COVID 19 impact on Cold storage

According to research by CBRE an industrial real estate form, demand for United States-based cold storage space is on the rise, due to the coronavirus as it creates massive disruption in the food industry.

Entitled “COVID-19 Impact on the Food Industry & Implications for Industrial Real Estate” posits effects for the cold storage sector include:

  • E-commerce grocery will become more widely adopted as consumer comfort grows with the practice. This will trigger the heightened demand for cold storage capacity;
  • Public refrigerated warehouse companies will likely consolidate to gain more control of the cold storage footprint;
  • Since e-commerce is typically fulfilled by local grocery stores, retail footprints will include more storage and fulfillment space, including a greater need for infill temperature-controlled facilities in proximity to consumers;
  • Restaurants may see a significant shift in dining formats with less dine-in options and more delivery or take-out that would require cold storage capacity. Foodservice companies that supply restaurants may look to second-generation cold storage space as a cost advantage in a limited dining environment; and
  • Automation will increase, prompting higher-density, greater-height and smaller-footprint buildouts that will be required for around-the-clock operations

What’s more, the report pointed to longer-term impacts such as the cost of building new cold storage is a huge barrier given that construction costs are two-to-three times higher than that of ambient (dry) warehouses. Moreover, finding skilled subcontractors can be challenging and securing the necessary building materials is difficult even more so today. These properties must adhere to strict thermal integrity, therefore storing and distributing perishable items with different shelf lives means that different temperature and humidity ranges climates must be maintained. 

In May 2019 CBRE also published “Food on Demand Series: Cold Storage Logistics Unpacked,” which examined the relationship between e-commerce grocery growth and cold storage, and suggested that an additional 75 million-to-100 million square-feet of industrial freezer/cooler space will be needed to meet the demand generated by online grocery sales over the next five years.

Supply Chain interactive tool

The American Logistics Aid Network (ALAN) has released a free-to-use, online tool that shows supply chain managers and transportation providers an interactive country-wide and real-time map of where COVID-19 is impacting roads, airports and seaports.

Started in 2005 after Hurricane Katrina, ALAN is an industry-led voluntary organization that provides free logistics assistance to disaster relief organizations. The Lakeland, Florida-based network has provided humanitarian supply chain services in response to numerous natural disasters, including hurricanes, wildfires, floods and tornadoes over the years. The newly launched ALAN Supply Chain Intelligence Center incorporates the online platform developed by Riskpulse, a supply chain risk analytics firm. 

ALAN expects the tool to remain important to aid logisticians after the COVID-19 pandemic subsides and will pave the way for better and faster response during all future crises – expediting the delivery of essential goods like medical supplies and food.

You can get additional information on ALAN at: Also, the organization is conducting a free webinar on June 2nd at 1pm EDT. Here is the link to register:

The Sea-Air business

The sea-air business via Dubai and Singapore is back up and running as air freight rates continue to stabilize but only in the context of current market conditions helped by the increasing capacity in the air mode. For example, rates from East Asia to Europe are running between $3 and $6 per kilo.  

Aeromar Sea Air, which suspended operations in March when air freight rates skyrocketed in Asia, is re-introducing services albeit with some limits on capacity. Sea-Air involves shipping goods by both modes of transportation within a single journey with this hybrid method of transportation reducing cost while paring down total transit time.

Aside from the amount of cargo limitations there are other restrictions: Aeromar does not accept Hazardous Materials/Dangerous Goods or perishable commodities as well as no single item larger than 120 cms. long, 100 cms. wide or 120 cms. high. They are also only operating from select ports in Asia such as Hong Kong, Singapore and Shanghai with transshipment in Dubai.

Changes on drivers Hours of Service regulations

The Federal Motor Carrier Safety Administration (FMCSA) issued its long-awaited final rule on changes to driver hours-of-service (HOS) regulations with four key provisions it asserts will increase driver flexibility and generate savings to the U.S. economy. The updated rules are based on the thousands of comments received.   The following changes were made to the existing HOS rules:

Increase flexibility for the 30-minute break rule by requiring a break after 8 hours of consecutive driving and allowing the break to be satisfied by a driver using on-duty, not driving status, rather than off-duty status.

Modify the sleeper-berth exception to allow drivers to split their required 10 hours off duty into two periods: an 8/2 split, or a 7/3 split. Neither period will count against the driver’s 14-hour driving window.

Modify the adverse driving conditions exception by extending by two hours the maximum window during which driving is permitted.

Change the short-haul exception available to certain commercial drivers by lengthening the drivers’ maximum on-duty period from 12 to 14 hours and extending the distance limit within which the driver may operate from 100 air miles to 150 air miles.

Left out of the final rule was a provision that FMCSA had been considering that would have allowed one off-duty break of at least 30 minutes, but not more than three hours that would pause a truck driver’s 14-hour driving window provided the driver takes 10 consecutive hours off-duty at the end of the work shift.

The Chairman of the American Trucking Associations and president of a trucking company said “no rule will satisfy everyone, even within our industry, but this one – crafted with a tremendous amount of input and data – is a good example of how by working with stakeholders on all sides, government can craft a rule that simultaneously benefits the industry, specifically drivers, and maintains highway safety,” However, road safety advocates are planning to challenge the changes in federal court that could  delay rollout.

The 230-page rule is scheduled to go into effect 120 days after it was published (May 14) in the Federal Register. 

Safely Aground Tankers

Thun Tankers has ordered a second product tanker designed to maximize capacity when resting safely on the bottom. 

Thun's “Not Always Afloat But Safely Aground” (NAABSA) maximizing design is built for a very specific form of controlled grounding. At certain tidally restricted ports, cargo operations are limited by water depth fluctuations. When alongside the pier, the 4,000 dwt these ships are designed to sit safely on the bottom when the tide goes out and refloating when it comes back in. This will maximize the ship's potential fully loaded draft and its corresponding cargo capacity.  In partnership with UK-based Geos Group Ltd., Thun placed the order for the first ship in the series last year, and it is under construction at Scheepswerf Ferus Smit B.V. in the Netherlands. It is slated for delivery this fall. 

The NAABSA operating concept is occasionally employed by ships not specifically designed for the purpose. According to the Norwegian Hull Club, a NAABSA clause is sometimes incorporated into vessel charter parties for certain port destinations, and it indicates that the shipowner accepts calling at berths where the vessel may be temporarily resting on the bottom during cargo operations. 

Vessels of this type may be found in regular use for the river ports such as along the Thames and Humber in the UK and occasionally elsewhere. As one would expect it generally requires additional care and attention on the part of the master.

Port Control Report APAC

The Tokyo MOU has released its Annual Report on Port State Control in the Asia-Pacific Region noting that the number of detentions was up in 2019 after seven years of decline. The number of under-performing ships also rose last year. While not all together good news, the increases are considered an encouraging outcome of improvement and enhancement on targeting or selecting ships for inspections of high-risk ships.

International Safety Management Code (ISM) related detainable deficiencies have remained at the top with one-third related to major non-compliance issues.

As a result, the Tokyo MOU will refine inspection measures focusing on implementation of ISM protocols on board ships and familiarization and understanding of operational requirements by the crew. The latter continue to be an area of concern due to the increasing complexity of shipboard systems and the pace of change.

The most notable deficiencies found during the campaign were related to the muster list details in accordance with the requirements (178 deficiencies, 2.48 percent), emergency source of the electrical power supply to essential equipment (151 deficiencies, 2.10 percent), damage control plan readily available (137 deficiencies, 1.91 percent), steering gear system and its related emergency alarm operation (127 deficiencies, 1.77 percent) and capability of the public address system (112 deficiencies, 1.56 percent). 

Membership of Tokyo MOU was further expanded in 2019 upon with the acceptance of Panama as its 21st full member now meaning four of the top five world largest flags (Panama, Marshall Islands, Hong Kong and Singapore) are part of the MOU.  

The report is available at:

Cyber security effort

A group of American seaports and maritime stakeholders have decided to address cybersecurity threats by launching a new non-profit, the Maritime Transportation System Information Sharing and Analysis Center (MTS-ISAC).

The new organization's objective is to promote cybersecurity information sharing throughout the maritime community recognizing the need to improve their own cybersecurity resiliency, and limited resources individually, they realized the best approach was to work with their peers to identify, protect against, and detect cyber threats. Information sharing and analysis efforts will focus on threats to both information technology (IT) and operational technology (OT) systems, which stakeholders can use to identify, assess, address and prevent or minimize potential incidents. 

The initial board members for the ISAC include the Alabama State Port Authority, Greater Lafourche Port Commission, Jacksonville Port Authority (JAXPORT), Port of New Orleans, Port of San Diego, Port Vancouver USA, and six other maritime critical infrastructure entities.

While IMO 2021 Guidelines and the USCG NVIC [01-20] help provide guidance to the maritime industry public-private coalitions like this act as a force multiplier moving cyber risk management efforts forward.

Containers congestion

The offer by shipping lines to temporarily store containers at off-site locations to avoid congestion at destination terminals has proved popular with European importers. There has been a significant take-up of the products to help manage the reduced demand during the coronavirus crisis, which have been variously dubbed ‘delay in transit’, ‘suspension of transit’ and ‘detention in transit’. 

MSC, Maersk and CMA CGM are among the carriers working these options catering to cargo shipped out of China that were too late to be postponed or cancelled after Covid-19 social distancing restrictions shuttered retail outlets in Europe and the US.

However, there have been media reports of some instances where the wrong boxes have been selected for storage at the transit hubs. Also, insurers are concerned about the increased security risk from the storage of containers at the temporary off-dock facilities, as well as the potential for cargo damage.

A report in the East Anglian Daily Times recently revealed that former airfields, like RAF Bentwaters, near Woodbridge in Suffolk, had been earmarked as temporary storage areas but had been officially “stood down” after it become clear that the number of ships and containers arriving at the port would greatly reduce in the coming weeks.

The risk management concern is the physical security and overall safety of these goods while temporarily staged in open yards and buildings not usually used for storage of loaded ocean containers. This is not just limited to fencing, lighting, CCTV cameras/coverage and security guards but also communication with trucking companies delivering cargo to the unfamiliar premises along with the ever-present danger of fictitious pickups.

The information for much of the content was taken from a number of public sources that, to the best of the undersigned’s knowledge, is accurate. The views expressed in this document should be regarded as the personal opinion of the undersigned and not necessarily of the Chubb.

If anyone wants additional information on any of the topics covered contact the authors.