Cold Storage Boom: North American Ports Embrace Reefer Revolution

By Ira Breskin

BOSTON — The refrigerated cargo/reefer business has emerged as an unexpected port and terminal industry “super star,” speakers said this week here at the annual meeting of the American Association of Port Authorities.

Given consistent, sustained growth of this cargo and aging port-related infrastructure, a number of North American ports have major cold storage building projects underway. The goal is to better serve high-margin reefer shippers. Cargoes include fresh and frozen meat and fish, fruits and vegetables, florals, and active pharmaceutical ingredients.

The reason for the renewed port interest is simple, said Eric Casey, executive vice president of Ketchum, Idaho-based Cold Summit Development, a private equity-backed builder/designer operator of port-based cold storage warehouses. The bulk of North American cold storage facilities are strong candidates for replacement given that most were built before 2000, and half are more than 40 years old, Casey said. That means they are “exceedingly inefficient” given their dated design and cooling systems, he added.

New cold storage facilities are a good strategic fit for the Port of Wilmington, North Carolina, said Brian Clark, executive director of North Carolina Ports. Wilmington houses several cold storage construction projects at various stages: completed, under construction, or planned. Cold Summit Development recently opened a 290,000-square-foot facility in Wilmington that it designed, built, and manages.

Landlord ports and warehouse operators both benefit, Casey said.

Optimally locating the new purpose-built warehouses on or near port property means ports make better use of valuable acreage. For operators, payback on the original investment is as short as three or four years, he added.

The new “cold chain” warehouses help the Port of Wilmington offset its traditional cargo imbalance. These facilities store locally-produced, export-bound poultry and beef. In turn, they also accommodate imported fresh fruit and vegetable shipments destined for the underserved mid-Atlantic market, Clark said. The closest major competing ports are distant, specifically Wilmington, DE and several in south Florida.

This bi-directional trade also allows many carriers calling at Wilmington to increase capacity utilization of their vessels.

Demand for reefer cargo continues to grow moderately, with shipments increasing almost 6 to 8 percent annually, analysts say. The reason: consumers in developing countries are spending more of their higher disposable income on high-protein poultry and fish. Also, American consumers are buying more fresh fruits and vegetables, recognizing their inherent health benefits.

Ira Breskin is a senior lecturer at State University of New York Maritime College in the Bronx, NY and author of The Business of Shipping (9th edition, 2018), a primer that explains shipping economics, operations and regulations. 

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