10 Requirements for Operating a Successful Portside Cold-Storage Facility

Thirty years ago, ports were the least-known component in the shipping matrix. Words and phrases such as “intermodal,” “paradigm shift” and “tipping points” were not part of the transportation vocabulary. Today, the mantra is “green.” One of these “green” areas is the cold-storage warehouse. They are green because there are several methodologies for cold storage, some “greener” than others. These include ammonia, chlorine, Freon substitutes, bromide, new methodologies as well as rare gases. Cold-storage facilities often are a partnership between a public port and private enterprise. These facilities seldom stand alone because they require technical expertise, and the public sector lacks the necessary industry contacts. Local governance — influenced by activists and advocates clamoring for their “piece of the pie” within a port district — controls commercial trends of cold-storage facilities. Cold-storage facilities along the nation’s three vast ocean coasts, in the Great Lakes region and at hundreds of inland river ports keep commodity prices low. Consumers living in areas without a port nearby pay much more for their fresh fruit, and poultry and beef producers are unable to get their products overseas. This is why portside cold-storage facilities are so valuable. Cargo methodologies are changing rapidly. Although container shipping remains the best way of transporting goods in and out of the U.S., portside cold-storage facilities move large amounts of neo-bulk materials characterized by palletized boxes of fruit, poultry and beef, as well as drummed and bulk juices. Even with the emergence of the mega-container ship, the perishable portside warehouse is still viable, though diminished in size. The following are 10 requirements in operating a successful portside cold-storage facility. 1. Location. Cold-storage warehouses must be adjacent to a primary growing/producing area or within a consuming region. This also applies for meat and poultry exporters. Ask yourself, “Where is the nearest port to my production site?” If you’re targeting juice, where are the population centers in relation to the location of a port and domestic juice production? 2. Know your port board. This is the rule-setting body within any public port. If a cold-storage facility does not currently exist, port staff must sell their politicians on the advantages of one. Do your due diligence on any potential investor and then let the port staff introduce the investor to each board member. Be aware of potential competing cold-storage investors. Some board members may already have a preference. In that case, port staff should present all competing sides equally, letting the chips fall where they may. In addition to port boards, private entrepreneurs must cultivate other local government agencies, including municipal and state governments, chambers of commerce and private-sector job-creating agencies. 3. Activists. The location of cold-storage facilities must meet the approval of this group or it will never be built. Is it near a school or future community? Is there ample distance for an emergency exit route in the event of gas leak? These are issues that must be broached for a project to be successful. Remember, activists pressure politicians who bend with the wind. How “green” is the refrigerant? The greener the better — and we don’t mean chlorine. 4. Rail. Where is the nearest rail? Is it Class I, II or III? Does the commodity have direct rail junctions to the warehouse or must freight be loaded on or taken off a truck before it is reloaded onto a refrigerated railcar? The railhead distance to a port can be a business breaker. 5. Trucking. Will the local community tolerate 18-wheelers rolling through their streets at all hours of the day? If not, this can cause a displacement of shipping, especially during peak seasons, inclement weather or harvest periods. Do truckers have proper identification to enter portside properties? How many receiving docks are there? The more the merrier! Provide two sets of receiving: one to load and another to unload. This makes it easier and less confusing for the trucking industry. 6. Labor. Is there adequate white- and blue-collar labor in the vicinity or will the warehouse have to employ seasonal labor pools? Another problem is the issue of unionized and “alternative labor.” Does the port allow both or is it a signatory to a waterfront labor contract? These can be constrictive, depending on state “right-to-work” laws. All dockside worker identities must comply with Department of Homeland Security mandates. Are there workers who should not be around a port? These are difficult issues! 7. Computerization. Inventory controls did not exist 20 years ago, but are de rigueur at any warehouse today, especially refrigerated ones with freight transiting in and out simultaneously. Bar coding and radio frequency devices, among other requirements, are a necessity for a refrigerated unit to be successful. How will you treat commodities for export, import and domestic trades? This requires state-of-the art central computer units, handheld readers, instant location devices and trained personnel in all facets of computerization. In addition, 24/7 operation of units must be in service during the peak season. Special segregation and inspection of goods with automation must exist in order to comply with DHS requirements. 8. Marketing and sales. This least-known of the 10 requirements of a successful portside cold-storage facility must be fully ingrained into the operations plan of the facility and the port. The private sector and the public port must reach out to potential users. These include regional, statewide, national and overseas users. Don’t forget cargo and vessel brokers or the global refrigerated ship operators. One-on-one sales visits coupled with joint trade show participation — domestic, regional and international — is a must! If you don’t showcase your wares, how do you expect clients to know where or what you have to offer? You are not alone! There are competing dockside cold-storage facilities at most major ports, not to mention those that are near-side. 9. Pricing. This is a collaborative effort of the port’s tariff coupled with the prices offered by the warehouse. Remember, most ports make “nickel and dime” on wharfage and dockage! The real money is made on the long-term leasing of warehouse space and, if you are an operating port, on stevedoring and warehousing. You need square footage as well as cubic capacity. The higher you can stack, the less you have to charge. On the other hand, four to five pallets are the most you can stack on a single warehouse floor. Remember, job creation and assistance to local and regional importers/exporters are the major impacts of the portside cold-storage facility. 10. Federal agencies. This is the weakest link in the 10 requirements for a strong, sellable portside cold-storage warehouse. In addition to Customs inspections, USDA and APHIS personnel are required to operate a successful dockside cold-storage facility. Unfortunately, staff cutbacks by the government have become a major issue. Are the agencies part-time or seasonal? Some goods might move all year, while others move in conjunction with the opposite season in the Northern or Southern Hemisphere! You might have to devote (free) space year-round to these agencies in order to secure their support. Don’t forget port politicians and your congressional delegation. They can be powerful tools in addressing your situation. Adhering to these 10 requirements will allow public ports to be more self-sufficient, providing essential services to their regions as well as end-users.