Busy times at coldstores in Holland, as operators keep up with the pace: multiple factors converge to result in tight space availability at Dutch refrigerated warehouses during 2007. Are rates, therefore, poised to rise at long last? Maybe.

There was still a little "room at the inn" for incoming frozen and refrigerated shipments bound for Port of Rotterdam coldstores around Christmas time, but it was mainly available only to top-tier customers with advance reservations. Other cargo would have to be moved beyond the waterfront for further distribution, and there was no shortage of forwarders on or near the docks to point the way.

"At 90%-plus capacity right now, we remain loyal to our loyal customers by keeping some space available. They rely on us to accommodate additional shipments if necessary, and we won't let them down, Derk Van Mackelenbergh, managing director of Eurofrigo BV, told Quick Frozen Foods International (QFFI) on December 3.

Johan Kloosterboer, chief executive officer with the Kloosterboer Group and managing director of the Samskip Coldstore Division, confirmed that the situation was the same at their Rotterdam facility. "Space is very short all over Holland, as well as in Germany," he said.

"Occupancy rates have been high for some time now. This is quite a luxury, and of course we don't know how long it will last," commented Erica Van der Ham, the Velsen-based managing director of Daalimpex Logistics. "For now, we are handling the increased throughput without a problem."

With six coldstores strategically positioned from Middenmeer in the north of Holland, down south to Flushing in Zeeland, Daalimpex ranks among the largest operators of refrigerated warehousing services in the Netherlands. As a subsidiary of Reykjavik, Iceland-headquartered Eimskip, it is part of the world's second biggest network of coldstores--extending from Europe and the Americas to Asia, Australia and New Zealand.

Mr. Van Mackelenbergh of Eurofrigo, a member of the Nichirei European Logistics Group, has managed to keep his facility from bursting at the seams by steering some incoming frozen stocks to Dutch sister warehouses in Venlo and Heerlen.

Likewise, Ms. Van der Ham informed QFFI that Daalimpex's two inland terminals have absorbed what otherwise would be overflow pallets. "We don't like to say 'no' to customers, so we always try to find solutions for them," she said. "If customers are flexible in accepting an alternative location, we can always accommodate them."

[ILLUSTRATION OMITTED]

The public refrigerated warehouse (PRW) executives interviewed in the Netherlands by this writer late last year pointed to a number of factors for the simultaneous surge in business among virtually all coldstore operators.

"Every customer has been building up inventory during the last quarter and a half, perhaps to keep ahead of rising commodity prices. And relatively little is going out quickly," commented the managing director of Eurofrigo. "Now, with the Christmas and New Year season fast approaching, we expect that stocks will begin moving out to end users, as is traditionally the case."

"The market is certainly growing. Surprisingly, volume of all commodities--from fish and chicken to french fries--is increasing at the same time. If you know why this is happening, please tell me," remarked Mr. Kloosterboer when queried by QFFI.

"One of the reasons we are more busy is because of new clients acquired from the Daalimpex purchase of the former Van Bon terminal in Flushing," said Ms. Van der Ham. "Another reason is that a variety of new products ranging from tilapia and shrimp to cod fish, vegetables and fruits are coming into the market and creating extra business."

"Our coldstores are full due to a number of factors," reported Reinier van Elderen, managing director of Frigo Breda, one of five inland PRWs operated by the Frigo Group in the Netherlands, Belgium and France. "Potato processors, reacting from the bad crop the year before, built up more stock to have on hand during 2007. Also, because of a very disappointing strawberry crop, a lot of the harvest went straight into cold storage throughout Western Europe. On the other hand, with the overall economy strong and the low value of the dollar at the moment, more goods such as fish from the US are coming into Europe."

[ILLUSTRATIONS OMITTED]

With supply tight and demand strong currently, does this mean that the time is ripe for an increase in across-the-board cold storage rates to offset rising energy costs and other operational expenses? The answer is "yes" and "no."

"Certainly we have to cover rising costs, and part of this can be done by operating more efficiently. We plan to raise rates by between zero and five percent in January, depending on the customer's service requirements," stated Mr. Kloosterboer. "We respect our relationship with long-term clients, and will always honor contracts."

Realistically, with approximately 220 coldstores operating in the Netherlands, the highly fragmented market makes it difficult to raise rates and keep them intact for an extended period of time. That's because once space loosens up, historically there has generally been a warehouse operator somewhere who was willing to reduce prices to keep volume flowing into his premises.

Over the next three to five years, agreed a number of Dutch cold storage operators polled by QFFI, an increase in rates of 20-25% will be required to bring back margins needed to sustain viability. They added, however, that the market ultimately decides price levels.

The cold storage business in Holland seems to be stabilizing now, after a long period of overcapacity that followed a boom in construction in the 1980s and the entry of newcomers. That was a time when EU subsidies liberally flowed to farmers, creating lakes of butter, mountains of meat, and surpluses of other commodities that required warehousing. Today, most easy-access agricultural subsidies are gone, and so are speculators with dreams of making fast money in the refrigerated warehousing industry.

But this does not mean that rational expansion is not continuing when and where necessary. Kloosterboer, for one, plans to build brand new capacity and add space to existing premises in 2008.

"Locations have already been selected, and they will be announced early in the new year," Johan Kloosterboer told QFFI. "We are focusing on growing with dedicated and automated facilities."

Ms. Van der Ham reported that Daalimpex will also go this route, commenting: "We definitely will increase capacity in the coming years, though plans for where and when this will happen have not yet been finalized."

All operators interviewed by this writer commented that boosting efficiencies and maintaining a solid workforce would be key in the future for remaining competitive in the increasingly service-oriented business of distribution warehousing.

"We are doing everything possible to keep good people and recruit new talent with the technical skills needed to retain peak performance," said Mr. Van Mackelenbergh of Eurofrigo.

Ms. Van der Ham, who spends a good deal of her time on personnel matters, works incessantly at keeping morale high among workers, as well as attracting new employees to join the team.

"While we look at further enhancing IT systems and automating loading functions and other jobs, the operation can never be entirely automated," she pointed out. "We have approximately 300 people on the payroll, and could not manage without them."

Indeed, it is difficult to fully automate PRWs that handle a diversity of products and package sizes. At the 600,000-cubic-meter coldstore on the waterfront in Velsen--where a typical day could involve some 6,000 pallets coming in and 7,000 going out--throughput might entail 100 different kinds of sizes, weights and types of products. The following day, there could be 500 pallets coming in and 1,000 going out, with a completely different mix of products.

[ILLUSTRATION OMITTED]

In view of the above, it would seem that the need for quick-thinking and fast-moving forklift drivers will remain steady for some time to come.