By Benjamin Brits | All photos: ©Precool Insulated Panels
As the world grapples with massive annual food-waste challenges, cold stores in South Africa are one of the segments in the cold chain examining vast growth and can contribute to the solution.
In the context of ‘massive annual food waste’, and according to the most recent figures from the Food and Agricultural Organisation of the United Nations, food losses in the cold chain have now topped USD400-billion a year, or through another more significant picture – the food quantity wasted each year is of equivalent proportions to feed 2.56 billion hungry mouths.
From standard cold rooms to fancy turn-style mechanised designs, and from the biggest developments to the growing informal sector (and even modular solutions direct to the farmers as a click and deliver online solution), cold stores and rooms are gaining momentum, as economists predicted.
The local market too has become much more aware of waste because this ultimately means lost income, and today minimising this factor has become more important than ever. Additionally, our growing exports carry a significant value towards the economy and cannot be serviced or increased without this essential part of the chain.
So, cold stores are an obvious choice to minimise loss and to extend the shelf life of any perishable product, but before you now rush off and start investing in this segment, a number of considerations need to be applied, and on speaking to various industry specialists, many costly mistakes can be avoided, not to mention the very important elements the average Joe just wouldn’t be aware of.
No matter if you are splashing out a mere R75 000 or going large scale to a R300-million facility, many of the same principles can be applied to your choices in ensuring your needs are met and your business is a success – also avoiding the commonly forgotten operational costs that can break the bank over time.
Primarily, there are two driving factors in the management of perishables that require cold storage. Firstly, maintaining the cold chain correctly and effectively enables us to reduce the amount of waste that we have already identified (understanding the fact that the limited resources and limits in what can be produced is as important as the losses too), and secondly, the sustainability goals the world is working towards.
How this relates is through the fact that cold storage is directly related to a refrigeration component that in turn is directly related to energy demand and refrigerants – some refrigerants of course being particularly bad for the environment. Also, other products such as insulation play a very big role through not only the materials used in manufacture, but their function.
The starting point: a team with the right expertise
If you can’t compete, you will be in trouble from the start. A reality in any business is that many people overestimate their ability or capacity to ‘handle things themselves’. Sticking to your expertise is a major element of success. The same applies to the suppliers you appoint to make things happen. You don’t want to be left in a position to ask yourself “where is the company that did the work?”, because things have gone wrong. Sadly, but quite often, the case is that those companies have moved on or closed down because they offered the cheapest solution – there is much more to it than price.
At the start of any project a consistent element that comes to the fore having had the discussion with many industry role players, is that before a pick hits the ground or you start up that excavator, you have to have the assurance of a team with the right expertise.
“For the new clients we all engage with, it could sound like a bit of a self-praise to get their business, but in reality, having the right expertise can be likened to an individual that needs to go for a medical procedure. You would naturally go to the right doctor with the right expertise and depending on the seriousness of the procedure you would likely go to a specialist with good referrals – simply to manage your risk. The same applies in this context. Realistically, everyone makes mistakes as they learn, but you can be assured that someone who has done 20 or 30 projects will already know to advise a client to avoid X, Y and Z. This is definitely not a situation I would recommend opting for ‘call a friend’, especially because very often the value in any of these projects will be significant to the owner,” says Dawie Kriel, head of business development at Energy Partners Refrigeration.
Willem Schoeman, managing director at Central Specialist Group agrees fully says, ”Off the bat, I think it’s quite important to emphasise that at the end of the day cold stores are some of the most expensive structures that you can build – in terms of the construction, most of the time – and no matter the size, you start below ground with the floors that are different to regular floors, all the way through to the massive structures in high density warehousing, to the extremely expensive equipment deployed. Any mistakes will ultimately cost the client dearly, at some point.”
The process in constructing a cold store, and more specifically to the commercial market, starts with what one can only hope is the ‘right site’ to construct the facility.
The first part of this journey should be doing placement analysis, then followed by steps such as taking your customer base into consideration, inbound and outbound flows, making sure your flows are aligned with the storage capability and capacity, what you want to put though the facility, what the different sizes of the operational areas will be, and so on.
“Customers will often specify that they want a cold store constructed at X site and position, with very specific sizes and then only afterwards think about the aforementioned points. This is where their problems start and is ultimately the reason having the right team from the beginning is crucial. What many people just don’t realise is that cold store construction is not just building a structure (which any company can do), as part of a bigger cold chain the processes involved are directly linked – it’s not only about food waste, but also about the waste in time, energy, and putting the wrong number of vehicles on the road. There are many more things to consider than just the construction site,” adds Schoeman.
Security of supply is another major factor. Putting your building up in a place where there is a good infrastructure in terms of utilities and energy is vitally important, but you also need things like good drainage because you don’t want a flooded facility every time there is heavy rain, so you have to consider not only the site itself but the support around the site.
“What type of roads you have access to, how long it take a truck to get off the highway into your facility. If there are regular electricity outages or failures, your trucks might take double the amount of time to get to you due to poor traffic flow. These are other things to things that are only realised afterwards when the facility is complete and proper analysis was not done first,” adds Kriel.
“It is also often disheartening to see when someone had a piece of land and they just dived in and developed it but because they never had the necessary advice to consider everything that has been noted here, they land up in a very real scenario of whether the business will survive or not,” says Schoeman.
Reconsidering the meaning of cost
It is unfortunate that the continued general mindset in South Africa is to push and demand cheaper and cheaper solutions. We hear about this all the time and no doubt this could have been an experience you have worked through yourself, but in fact, the only progression here is a race to the bottom. It’s a case of all logic has’ gone out the window’ because evidence proves again and again that you have to choose between quality and cost.
“The quality element in South Africa essentially has and continues to create a very difficult environment for ‘honest competition’ and is always a topic of conversation. There is also reportedly not a drive in South Africa to check up on quality because there is no recourse for companies who take a short cut, and this is a major challenge across the industry,” says Ari Zwick, CEO of Precool Insulated Panels.
Cutting costs to secure a job widens an already open door to suspect quality being applied. It is increasingly common to hear comments where some companies have secured a contract at a rate that is far lower than the market rate, and in extreme cases lower than most suppliers’ costs – it is only logical that quality will be under question. In today’s economic environment it is more important than ever to be cognisant of this and the long-term effects.
“Costs in cold store construction can be divided into several parts and by far the biggest cost in the process, as I would explain to a client investing into this sector, is the cost of the actual product that will be stored or handled at the right temperature, at the right time, at the right place. If these key elements are not correct, you will face problems. The fact of the matter, and the reason this is important is because in many cases we have built facilities valued in the hundreds of millions of rands, but the value of the product inside the facility could be worth as much as 10 times that at any point in time. There are many such cases and some industries naturally have a higher value than others, but the main point here is that the value of the ‘kept product’ far exceeds the cost of the facility, even more so when considering a 20 years plus lifespan,” says Kriel.
“Someone packing fruit knows all about nectarines or peaches and plums, but a cold room is just a cold room to them.”
Second to product are energy costs. Up to 70% of the cost in running a cold store is going to be the energy consumed over the facility lifespan, and if you don’t take this into account from the beginning, this too can be such a big number compared to the capital expenditure, it may even prove an unviable venture.
Energy costs and their parameters should also form part of your up-front analysis because the dynamics of this may differ vastly between geographical locations. For example, if you want to build a cold store in the middle of Johannesburg, this might be exceptional in terms of location purposes, but then having to pay a tariff that is twice what you would pay by establishing a cold store in another area would result in you being uncompetitive and automatically out of the market before you even open your doors.
With all refrigeration system maintenance, and the most important in terms of energy consumption is that the day the system is commissioned, it’s working perfectly efficiently. A year later when not maintained correctly you will see that plant is operating in a sub-optimal state. Another year its further away from optimal efficiency. Over a five year period you may sit at 20% less efficient and this means opex costs are out of budget.
A closer look at major components
Fire suppression systems are a non-negotiable for the industry and must form part of any facility. In the past, people could get away with interpreting the regulations in a way to cut out certain elements, but today one has to be innovative around fire systems and there is a lot of research being done in different technologies to offer different solutions to the common sprinkler type systems that are not actually a good fit for this application because the consequences of accidents result in very bad outcomes.
“What we have found from our perspective, is that we have seen a significant impact from insurance companies in regard to component requirements. As alluded to, a lot of systems that take the water factor out of a cold store environment are in continual development, but fire safety is one of the key elements required to be included in design. The insurance landscape requirements are much more stringent than what we saw 5 years ago,” notes Schoeman.
There is also a perceived specification for insulated panels which is another major component in any cold store or cold room construction. The engineer will specify X, and he will expect and assume the contractor will provide X. Projects go out to tender and companies submit their pricing. As an example, a 0.5mm frost white chromadek cladding and a 100mm insulation would be requested.
“There is then no specification on quality of steel, zinc content or corrosion resistance, nor is there specification on insulation density. Both of these items have a huge range and a supply into South Africa that often comes from China, Taiwan, and India to name a few. I like to explain things in analogy, so specifying something without specifics is like asking for a car with four wheels and body. Four wheels and a body could be a salvaged bakkie that fell off a container into the sea, was claimed and is barely running, or it could be the latest luxury SUV off the showroom floor. The range in between the two is almost infinite and so the quality will obviously be different,” expresses Zwick.
Insulated panelling is an easy place to ‘cheat’. The steel can be microns thinner and the insulation density can be greatly reduced, for example by 30%. Now, when you are building a cold store that is 100m long and 60m wide and 15m high, there is a couple of thousand cubic metres of refrigerated space to contend with.
When you take a 30% lower insulation density in the envelope into consideration, this has a significant impact on many levels. When you look at the panels you won’t see the difference, when you look at the cladding you won’t notice the difference, but there is in fact a huge difference, and this directly translates to your energy costs over time, and the stress you will put onto your refrigeration system.
The thermal efficiency of the building or store will be greatly reduced. As an example, you have 30 degree weather or even 20 degree weather for that matter, but a -20°C inside requirement. On the latter, that is a 40 degree differential. Ultimately thermal radiation will be pressing onto the building and you want to keep that out – obviously, the longer you can keep that out the more efficient your system runs. With 30 % less ‘power’ to keep out that thermal radiation you will definitely have your hands full with scenarios that could play out in a number of ways.
With insulated panels there is also a structural component to consider. The actual structural element in lighter or less dense insulation material means less strength as well.
“Incomplete or inaccurate information equals bad choices which has a direct impact on the overall industry.”
“This speaks directly to integrity as a business because at the end of the day it’s short-changing the customer because generally, they will have no clue – they rely on the expertise of the suppliers because it looks and feels like the right thing and they won’t even realise it when they are overpaying on their electricity bill per month. They also won’t understand why, but ultimately this eats away at their bottom line. In some cases, it can sink a business. Over a year you could be overspending on your budget by 10 to 20% – these are big figures. A 10-year figure would reveal double expenditure, and so on,” adds Zwick.
Above the insulation density, there are also so many different grades of steel, you have your regular galvanised steel and alu-zinc material that has a component of aluminium which offers corrosion protection. A new material now has some magnesium which is even more corrosive protective. The different components you put into the steel base give it different properties and qualities. These mixed materials get used in coastal applications where certain minimum ratios are recommended that don’t allow the panels to corrode. Naturally, the better the quality of steel, the higher the cost will be.
“What prospective cold store investors need to take into account, and for those hard negotiators, is that the unfortunate reality that happens in the industry is that supply companies quote to get the job and then they start looking at how they can make money. Skimping on insulation quality (because generally no one is the wiser) and when done cleverly, the building will stand. It may not stand for 30 or 40 years, but long enough to reach the guarantee period,” says Zwick.
He continues, “Any supplier should supply what they promise to their clients but further the best application for the job. This is often confused where you get told to ‘give the customer what they want’, but the reality is that what the customer wants is not going to work. They don’t really know because they don’t have the expertise. Someone packing fruit knows all about nectarines or peaches and plums, but a cold room is just a cold room to them. What they need is a cold room that is efficient and that will have a life and not fall apart after a couple of years. We all need to do our part to make cold rooms economically efficient, electrically efficient – and structural integrity is not even a question.”
Cold room requirements are also many, for example, will you be storing fruit or vegetables that will be coming from a refrigerated truck or after you have harvested at 35 degrees out from the field where produce needs to be cooled down very quickly in order to give a sufficient shelf life.
Timing is thus also an important factor because if you need to get produce to zero degrees within 5 hours or 10 hours, this makes a difference on the specs of your system. What now happens however is that some companies are selling a cold room to a client for R50 000 when they actually need a cold room that will cost R75 000. The client then takes the R50 000 option but lands up spending an additional R35 000 to continually fix and maintain it, so these costs far outweigh what they should have been supplied from the start. Too often the industry exploits the users’ lack of knowledge and trust.
“Vapour barriers are another essential for any cold store. You have to make sure your cold room or store doesn’t have any moisture in it because moisture and frozen temperatures create havoc – moisture creates ice, and this creates expansion and contraction, ice build-up blocks up the fins in your coils and because of its own insulation barrier, stops components from working, or you have a battle to reach required temperatures so economy literally goes out the door, not to mention time wasted,” adds Zwick.
For the purpose of managing moisture, many companies have started deploying de-humidifiers in their cold rooms and stores these days to eliminate the associated issues moisture can cause. Panel joints are also important and of course door seals which are often overlooked.
Pressure release valves for cold rooms are also very important but often too are neglected because they carry additional costs. These units equalise the pressure to avoid buckling or in worst case scenarios failure that can be devastating should people be working in such a space.
“Fire regulation as mentioned already by Willem, is something impacting the entire world in terms of cold storage. Particularly, it’s a very sensitive issue in South Africa today because of the dramatic influence this has over an owner’s access to insurance for their facilities. The effect is either having an insurance ceiling, or their insurance is extremely high when certain standards are not met. As most re-insurers are linked internationally, they look specifically for fire safety compliance as a requirement.
Larger investors in this market are put in a difficult position because they cannot procure locally-manufactured goods because none of the products currently meet approval in terms of the insurance needs and this is a big danger for the local economy. The conundrum here is that if you want fire rated approval the entire system needs to be approved and not individual components, which insurers are specifying. One particular example is that any insulated panel needs to be structurally sound for a certain timeframe, so that should an incident occur, occupants have sufficient time to exit the facility. However, another important aspect in this regulation is that the roof too (which is insulated panelling) must be installed by being directly connected to the steel structure, but in reality, this doesn’t happen. So, what this actually comes down to is that it does not matter where the panels come from – or their rating, when not installed correctly as we see on so many site. We need to remember that people’s perception is what drives trends. Incomplete or inaccurate information equals bad choices which has a direct impact on the overall industry that supports many thousands of jobs,” says Zwick.
Trends, suggestions, and thoughts on technology
Cold store construction trends today have primarily seen a shift towards high-density warehouses. Obviously, land is extremely expensive, and then the relationship between height and footprint comes into play.
Schoeman notes, “Utilising automation in these facilities with robotics and shuttles has become topical and everyone is also starting to look at fire resistant panels in compliance with health and safety but also because insurance cover is becoming more stringent as Ari has mentioned. With high density facilities customers are starting to move towards implementing mobile racking systems which have their own challenges because you have to have a specifically constructed floor with the railing inset, and these foundations are naturally more costly, but the plus is a better yield per m2. Traditionally you would have a storage exposure of 50-60% but this particular mobile rack solution allows a much greater capacity. Systems and solutions are generally improving day to day. Automation on many levels is easily possible today.”
Retrofits are another process that has seen a lot of activity as old buildings are re-purposed, or older facilities are upgraded, still keeping some of the structure and componentry. However, retrofitting has its setbacks because they usually have various elements of difficulty and at the end of the day may cost more than anticipated. New design principles in this element identify a buildings suitability by looking at process flows, and operational areas required and if a separate cold room structure can be ‘fitted’ to the building from the side or in the middle. This is probably the best retrofit solution that you can get today through the combination method of new and old structures.
“The other things that are trending in cold store construction projects are things like automated lighting systems and new structural processes – anything in automation and to assist in energy savings,” Schoeman notes further.
“Refrigeration, which as we see is the biggest component of these facilities hasn’t really changed that much, simply because the basic principles have remained the same, but to just add to what Willem has said, the reason why I think companies are moving to high density solutions is because the higher you build versus the floorspace you have, the less energy it also requires. From an energy design perspective, you save by having a smaller footprint and taller structure. The only area you are then adding heat that comes into the system is on the sidewalls – the rest stays the same. The roof area is the same and the floor area is the same. The walls in these facilities are minor factors from an energy perspective so it just makes sense both from a cost point of view and land-utilisation point of view,” says Kriel.
The idea of not having any human-product interfaces is something that is also becoming more and more important in these types of facilities, locally and international where various levels of automation are already a reality. Accidents and errors are caused by people and some research suggests that this figure can be as high as 90%
An operator for example drives a forklift into a door – this now creates the environment for moisture ingress that will cause problems in time. An employee will forget to close a door or doesn’t close the doors because of comfort issues because they don’t understand the functionality of the refrigeration process. These seemingly silly things make a big difference. However, given that South Africa does have different dynamics compared to the rest of the world because here we have much cheaper labour where in other countries labour cost is expensive, our model drives us to have more human interfaces, but statistics show that you pay so much more in terms of factors linked directly to human activity and behaviour such as damage, neglect, maintenance and so forth.
“On the energy side one should never consider building a cold store without a solar PV system included on the roof – adding one of these systems is going to be cheaper than any energy that you buy from any supplier in South Africa. We also know that generally for the roof area that we have to work with, the amount of energy that you can generate is always going to be less than what your system will require so you will never end up in a situation where you have ‘excess electricity’, so, you shouldn’t even think twice about this,” Kriel adds further.
Solar panels provide the backup energy and are included as a cost-saving mechanism and also lower a facility’s carbon footprint. This element in particular has slowly started to be brought into the legal framework in the country. In other countries carbon reporting and penalties are already a lot stricter than we have here.
In this country you also cannot go without a generator, especially if you have a product that is extremely temperature sensitive, obviously some products are less sensitive to fluctuation such as juice concentrates, but if your store is going to hold vaccines it would be critical to have consistency. It is unfortunate that we regularly get reminded from government that we will continue to have power interruptions, and not to mention the factor that is too often overlooked – being the age of our infrastructure where we see many failures these days.
Another consideration for your facility could be thermal solutions such as ice storage system albeit it that these are limited in their application, but still a consideration in managing energy costs.
Schoeman adds, “All the recent designs that we have done for these types of facilities include integration between the three main energy sources and there are different relationships between options, so a variety of configurations using PV, Eskom and generator sets. Generator sets in our minds are already a part of a facility design and the client really just needs to decide how much of the facility must be able to be run by generator, such as the critical areas.”
Trends in terms of refrigeration itself is the move towards natural refrigerants. “This move is going to become, in the next 10 years, the norm. We will be using refrigerants that are low in global warming potential (GWP). At the moment there is nothing from a synthetic point of view that even remotely gets close to what you have in the natural refrigerants. CO2 has a GWP of 1, and ammonia has a GWP of 0, propane has a GWP of 3. The next best refrigerant GWP are in the hundreds. Natural refrigerants do have their own types of challenges that need to be considered. The most obvious is that propane is extremely flammable, and you can’t really use this as a refrigerant in very large applications with a wide range of temperature requirements. Ammonia in South Africa has been used for around 50 years and we in fact have the highest number of expertise in the world in terms of ammonia installations – we have excellent engineers, technicians and suppliers, so ammonia is just a logical choice,” notes Kriel.
“Waste heat recovery is another trend being widely adopted for a variety of applications.”
CO2 is extremely efficient at low temperatures and combining ammonia and CO2 installations will be one of the most interesting fields to be developed in future. We can use CO2 directly at very low temperatures in a direct expansion (DX) system and you could use CO2 as a brine solution if you don’t want to use ammonia in your cold space because of the effect that it usually damages produce if you have a leak, as an example.
A combination of refrigerants can be something that can have a lot of legs in terms of trends for the future. Full CO2 solutions are also gaining popularity around the world and is still a relatively new technology according to energy efficiency. There are also not many technicians in South Africa that understand and can work on these systems. The systems further have a many components, and this could lead to the risk in failure ratios.
Another trend gaining popularity is what is known as CaaS or ‘Cooling as a Service’. This model essentially means that operators don’t own anything in principle. This falls more in line with the other general strategic principles in owning a typical cold store. Operators don’t own the building – they have a long-term lease with the developer, they usually don’t own the land, they don’t own the equipment as these are also rented, they don’t own trucks that move product and don’t even own the product. What is left is the furniture, labour, managing a process and of course the required tools like computers and software. The refrigeration system then is the ‘odd service out’ because it’s not consistent with the rest of the business ‘suppliers’.
With the cooling service model added, everything in terms of operational costs can be billed at the end of the month. This model has gained particular ground because companies don’t necessarily want to employ specialists to look after their systems. The whole world is moving towards a ‘utility model’ and this structure is very well suited, in fact, to the entire cold chain. The utility model simply allows a company to focus on its core business strategy.
Waste heat recovery is another trend that can be used to generate hot water and even clean in place (CIP) systems. It is a great way to increase efficiency and in cold store there are a lot of opportunities to use this method in other applications like underfloor heating through a glycol pipe system and managing humidity in voids rather than dumping it into the atmosphere – after all, you have paid for the generation already.