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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, Interact Analysis has seen automation vendors expanding their offerings for cold-chain applications.
This article, based on the analyst firm‘s “Warehouse Automation – 2024” report, dives into the driving forces, challenges, and emerging opportunities within the sector.
Cold chain warehouse automation grows
Cold-chain warehouse automation has gained significant momentum, with Interact Analysis expecting global revenues to surpass $1.3 billion in 2024 and to grow to just over $2 billion by 2030. This growth is fueled by technological innovation within the industry and growing consumer demand for frozen and chilled goods, which offer longer shelf lives and economic advantages.
One of the main driving forces in the cold chain market is real estate investment trusts (REITs). These are firms that operate or finance income-generating properties and then distribute most earnings as dividends to investors. Lineage Logistics and Americold – the two largest cold-chain providers in the world – are both REITs.
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 adopting robots and automation.
Americold’s investment with Dematic kick-started an investment frenzy, with Lineage Logistics driving further investments. Lineage Logistics, which currently has at least 16 automated warehouses, raised $2.2 billion from its IPO in 2024, which it plans to invest in more automated warehouses.
According to the Global Cold Chain Alliance (GCCA), Lineage Logistics and Americold collectively own 4.3 billion cubic feet (121 million cubic meters) of cold-chain warehouse space. In short, cold chain providers are competing to provide the lowest-cost, most efficient service, resulting in multiple large-scale investments in automation.
Other forces drive cold chain adoption
It’s not just cold-chain providers and REITs that are driving demand for cold chain automation. Since Amazon acquired Whole Foods in 2017, 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 Amazon. While Amazon didn’t end up disrupting the market, the initial investments from the likes of Walmart, Kroger, and other Tier 1 grocers led to other companies turning to automation to remain competitive, resulting in a chain reaction of investments.
Given how razor-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. Investments from grocers have therefore also contributed to the recent surge in cold-chain automation.
In addition, the global effort to distribute the COVID-19 vaccine highlighted weaknesses in the cold-chain infrastructure used to transport vaccines and other pharmaceuticals. We at Interact Analysis have theorized that pharmaceutical manufacturers and distributors have also contributed to the growth in cold-chain automation, but we have limited direct evidence of this to date.
Which automated systems are winning?
In general, Interact Analysis sees that cold-chain providers distribute and transport goods as unit loads. As such, we’ve found that pallet storage technologies account for the lion’s share of cold-chain automation investments.
In particular, we’ve found that roaming pallet shuttles have proven particularly adept for this application. Previously a relatively niche technology, such shuttles are becoming an increasingly common technology, driven in part by companies operating chilled or frozen environments.
However, the most common technology for cold-chain pallet storage is still unit-load automated storage and retrieval systems (ASRS) using stacker cranes. For example, Dematic installed its sixth high-bay warehouse for Agristo in the Netherlands, while Swisslog, one of the global leaders in stacker cranes, has provided unit-load ASRS for multiple Lineage Logistics sites.
When it comes to the storage and handling of smaller units, the opinion is split on the most effective way to store and retrieve items. AutoStore, for instance, recently announced its latest offerings for handling frozen items. It has created an area within its grid where the ambient temperature remains below freezing. This ensures that all products stored within this section remain frozen.
On the other end of the spectrum, Phononic develops actively cooled totes which can be individually controlled, thus avoiding having to freeze large areas of cubic space. Xpand (formally 1M Robotics) uses an interesting hybrid approach in which it controls the temperature of shelves, with each shelf containing multiple totes.
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 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.