Versacold Corporation, the only provider of a nationally integrated refrigerated warehousing and transportation services in Canada, manages the entire cold chain for food industry customers.
"We provide about 30% of Canada's 180 million cubic feet of refrigerated and freezer space at our 23 cold storage facilities," says Lionel Dodd, president and CEO of Versacold in Vancouver, British Columbia. "We are the largest national refrigerated warehousing network, providing 58 million cubic feet of cold storage."
Versacold is a publicly traded company that started business in 1946 as BC Ice and Cold Storage with a single location in Vancouver. Business has grown steadily throughout the company's 50 year history.
"In 1969, the company was acquired by Versatile, a publicly traded conglomerate with shipyards, farm equipment, and cold storage facilities," Dodd says. "In 1986, that conglomerate was broken up and three entrepreneurs purchased the cold storage company."
In January 1992, Versacold acquired QF Food Distribution in Calgary, Alberta, Canada, a refrigerated transportation company with national distribution. In December 1993, Versacold became a publicly traded company. "We acquired Transcanada Freezers, our biggest competitor in 1994. With that acquisition, Versacold became a national company."
Versacold has just completed its largest expansion, which was announced in 1996. The C$45 million (US$30.3 million) program includes expanding and refurbishing company facilities. Versacold began the program in 1997.
"The money went mostly into a few locations," Dodd says. "More than half of the warehouse expansion is in Toronto and the refurbishing took place in Montreal, Winnipeg, and Lethbridge. We also built our Great Plains Center, a C$14 million (US$9.4 million) distribution-warehouse facility in Calgary providing 4.1 million cubic feet of refrigerated and freezer space."
Strong Presence in West Versacold's presence is strongest in the West - from Manitoba to British Columbia - where the company has more than 60% of the available refrigerated warehouse space, Dodd says. "In Calgary, we were at capacity and needed more refrigerated space to make our transportation hub work."
The company has four national distribution hubs at Versacold warehouses in Vancouver, Calgary, Toronto, and Montreal. From these distribution centers, Versacold coordinates all transportation services, including cross-dock, load consolidation, and direct-store delivery. The distribution hubs are supported by 17 other strategic company locations. Versacold's national transportation network operates from and between facilities and provides point-to-point distribution throughout Canada and into Canada from the US, Dodd says.
"We transport product that is cross-docked or from our warehouse racks," adds Marshall McRae, vice-president and chief development officer of Versacold.
Versacold works mainly with owner-operators who operate refrigerated trailers painted with the Versacold logo. The company offers transportation management but is not a trucking company per se, McRae says. It is a nonasset-based transportation company that owns 50 refrigerated trailers for city delivery. "On the highway, about 90% of our transportation equipment belongs to for-hire carriers," he says. "For city delivery, we provide the trailers to contract carriers who use their own tractors. We like to leave the job of operating trucks to for-hire carriers. We also operate a driver-owned fleet of 85 refrigerated straight trucks for local delivery in major cities."
Only in the past three years has Versacold fully integrated transportation and warehousing in single facilities at hub locations, Dodd says. Prior to that, the transportation centers were in buildings separate from the warehouses. Transportation and warehousing operations weren't fully integrated until after Versacold had constructed its major distribution facilities in Toronto and Calgary.
Integrated National Network Versacold continued to operate from separate transportation and warehouse terminals for a few years after the acquisitions. But by 1998, the company had terminated leases or sold the facilities of the former distribution companies and integrated transportation with warehousing services at the same Versacold facilities. To achieve this, Versacold built new distribution centers in Toronto and Calgary.
The company's national transportation-warehouse network allows customers to move small or large shipments on a frequent and cost-efficient basis, Dodd says. Versacold's services enable customers to reach 80% of the Canadian population within 24 hours. "Versacold's objective is to integrate fully its services with customers' own operations, thus providing complete refrigerated warehouse distribution services from the manufacturer or processor to the retail outlet," he says.
Though Versacold is in an excellent position to manage the supply chain, no single customer purchases the entire menu of services provided by the company, Dodd says. Versacold's opportunity is to introduce more services to customers. "We have more than 1,700 customers, but no single customer represents more than 10% of our sales," he says. "Our 10 largest customers account for only 27% of sales."
Versacold's customers are manufacturers and retailers, and they include some of Canada's top food companies, Dodd says. Food suppliers include Kellogg Canada Inc, Pillsbury Canada Limited, Maple Leaf Foods, Baskin-Robbins Canada, and JM Schneider Inc. Retailers include Costco Wholesale Canada and the Overwaitea Food Group. "We have one to 10 year commitments with the blue-chip customers we serve," he says. "With many customers, we have three-year agreements."
Versacold has shifted its marketing strategy over the years as the company started handling new products. The company got its start in the commodities business, freezing and storing fresh berries, fish, and vegetables. "We're getting away from that volatile element," Dodd says. "These types of products are influenced too greatly by environmental conditions."
Packaged goods became a new focus for Versacold as the company moved into the 1990s, Dodd says. Packaged goods offer a more stable, less seasonal source of business with better growth prospects than commodities.
Over the past few years, Versacold obviously began emphasizing its nationwide distribution services as they were developed. The company's transportation strategy is providing the right trucks for the right job, whether they are straight trucks or trailers, Dodd says. Providing transportation and warehousing allows Versacold to focus on selling services for the entire supply chain.
Value-Added Services Versacold's decision to handle a more diverse product line was a wise one, Dodd says. Since 1997, revenue from commodities such as berries and fish has declined. Unfavorable weather has reduced berry crop yields, and fewer salmon have been caught. Today, bulk fish and seafood represent 5% of the company volume. Fruit and vegetables represent only 9%.
"We don't see much salmon in the future," he says. "About 50% worldwide now comes from fish farms; shippers don't need to freeze it. Berries are a different story; we believe this business will increase. More have been planted in recent years."
On the other hand, the frozen food market is growing, he adds. That market is increasing by about 10% a year in Canada. One reason for increased sales is the development of better quality frozen products, such as frozen dough.
Versacold tailors its services to specific markets. Some company warehouses are geared to commodities, including two facilities in Vancouver for bulk fish handling, processing, and warehousing. Commodities warehouses provide specialized freezing including individual quick freezing and brine refrigeration, boxing and packaging, container stuffing, and export documentation.
Company warehouses that store packaged goods offer blast freezing and cross-dock services. Major customers who store in these facilities may have personnel onsite to inspect the product and in some cases have adjoining processing facilities. "Versacold wants to integrate its services with customer operations," Dodd explains.
A typical example of a Versacold facility dedicated to packaged goods is the Cliveden Center refrigerated warehouse in Vancouver. A major customer at the Cliveden location, Costco, had two representatives on a recent day at the warehouse to inspect inbound produce brought in by a for-hire carrier from California.
The 87,000-sq-ft Cliveden warehouse, one of seven Versacold facilities in Vancouver, has 15,000 pallet positions and 4.3 million cu ft of refrigerated storage capacity. "This is a retail distribution facility," says Mike Stephens, Cliveden Center manager. "We provide order picking and direct distribution to stores."
The warehouse is divided into 12 computer-monitored temperature zones. Five refrigerated rooms are cooled by a central ammonia refrigeration system installed by Cimco Lewis, based in New Westminster, British Columbia. Meat and deli items are stored in two rooms, one kept at 29 degrees F, the other at 32 degrees F. The other rooms store frozen products at -14 degrees F. Three of the rooms are convertible, and can be held at temperatures ranging from -14 degrees F to +44 degrees F.
The facility has a 17-door enclosed receiving dock held at 42 degrees F. The former Transcanada Freezer facility, built in 1991, was expanded in 1994. About half of the warehouse has rooms with 70-ft-high ceilings; the other half has 40-ft ceilings.
"We store a wide diversity of products here," Stephens says. "The products on the dock will be gone by midnight. At this facility, many products turn over within 48 hours."
