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, we’ve seen automation vendors expanding their offerings for cold-chain applications.

This article, based on our Warehouse Automation – 2024 report, dives into the driving forces, challenges, and emerging opportunities within the sector.

The growth trajectory of automated cold-chain warehouses

Cold-chain warehouse automation has gained significant momentum, with global revenues expected to surpass $1.3 billion in 2024 and expecting to grow to just over $2 billion by 2030. This growth is fueled by technological innovation within the industry, growing consumer demand for frozen and chilled goods, which offer longer shelf lives and economic advantages, and the rise of REITs.

The cold-chain warehouse automation market remains on a strong growth trajectory and is expected to exceed $2bn revenue in 2030.

One of the main driving forces in the cold chain market is Real Estate Investment Trusts (REITs); firms which operate, or finance income-generating properties, distributing 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 the cold-chain warehouse automation market.

Americold’s investment with Dematic seemingly kicked started the 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 are the two largest cold-chain providers by cubic volume, collectively owning 4.3 billion cubed feet of cold-chain warehouse space. In short, it seems that cold chain providers are vying for position and competing to be the lowest cost, most efficient provider, resulting in multiple large-scale investments in automation.

Other Driving Forces

It’s not just cold-chain providers and REITs which are driving demand for cold chain automation investments. 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. Whilst 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 investing in automation to remain competitive, resulting in a chain reaction of investments. Given how razer 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 in the solution. Investments from grocers have therefore also contributed to the recent surge in cold-chain automation.

Lastly, the global effort to distribute the COVID-19 vaccine highlighted clear weaknesses in the cold-chain infrastructure used to transport vaccines and other pharmaceuticals. We theorize that pharmaceutical manufacturers and distributors have also contributed to the growth in cold-chain warehouse automation investments, although we have limited direct evidence of this to date.

Which Automation Solutions are Winning?

In general, we see that cold-chain providers distribute and transport goods as unit loads. As such, we’ve found that pallet storage technologies account for the lion share of cold-chain warehouse automation investments. In particular, we’ve found that roaming pallet shuttles have proven particularly adept for this application. What was before a relatively niche technology, roaming pallet shuttles are becoming an increasingly common technology, driven in part by investments from companies operating chilled or frozen environments.

However, the most common technology for cold-chain pallet storage is still unit-load AS/RS using stacker cranes. Dematic, for example, installed its 6^th high-bay warehouse for Agristo in the Netherlands, whilst Swisslog, one of the global leaders in stacker cranes, has provided unit-load AS/RS solutions for multiple of Lineage Logistics’ sites.

When it comes to the storage of smaller handling units, the opinion is split on the most effective way to store and retrieve items. AutoStore, for example, recently announced its latest solution for handling frozen items. In effect, AutoStore creates a area within the grid itself that remains below freezing temperature. 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 where they control 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 cold-chain 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.

To learn more about the global cold-chain automation market and Interact Analysis’ latest Warehouse Automation – 2024 report, please reach out to Rueben Scriven.