Cold Storage Space Lags Behind Demand as Digital Grocery Sales Soar

The rise of online food sales means food manufacturers and shippers need more cold storage to ensure fruits and vegetables don’t spoil on the way to their destination.

But industry insiders have doubts that the nation has enough cold storage space to meet the rising demand.

The United States has roughly 3.7 billion cubic feet of refrigerated storage capacity, according to the real estate services company CBRE Group.

Representatives of several food companies that spoke to Supply Chain Dive said they were squeezed during COVID, and space is again running low.

Jon Wong, VP of logistics, operations and supply chain chief of staff at Amy’s Kitchen, told the trade publication that the company and its partners are using 85% of their cold storage capacity, higher than the ideal 80%.

At the height of the coronavirus pandemic, that figure shot up to 115%.

“We’re not out of the woods yet,” Wong said.

There is reason to think the company will need more capacity in the future.

Online grocery sales reached $72.2 billion last year, and are only expected to grow, Grocery Dive reported, citing figures from Brick Meets Click and Mercatus, which releases an annual grocery shopping survey. The organization projects annual double-digit annual growth in digital grocery sales over the next five years.

Roughly 3.3 million square feet of cold storage capacity was developed in the second quarter of 2022, the most recent year for which statistics were available, according to CBRE.

The organization projects that cold storage projects will proliferate faster than before the pandemic.

But Amanda Ortiz, director of U.S. industrial and logistics research at CBRE, told Supply Chain Dive that growth in cold storage is difficult to scale up quickly.

She said it will be a challenge for the cold storage industry to keep up with demand.

Atlantic Sea Farms stores in Maine stores food in six different locations and is experimenting with dry food that doesn’t need to be stored in cold spaces, Casey Ballin, director of operations and sustainability, told Supply Chain Dive.

“We have to be scrappy, and we have to be creative,” she said, “There’s definitely innovation waiting to happen here.”