an opportunity for all members to gather in one place to form and extend personal relationships.

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
7:53

NEW YORK

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
7:53

sao paulo

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
7:53

london

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
7:53

dubai

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
7:53

bangkok

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
7:53

hong kong

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
7:53

tokyo

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
7:53

sydney