Queue item eighteen, and the fifteenth article this session. Item seventeen was confirmed already covered and skipped. We also declined commercial printing after checking it against an existing article: press hour costing gated clear on vocabulary and is the machine shop denominator problem in different words. That check is now routine because it caught a real duplication earlier this session.
Key Takeaway
Cost shares are ratios and a ratio has two ends. The published disagreement about energy in cold storage is not a disagreement about energy. It is four different denominators, and the same dollar of electricity reports as a tenth of the cost base or three quarters of it depending which one you use.
The Verdict, Stated First
Five claims, in descending order of confidence.
One. Published figures for energy as a share of cold storage operating cost disagree by several times. One industry benchmark puts labour at around 46 percent and occupancy at around 35, leaving energy inside a minority remainder. Other sources state 25 to 40 percent, and others 50 to 60 percent.
Two. The disagreement is about scope, and one source says so explicitly. It records that the higher figures usually describe an owner-operator who already owns the building and runs lean on labour, or a tally of utility cost only.
Three. On our own arithmetic that explanation is sufficient. Holding the energy dollar constant and changing only the denominator produces 10.0 percent on a full third-party profit and loss, 15.4 percent excluding rent, 23.8 percent excluding rent and halving labour, and 76.9 percent on a utility-only tally. A factor of 7.7, with nothing about the business changed.
Four. Storage energy is close to a fixed cost, which makes occupancy the whole business. Ours, on an invented 20,000-position facility at $25 a position a month with $4,200,000 of near-fixed cost: break-even occupancy is 70.0 percent, and moving from 76.1 percent to 90.0 percent raises revenue 18.3 percent and operating profit 228 percent.
Five. The billing unit and the cost driver are different things. Operators bill per pallet position regardless of how full the pallet is, while cost is driven by cubic space, handling and temperature. Least confident of the five because we are reasoning from rate-card descriptions rather than from any operator's cost data.
Our Grades For These Claims
We grade our own sourcing before anyone else has to.
Claim one is well sourced on one side and less so on the others. The 46 percent labour and 35 percent occupancy figures come from the Global Cold Chain Alliance's Cold Chain Index, a commissioned industry benchmark reported since 2018, described as tracking cost growth using predominantly official economic data. The competing percentages come from commercial cost guides and a business valuation site.
Claim two is the single most valuable thing we found and it comes from one source, which diagnoses the discrepancy rather than merely adding another figure to it. We have adopted its explanation and tested it arithmetically rather than taking it on trust.
Claim three is our own arithmetic on an illustrative cost split. The split is built from the Cold Chain Index shares for labour and occupancy with the remainder allocated by us between energy and everything else. That allocation is invented, so the specific percentages are illustrative and the mechanism is not.
Claim four is arithmetic on invented figures at a rate inside the published ranges.
Most of the rate and cost data here comes from commercial content marketing. Warehousing cost guides, 3PL comparison sites and a valuation broker. These sites exist to generate enquiries and their numbers are not audited. We have used them for ranges and for the shape of rate structures, and we have computed nothing important from them.
A Note On Method
What we obtained: the Global Cold Chain Alliance's description of its Cold Chain Index, including the five expense classes and the labour and occupancy shares; a cold storage operating cost guide that diagnoses the scope problem behind competing energy figures; two commercial warehousing cost guides giving lease, construction and third-party pallet rates; a cold storage cost calculator describing rate structures and their variation; a business valuation site describing utilisation benchmarks and revenue per position; and an investment analysis of a listed cold storage operator giving reported occupancy and throughput.
What we did NOT obtain:
- The Cold Chain Index itself. We have the alliance's description of it and the two headline shares, not the underlying series.
- Any Canadian data. Every figure here is North American at best and mostly United States. Canadian electricity prices, labour costs and lease rates differ by province and differ from the US, and nothing here is calibrated to Canada.
- Any operator's actual cost structure, energy consumption or rate card.
- Any engineering data on refrigeration load against occupancy, which is the physical basis for our claim that storage energy is near-fixed.
- Any accounting guidance. We state no recognition or measurement position.
One warning larger than usual. This article is about a ratio, and we are using an invented cost split to demonstrate what happens to it. The demonstration is exact arithmetic. The inputs are ours, and a reader who wants the real shares needs the Index.
The Number Everybody Quotes
Search for what it costs to run a cold store and you will be told, confidently and repeatedly, what share of operating cost is energy. The figures do not agree.
The Global Cold Chain Alliance's Cold Chain Index tracks five classes of expense: labour, electric power, rent, supplies and repairs. On the shares it reports as typical of a North American refrigerated warehouse, labour is the largest at 46 percent and property rent or lease expense is nearly 35 percent. Electric power, supplies and repairs share what is left.
A commercial cost guide states that energy costs alone account for 25 to 40 percent of total operating expenses in temperature-controlled facilities [2].
A business valuation site states that refrigeration typically represents 50 to 60 percent of facility operating expenses [4].
And a cold storage operating cost guide refers to a 60 to 70 percent energy figure quoted elsewhere.
So the published range for one quantity runs from something under nineteen percent, on the Index's arithmetic, to seventy percent. That is not a difference of opinion about a hard number. It is too wide for that.
The temptation is to average them, or to pick the source you trust, or to conclude that the industry does not know its own cost structure. All three are wrong, and one of the sources explains why.
One Source Diagnoses It
The cold storage operating cost guide does something the others do not. Instead of adding another figure, it accounts for the spread.
Its statement is that labour is usually the largest single line on a third-party warehouse's profit and loss, around 46 percent on the alliance's North American benchmark, followed by occupancy near 35 percent, and that energy is the biggest controllable utility cost and the reason cold storage runs several times a dry warehouse, but on a full operating statement it sits below labour and rent.
Then the diagnosis: the 60 to 70 percent energy figure quoted elsewhere usually describes a different scope, being an owner-operator who already owns the building and runs lean on labour, or a tally of utility cost only [3].
Read what that says. The competing figures are not measuring the same thing. They are the same numerator over different denominators.
An owner-operator has no rent line. If the building is owned outright and its cost appears as depreciation or not at all, roughly 35 percent of the cost base disappears from the denominator and every remaining share rises.
A lean operation has less labour. Automated or low-touch storage, as opposed to high-throughput pick-and-pack, employs fewer people, so the largest line shrinks and again the denominator falls.
A utility tally is not an operating statement at all. Energy as a share of utilities is a different question from energy as a share of cost.
The explanation is plausible on its face. The useful thing is that it is testable.
One Dollar, Four Answers
Ours, and this is the section the article exists for.
Build an illustrative cost base from the Index's two published shares [1] and allocate the remainder. Labour 46, occupancy 35, energy 10, everything else 9, summing to 100. The energy allocation of 10 is ours, because the Index's description gives energy only as part of a residual shared with supplies and repairs.
Now hold that energy dollar completely constant and change only what it is divided by.
Full third-party operating statement. Denominator 100. Energy is 10.0 percent.
Owner-operator, no rent line. Remove occupancy of 35. Denominator 65. Energy is 15.4 percent.
Owner-operator running lean on labour. Remove occupancy and halve labour to 23. Denominator 42. Energy is 23.8 percent.
Utility-cost-only tally. Energy against energy plus other utilities, taken as 3. Denominator 13. Energy is 76.9 percent.
Same facility. Same electricity bill. Same dollar. Reported share ranges from 10.0 percent to 76.9 percent, a factor of 7.7, and nothing about the business has changed.
Those four figures span the entire published range we found, from under nineteen percent at one end to seventy at the other. The diagnosis is sufficient. There is no residual disagreement about energy left to explain.
Which One Is Right
Having shown that all four can be produced from one set of facts, the obvious question is which figure a person should use. The answer is that it depends entirely on the decision.
For pricing a third-party storage contract, the full operating statement is the right denominator, because the price has to cover everything including rent and labour. Energy at around a tenth of cost is the figure that belongs in that conversation, and quoting sixty percent would justify an energy surcharge several times larger than the cost it recovers.
For an owner-operator deciding whether to invest in refrigeration efficiency, the rent line is genuinely irrelevant, because it is sunk and unaffected. The higher share is the right one for that decision.
For a utility procurement or demand-response decision, the utility-only tally is the relevant frame, because the question is about the utility bill.
Ours, and it is the general point. A cost share is not a fact about a business. It is a fact about a business and a denominator, and the denominator is chosen by whoever is quoting it.
That makes the statistic unusually easy to use badly, in a specific direction. An energy share computed on the narrowest denominator, quoted in a conversation about the widest one, overstates the case by a factor we have just shown can reach 7.7.
We are not suggesting anybody does this deliberately. The numbers circulate without their scope attached, which is enough to produce the effect without anyone intending it.
Why Energy Feels Larger Than It Is
There is a reason the higher figures are believed even by people whose own statements show otherwise, and it is not innumeracy.
The operating cost guide names it: energy is the biggest controllable utility cost and the one that swings most from month to month.
Three properties make a cost feel dominant regardless of its share.
It varies. Rent is the same every month. Labour moves slowly. The electricity bill moves with tariff, weather, throughput and plant condition, so it is the line that changes and therefore the line that gets discussed.
It is controllable. Management can do something about energy through plant maintenance, controls, defrost strategy, door discipline and refrigerant choice. Rent cannot be managed after the lease is signed. So energy absorbs management attention disproportionate to its share.
It is the differentiator. Energy is why cold storage costs several times a dry warehouse. When explaining why the business is different, energy is the correct answer, and it is easy for the correct answer to the question why is this expensive to be mistaken for the answer to what is expensive about this.
Ours. All three are legitimate reasons to pay close attention to energy and none of them is a reason to misstate its share. A cost can be the most important thing to manage and the third largest line at the same time, and cold storage appears to be exactly that case.
And Storage Energy Barely Moves With Occupancy
One physical property of the cost drives everything in the second half of this article.
The refrigeration load on a cold store in steady state is largely the heat that gets in: through the insulated envelope, through door openings, from lighting and equipment, and from the defrost cycle. Product already at temperature contributes almost nothing to steady-state load, because it is not generating heat.
Product does create load when it arrives warm and has to be pulled down to temperature, which is why blast freezing is a separate and separately priced service.
So the energy cost of holding a pallet that is already cold is close to zero, and the energy cost of running the building is nearly the same whether it is half full or full.
We flag this as reasoning rather than sourced fact. We did not obtain any engineering data on refrigeration load against occupancy, and a real facility has second-order effects we are ignoring, including that a fuller store has more thermal mass buffering temperature swings, which cuts the other way.
If the reasoning holds, the consequence is large and it is the subject of everything below. Energy is not the only near-fixed cost either. Rent does not move with occupancy at all, and a substantial part of labour is a minimum crew rather than a variable input.
A business whose costs are mostly fixed and whose revenue is per occupied position is a business about occupancy, and very little else.
Occupancy Is Almost The Whole Answer
If most of the cost base does not move with how full the building is, then the revenue that does move is almost pure margin, and the operating result is a function of one number.
The industry knows this and measures it. A valuation source describes pallet position utilisation as the measure of how effectively a facility converts total storage capacity into revenue-generating occupied positions, puts 90 percent and above as demonstrating strong demand and effective account management, and reads below 75 percent as signalling market oversupply, inadequate sales effort or competitive disadvantage [4].
A listed operator's reported figures give a real data point. In the quarter analysed, warehouse segment revenue declined 1.0 percent year over year as economic occupancy fell 130 basis points to 76.1 percent and throughput pallets declined 4.3 percent, with higher revenue per pallet from mix and pricing partially offsetting [5].
Note what that sentence contains. A 130 basis point occupancy fall and a 4.3 percent throughput fall produced a 1.0 percent revenue fall, because price and mix absorbed most of it. Revenue is the least sensitive of those measures.
Profit is not. That is the next section.
What Fourteen Points Of Occupancy Is Worth
Ours, and invented. Assume a facility with 20,000 pallet positions, a rate of $25 per position per month, and $4,200,000 of annual cost that does not move with occupancy.
At full occupancy the revenue is $6,000,000.
- 70.0 percent: revenue $4,200,000, profit nil
- 76.1 percent: revenue $4,566,000, profit $366,000, margin 8.0 percent
- 80.0 percent: revenue $4,800,000, profit $600,000, margin 12.5 percent
- 85.0 percent: revenue $5,100,000, profit $900,000, margin 17.6 percent
- 90.0 percent: revenue $5,400,000, profit $1,200,000, margin 22.2 percent
- 95.0 percent: revenue $5,700,000, profit $1,500,000, margin 26.3 percent
Break-even occupancy is 70.0 percent on these assumptions, which sits just below the 75 percent the valuation source treats as a warning sign, and that alignment is worth noticing even though ours is invented.
Moving from 76.1 percent to 90.0 percent raises revenue 18.3 percent and operating profit 228 percent.
That is the arithmetic of a fixed cost base and it is why the occupancy figure carries so much weight in how these businesses are assessed. It is not a utilisation statistic. On this cost structure it is very nearly the entire income statement.
And What The Same Leverage Does Downward
Leverage runs both ways and the downside is the part that gets underweighted.
On the same numbers, falling from 76.1 percent to 70.0 percent removes $366,000 of profit and leaves nothing. That is a fall of 6.1 occupancy points, which on the listed operator's reported movement of 130 basis points in a quarter is about five quarters of the same drift.
Ours, and the shape matters more than the numbers. A business with a break-even occupancy at 70 percent and a market that regards 75 percent as a warning sign is operating with roughly five points of headroom between concern and nil.
Three features make that headroom thinner than it looks.
Occupancy is seasonal. The valuation source notes seasonal utilisation patterns driven by agricultural harvest cycles, holiday inventory builds and food production schedules affecting annual average occupancy [4]. An annual average of 78 percent contains months well below it.
Capacity is lumpy and permanent. A cold store is built at a size. Occupancy falls either because demand fell or because somebody built more capacity nearby, and the second does not reverse.
The cost base cannot follow it down. That is the whole premise. Rent does not fall, the plant runs, and the minimum crew is a minimum.
So the business has high operating leverage in both directions and limited ability to respond to the downward one, which is the classic profile of an asset-heavy fixed-cost operation and is worth naming explicitly because the upside arithmetic in the previous section is seductive on its own.
Storage And Handling Are Different Businesses
A cold store sells two things with completely different cost behaviour and they are frequently discussed as one.
Storage is rent for a position over time. On the reasoning established above, its marginal cost is close to zero once the building is running.
Handling is receiving, put-away, picking, loading, blast freezing and the associated documentation. Every one of those consumes labour, equipment time and, in the case of blast freezing, substantial energy pulling warm product down to temperature.
The commercial material confirms these are separately priced. One source notes that handling, receiving and blast freezing are billed separately, so that a fast-moving account can pay more in transaction fees than in storage rent [3]. A calculator source puts a cold storage receiving fee at around $9 a pallet, roughly 1.7 times the ambient equivalent [2].
Ours, and it is the commercially important point. Because labour is the largest line on the operating statement at around 46 percent, and because handling is what consumes labour, the handling business is where most of the cost is and the storage business is where most of the margin is.
An operator whose account mix shifts toward fast-moving, high-throughput customers is shifting toward the revenue that carries real marginal cost. An operator holding slow-moving product at good occupancy is collecting near-pure margin on an asset that is running anyway.
Those are opposite businesses inside one building, and a blended cost per pallet tells you which one you are in only by accident.
Free time deserves a note here because it sits exactly on the seam between the two revenues. Many tariffs include a number of storage days with an inbound. For a fast-moving account that number can exceed the actual dwell, so the customer pays handling and effectively no storage at all.
Ours. That is the worst combination available to the operator. The account consumes the labour, which is the largest line on the operating statement, and contributes nothing to the near-zero-marginal-cost revenue that carries the margin. A high-throughput account on generous free time is a business that has been sold at handling rates and costed as though it were storage.
The reverse case is the one operators should want and rarely chase: slow-moving product, minimal handling, long dwell, occupying a position that is running anyway. It generates no activity, no throughput statistic, and close to pure contribution.
The Billing Unit Is Not The Cost Driver
The industry bills by the pallet position and the position is not what costs money.
A cost guide describes the mechanism plainly: goods are placed on standardised pallets in designated positions, businesses pay a recurring fee per pallet position, and pallet pricing charges a flat fee per pallet regardless of how full it is [2]. The most common size used for pricing is stated as 40 by 48 inches.
The same source records the alternative. Cubic-foot pricing bills for the actual volume the inventory occupies, quoted at $0.35 to $0.60 per cubic foot, and is described as benefiting high-SKU or irregularly shaped inventory where vertical space utilisation matters.
And it records the adjustment where the standard breaks: if pallets are larger or heavier, expect higher fees, because they reduce rack density and require more handling.
Ours. Read those three statements together and the position-based tariff is a simplification that works while pallets are standard and breaks in two directions when they are not.
A short, light, half-empty pallet occupies a full billed position and consumes a fraction of the cubic space and handling effort. A tall, heavy, dense pallet occupies one billed position and consumes more of both.
So within a single tariff there is cross-subsidy running from dense to sparse, and the operator recovers it, if at all, through the surcharges the same source describes rather than through the headline rate.
Two Pallets, One Price
Put a number on the cross-subsidy, because the mechanism is easier to see priced.
A standard 40 by 48 inch pallet position in a racked freezer accommodates a pallet up to a set height. Ours, illustratively: a position with usable volume of about 64 cubic feet at a typical racked height.
At the cubic-foot rate the same source quotes, $0.35 to $0.60, a fully occupied position would bill between $22.40 and $38.40 a month on volume. That sits inside the published per-position ranges, which is a mild consistency check on both.
Now half-fill it. On cubic pricing the customer pays $11.20 to $19.20. On position pricing the customer pays the full position rate regardless.
So the choice of tariff is worth up to half the storage bill on the same physical goods, and it runs in favour of the operator for sparse pallets and in favour of the customer for dense ones.
We flag the arithmetic hard. The 64 cubic feet is ours and we did not source a standard position volume. Rack heights, pallet heights and clearances vary and the number could reasonably be half or double what we assumed. The point that survives any of those is directional: the two tariffs price the same goods differently, and which one a customer is on is a material commercial fact that neither party usually discusses.
A customer with dense, heavy, well-stacked pallets should want position pricing. A customer with light or awkward goods should want cubic. Both are usually offered whatever the operator's standard tariff is.
Why Two Quotes Never Compare
The rate ranges we found across sources are so wide that they cannot all be describing the same service, and one source explains why.
Published third-party cold storage rates in our material run at $8 to $25 a pallet position a month in one source, $15 to $35 in another, and $35 to $75 in a third, against $15 to $25 for ambient.
A calculator source sets out the reason directly: operators publish wildly different rate structures. Some bill per occupied pallet position; others bill per pallet per day. Some bundle documentation and appointment scheduling into the storage rate while others itemise every outbound. Some quote a flat energy pass-through and others split an energy surcharge into chamber-by-chamber attribution. Its conclusion is that two operators quoting the same freezer storage at $34 and $39 a pallet a month are not necessarily quoting the same thing [2].
The same source records that real per-account quotes vary by 15 to 25 percent on volume tier, dwell time, energy cost recovery clauses and minimum monthly commitment.
Ours, and it connects to the first half of this article. An energy cost recovery clause is a contractual pass-through of a cost whose share of the operating base is the very number that ranges 7.7 times across published sources depending on denominator.
A customer negotiating an energy surcharge with only the published percentages to reason from is negotiating against a statistic that can be quoted at any level between a tenth and three quarters of cost, truthfully, by choosing a scope.
What Actually Makes Two Quotes Comparable
If headline rates do not compare, something has to, and the components are knowable.
Ours, and it is a list rather than a finding.
The billing basis. Per occupied position per month, per pallet per day, or per cubic foot. These produce different bills on identical goods and the difference is largest for short dwell times, where a daily rate and a monthly minimum diverge sharply.
What is bundled. Receiving, put-away, picking, documentation, appointment scheduling and outbound handling are each either inside the storage rate or itemised. A low storage rate with everything itemised is not a low price.
The energy clause. Flat pass-through, indexed surcharge, chamber-attributed, or absorbed. This determines who carries tariff volatility, which the first half of this article showed is the most variable line in the business.
The minimum commitment. A minimum monthly charge converts a variable cost for the customer into a fixed one and does the reverse for the operator.
Free time. Days of storage included with an inbound, which shifts the effective rate for fast-moving product substantially.
The temperature zone. Frozen and chilled are different costs and should be different rates, which the next section takes up.
None of this is exotic and all of it is ordinary contract diligence. We set it out because the published material we read is dominated by headline rate comparison, and headline rate is the one component that has been shown not to compare.
Every Degree Costs Something
Temperature is a cost driver with a physical basis and it is priced accordingly.
The operating cost guide states it simply: frozen storage costs more than chilled because every degree colder increases the heat the refrigeration plant must remove [3]. The same source puts third-party cold storage at $8 to $25 a position a month with frozen at the top of the range and chilled toward the bottom.
A valuation source goes further and treats zone diversity as a business characteristic rather than a cost fact. It describes facilities operating frozen, refrigerated cooler and blast freezing as generating $1.50 to $2.50 per pallet position per day across zones against $0.80 to $1.20 for single-temperature operations, and lists temperature zone diversity among the things buyers evaluate [4].
Ours, converting those to a common basis, because the sources quote per day and per month and the comparison is not obvious. At thirty days, $1.50 to $2.50 a day is $45 to $75 a position a month, and $0.80 to $1.20 is $24 to $36. So multi-zone facilities are reported at roughly 1.9 to 2.1 times single-temperature revenue per position.
That is a large premium and the sources do not say how much of it is higher cost recovered versus genuine margin. We do not know, and it is the question we would ask, because a doubling of revenue per position that merely recovers a doubling of cost is not a better business, it is a bigger one.
What is clear is that zone capability is a capital decision made at build, and a single-zone building cannot follow the market into the higher band without construction.
If You Run A Cold Store
Five things, in the order we would look at them.
Know your break-even occupancy and how far you are above it. On our invented numbers it was 70.0 percent against a market that treats 75 percent as a warning sign. That is five points of headroom, and occupancy is seasonal.
Report storage margin and handling margin separately. Storage has near-zero marginal cost and handling consumes the largest line on your operating statement. A blended cost per pallet tells you which business you are in only by accident.
Check whether your tariff matches your customers' density. Position pricing on sparse pallets is generous to you; on dense pallets it is generous to them. Both are in your book at the same rate.
State the scope whenever you quote an energy share. Your own number is true on your denominator and can be four times a customer's expectation on theirs, and an energy surcharge argued from a mismatched denominator is an argument you will eventually lose.
Treat occupancy as a pricing problem, not only a sales one. With marginal cost near zero, filling an empty position at a discount is almost pure contribution, and the constraint on doing so is what it does to your existing rate card rather than what it costs to serve.
If You Advise One
Four checks we would run on any cold storage engagement.
Whether the cost base has been split by behaviour rather than by nature. Fixed, occupancy-driven and throughput-driven are the categories that matter here. A chart of accounts organised by expense type will not produce them.
Whether occupancy is reported as a period average or a point. A seasonal business reports very different figures depending which, and the difference is largest exactly where it matters most, near break-even.
What the energy recovery clause in the standard contract actually says. Flat pass-through, indexed or absorbed determines who carries the most volatile line in the business, and it is frequently inherited from an old template.
Whether any customer concentration sits behind the occupancy figure. The valuation material treats no account exceeding 25 percent of revenue as a diligence criterion. High occupancy from one large account is a different asset from the same occupancy across fifty.
And one thing to resist. Do not repeat an energy percentage without asking what it is a percentage of. We have shown one unchanged dollar reporting at 10.0, 15.4, 23.8 and 76.9 percent, and every one of those figures could be quoted truthfully.
What To Do
If you take one thing from this article, take the denominator. The published disagreement about what energy costs a cold store is not a disagreement about energy. Four different scopes produce 10.0, 15.4, 23.8 and 76.9 percent from one unchanged dollar, and that range covers everything we found published.
If you take two, take the leverage. With a mostly fixed cost base, occupancy is very nearly the whole income statement. On our numbers 76.1 to 90.0 percent raises revenue 18.3 percent and profit 228 percent, and the same arithmetic runs downward to nil at 70.
If you are advising a cold storage operator this quarter, the highest-value single question is what proportion of the cost base moves with occupancy. If nobody can answer it, neither the break-even nor the marginal price of an empty position is known, and those are the two numbers the business runs on.
The Limits Of This Analysis
Long and specific, because a limits section that is short is decoration.
The cost split we rebase is invented. We took labour at 46 and occupancy at 35 from the Cold Chain Index description and allocated the remaining 19 between energy and everything else ourselves. The four percentages that follow are exact arithmetic on an assumed split, and a different allocation gives different figures while producing the same mechanism.
Almost nothing here is Canadian. The benchmark is North American, the rate data is United States, and Canadian electricity prices, labour costs and industrial lease rates vary by province and differ from US levels. This is the largest limitation in the article for the audience it is written for, and we could not find Canadian equivalents.
Most of the rate and cost material is commercial content marketing. Warehousing cost guides, 3PL comparison sites, a calculator and a valuation broker. These exist to generate enquiries. We used them for ranges and rate structures and computed nothing important from them.
The near-fixed energy claim is reasoning, not measurement. We obtained no engineering data on refrigeration load against occupancy, and we noted one second-order effect running the other way.
The 64 cubic foot position volume is entirely ours and could reasonably be half or double. The cubic-versus-position comparison that depends on it is directional only.
The zone premium conversion assumes thirty days a month and compares two sources that may not be measuring comparable facilities. We flagged in the body that we do not know how much of the premium is recovered cost.
The listed operator's occupancy figure is one quarter for one company, reported in an investment analysis rather than taken from the filing. It is a data point, not a benchmark.
We obtained no accounting guidance and state no recognition or measurement position anywhere.
We did not obtain the Cold Chain Index itself [6], only the alliance's public description of it. The two shares we rebase are quoted from that description, and the energy share is not separately stated anywhere in what we obtained, which is precisely why we had to allocate the remainder ourselves.
The break-even alignment is a coincidence and we should say so. Our invented break-even of 70.0 percent sits just below the 75 percent the valuation material treats as a warning sign. We chose the cost base before noticing that and the agreement is not evidence of anything.
Nothing here is advice on a particular facility or a particular contract.
Frequently Asked Questions
How much of a cold store's operating cost is energy?
What is the largest cost in a refrigerated warehouse?
Why do sources disagree so much about energy?
Why does occupancy matter so much?
Is storage or handling the better business?
Why do quoted pallet rates vary so widely?
Should I be on position pricing or cubic-foot pricing?
References
- Global Cold Chain Alliance, description of its Cold Chain Index. Source of the statement that the Index has been reported since the end of 2018 and tracks cost growth using predominantly official sources of economic data, that it includes five classes of expense being labour, electric power, rent, supplies and repairs, and that on the shares typical of a North American refrigerated warehouse labour was the largest at 46 percent of the total with property rent or lease expense representing nearly 35 percent. Note: a commissioned industry benchmark and the most authoritative cost source in this article. We have the alliance's description of the Index and NOT the Index itself, and the energy share is not separately stated in what we obtained.
- Commercial warehousing cost guides and a cold storage cost calculator. Source of the pallet position billing mechanism and the statement that pallet pricing charges a flat fee regardless of how full the pallet is; of the 40 by 48 inch standard used for pricing; of the cubic-foot alternative at $0.35 to $0.60 per cubic foot; of the note that larger or heavier pallets attract higher fees because they reduce rack density and require more handling; of the receiving fee at around $9 a pallet, roughly 1.7 times ambient; of the statement that energy costs alone account for 25 to 40 percent of operating expenses; of the observation that operators publish wildly different rate structures, some per occupied position and some per pallet per day, some bundled and some itemised, some with flat energy pass-through and some with chamber-by-chamber attribution, such that two operators quoting $34 and $39 may not be quoting the same thing; and of the note that real per-account quotes vary 15 to 25 percent on volume tier, dwell time, energy recovery clauses and minimum commitment. Note: commercial content marketing published to generate enquiries. Used for ranges and rate structures, not for anything computed.
- A cold storage operating cost guide. Source of the diagnosis this article is built on: that labour is usually the largest line at around 46 percent on the alliance benchmark followed by occupancy near 35, that energy is the biggest controllable utility cost and the reason cold storage runs several times a dry warehouse but sits below labour and rent on a full operating statement, and that the 60 to 70 percent energy figure quoted elsewhere usually describes a different scope, being an owner-operator who already owns the building and runs lean on labour, or a tally of utility cost only. Also the source of third-party rates at $8 to $25 a position a month with frozen at the top and chilled at the bottom, of the note that handling, receiving and blast freezing are billed separately so a fast-moving account can pay more in transaction fees than storage rent, and of the statement that frozen costs more because every degree colder increases the heat the plant must remove. Note: the single most valuable source here, because it accounts for a discrepancy rather than adding to it. It is still commercial content and we tested its explanation arithmetically rather than accepting it.
- A business valuation site's description of cold storage warehouse economics. Source of pallet position utilisation as the measure of converting capacity into revenue-generating occupied positions, with 90 percent and above indicating strong demand and below 75 percent signalling oversupply, inadequate sales effort or competitive disadvantage; of revenue per position at $15 to $35 a month depending on zone and market; of multi-zone facilities generating $1.50 to $2.50 per position per day against $0.80 to $1.20 for single-temperature; of seasonal utilisation driven by harvest cycles, holiday inventory builds and production schedules; and of diligence criteria including customer concentration with no account exceeding 25 percent of revenue and refrigeration equipment age. Note: a broker's marketing material describing what buyers look for. Directionally useful about what the market measures, and not an independent source of cost facts.
- An investment analysis of a listed cold storage operator. Source of the reported quarterly figures used as a real data point: warehouse segment revenue declining 1.0 percent year over year, economic occupancy falling 130 basis points to 76.1 percent, throughput pallets declining 4.3 percent, and higher revenue per pallet from mix and pricing partially offsetting; and of the observation that a meaningful portion of revenue derives from activity per pallet rather than rent per square foot. Note: an investment analysis rather than the filing itself, and one quarter for one company. A data point, not a benchmark, and the author has a stated view on the stock.
- No Canadian cost, rate or energy data was obtained for this article, no engineering data on refrigeration load against occupancy, and no accounting guidance. Note: recorded as a reference deliberately so these absences sit on the list. The first is the most serious: this article is written for a Canadian audience from North American and United States material, and Canadian electricity prices, labour costs and industrial lease rates differ by province and from US levels.