The Rise of Real Estate Investment Trusts in the Cold Chain

Innovations in modularity, energy efficiency, and scalability are expected to unlock new opportunities for businesses of all sizes and serve as a differentiator in competitive markets.

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The cold chain warehouse automation market is experiencing a period of transformation as industries respond to shifts in consumer behavior, rising energy costs, and labor and skills shortages. The volume of chilled and frozen food is on the rise, leading to growing demand for automation for the storage of refrigerated goods. At the same time, automation vendors are expanding their offerings for cold chain applications.

The growth trajectory of automated cold chain warehouses

Cold chain warehouse automation has gained significant momentum, with global revenues expected to surpass $1.3 billion in 2024 and expecting to grow to just over $2 billion by 2030. This growth is fueled by technological innovation within the industry, growing consumer demand for frozen and chilled goods, which offer longer shelf lives, economic advantages, and the rise of real estate investment trusts (REITs).

The cold chain warehouse automation market remains on a strong growth trajectory and is expected to exceed $2 billion revenue in 2030.

One of the main driving forces in the cold chain market is REITs; firms that operate, or finance income-generating properties, distributing most earnings as dividends to investors. REITs are highly investment-driven and are therefore keen to invest in automation if it can provide a long-term economic return for shareholders. As such, REITs – which make up a large share of the global cold chain market – have been a big driving force for the cold chain warehouse automation market.

In short, cold chain providers are vying for position and competing to be the lowest cost, most efficient provider, resulting in multiple large-scale investments in automation.

Other driving forces

It’s not just cold chain providers and REITs driving demand for cold chain automation investments. Grocers around the world have been investing heavily in automating their logistics operations. This frenzy initially started as a preventive measure to avoid disruption from online marketplaces, and has led to other companies investing in automation to remain competitive, resulting in a chain reaction of investments. Given how razer-thin margins are in the grocery market, no one can afford to be left behind. The majority of store-replenishment automation projects include some form of chilled or frozen section in the solution. Investments from grocers have therefore also contributed to the recent surge in cold chain automation.

Lastly, the global effort to distribute the COVID-19 vaccine highlighted clear weaknesses in the cold chain infrastructure used to transport vaccines and other pharmaceuticals.

Which automation solutions are winning?

In general, cold chain providers distribute and transport goods as unit loads. As such, pallet storage technologies account for the lion share of cold chain warehouse automation investments. In particular, roaming pallet shuttles have proven particularly adept for this application. What was before a relatively niche technology, roaming pallet shuttles are becoming an increasingly common technology, driven in part by investments from companies operating chilled or frozen environments.

However, the most common technology for cold chain pallet storage is still unit-load automated storage retrieval systems (AS/RS) using stacker cranes.

Future outlook: A path to accessibility

Persistent difficulties sourcing labor willing to work in frozen and chilled environments for extended periods of time is increasing the appeal of automated solutions. In addition, rising energy costs to maintain cold storage make storage efficiency through automation a key driver for cold-chain warehouse automation investment.

As technology advances and costs decrease, cold chain warehouse automation will become more accessible. Innovations in modularity, energy efficiency, and scalability are expected to unlock new opportunities for businesses of all sizes and serve as a differentiator in competitive markets.

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