Adapting the Australasian cold chain for a sustainable future

The Australasian cold chain distribution market is being transformed. A combination of global energy demand, volatile local policies, rising land costs and persistent labour shortages is reshaping the industry’s foundation. With these challenges rapidly changing the landscape of cold storage operations, businesses must adapt or risk falling behind.

Energy costs: a growing operational burden

Global electricity demand is projected to increase by 75% by 2050, according to the United States Energy Information Administration. In advanced economies, electric vehicles and electrification are driving demand, while emerging markets see rising consumption due to population growth and urbanisation. Locally, Australia’s energy policies remain inconsistent, creating uncertainty for power generators and further volatility in pricing.

For cold chain logistics, where cooling accounts for up to 80% of total power consumption, energy costs are quickly becoming the single largest operational expense. The Australian Energy Regulator reports average annual electricity prices across the National Electricity Market (NEM) have trended sharply upwards, further intensifying financial pressures.

The solution lies in transforming energy-intensive facilities into models of efficiency. Design improvements such as reducing building surface area and preventing temperature leakage are critical. Automation technologies, like automated storage and retrieval systems (ASRS), offer another layer of energy efficiency. By utilising denser storage configurations and operating with minimal energy loss, these systems can reduce energy costs by over 50% compared to traditional storage facilities.

Land: a scarce and costly resource

Urbanisation is also reshaping the geographic and economic landscape of the cold chain industry. More than 50% of Australia’s population is concentrated in just three cities, creating fierce competition for land near key supply markets. By contrast, in the United States, a similar population share is spread across dozens of cities, illustrating the unique geographic and operational constraints faced by Australian businesses.

As commercial land prices climb, cold chain businesses must make smarter use of limited footprints. Traditional horizontal expansion is no longer viable in many cases. Instead, taller, compact facilities that optimise vertical space are becoming essential. Solutions like ASRS and automated cartons buffer systems enable operators to maximise storage density, using advanced automation to reduce the space needed for operations while maintaining throughput.

These shifts not only address the immediate land shortage but also reduce construction costs associated with sprawling facilities. By consolidating operations within smaller footprints, businesses can remain close to urban centres without sacrificing operational efficiency.

Labour: a persistent challenge

Labour shortages have become a defining issue for the cold chain sector. Challenging working conditions, particularly in frozen and chilled environments, make it difficult to attract and retain workers. High turnover rates and an increasingly competitive labour market in Australia and New Zealand exacerbate the challenge, with businesses struggling to maintain a skilled and consistent workforce.

Automation is emerging as a critical tool to address these pressures. Systems like carton buffers and automated guided vehicles (AGVs) reduce reliance on manual labour for repetitive tasks, reallocating workers to higher-value activities. For example, AGVs can seamlessly integrate into existing facilities to handle pallet movement, replenishment and order fulfilment, improving safety and efficiency.

At Lactalis Australia’s Lidcombe milk site in NSW, Dematic’s AGVs have boosted productivity. The site uses Dematic’s Counterbalance Series AGVs to transport pallets of milk, handling loads up to 1.2 tonnes and reaching heights of 6 m. Operating 24/7 in chilled conditions (2–4°C), the AGVs retrieve pallets from production, feed them into an order buffer and release them onto live storage racks. Equipped with sensors and laser scanners for navigation, they can achieve speeds of up to 1.7 m/s. By automating repetitive tasks, the AGVs reduce reliance on manual labour, improving efficiency and reallocating workers to higher-value activities. Powered by lithium-ion batteries, the AGVs self-charge during inactivity, offering operational efficiency and a solid return on investment.

Using the AGVs increases supply chain reliability for Lactalis, with the AGVs capable of working non-stop, every day of the year. This is in addition to improving efficiency and accuracy of operations, thereby minimising mistakes, product damage and workplace accidents, which provides significant improvements in occupational health and safety standards.

By minimising the physical demands on workers and enhancing safety, automation not only reduces labour costs but also fosters a more stable workforce. These technologies represent a crucial step towards mitigating ongoing reliance on manual labour in an industry marked by volatility.

The role of automation in driving resilience

The adoption of automation technologies is not a luxury but a necessity for the Australasian cold chain market. Innovations like ASRS, carton buffers and AGVs are paving the way for more sustainable and efficient operations. These systems deliver a range of benefits, from reduced energy consumption and minimised operational footprints to improved safety and productivity.

At John Dee in Warwick, Queensland, a production consolidation facility uses carton buffer shuttles to handle frozen goods at temperatures as low as -28°C. These systems can store and retrieve over 550 cartons per hour per aisle, far surpassing the efficiency of manual processes.

The integration of automation within existing facilities also offers scalability and modularity, allowing businesses to respond to future challenges without requiring complete infrastructure overhauls. This adaptability is key to building resilience in an era of constant change.

Preparing for the future

The Australasian cold chain market is at a critical inflection point. Rising energy costs, constrained land availability and labour shortages demand a fundamental rethinking of how the industry operates. By embracing automation and sustainable practices, businesses can optimise their operations to meet today’s challenges while preparing for the uncertainties of tomorrow.

The path forward requires a commitment to innovation. Cold chain operators must invest in energy-efficient designs, compact and scalable facilities, and advanced automation technologies that enhance productivity and reduce costs. These measures not only address immediate pressures but also position the industry for long-term growth and resilience.

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