Va Q tec : Over 50 Percent Cost Savings for Frozen Food and Fresh Food Deliveries with High Performance Totes

Massive job cuts at Flink, withdrawal from Germany by Getir and Gorilla. After years of growth, the market for food home deliveries appears to have passed its peak. The operational costs put pressure on the margins, particularly on the last mile in the Fresh Food and Frozen Food area and render the business unprofitable. However, new technologies with highly insulating materials and special ice packs show that over 50 percent of the operational costs can be saved in the Fresh Food and Frozen Food area. Reusable vacuum passive totes reduce the energy consumption curing transportation and eliminate the need for expensive and environmentally harmful dry ice. Va-Q-tec, specialist for thermal energy efficiency and temperature-controlled supply chains, demonstrates by means of a practice-oriented example calculation in the white paper "Cost-efficient Cold Chains in the Online Home Delivery Market," how investments for grocery deliveries are worthwhile.

"We have already become accustomed to the 24-hour delivery of packages that do not have to be refrigerated. However, grocery deliveries that are transported in three different temperature ranges, pose completely different challenges to logistics. For profitability, it is decisive that the costs decrease with increasing business instead of getting out of hand," says Marc Moelter, Head of Sales Food at va-Q-tec.

High costs for the last mile strain the margin

The legal obligation for maintaining the cold chain for home deliveries poses high technical and economic challenges to the delivery services. On the cost side, it is especially the last mile in the supply chain that drives up the costs. With a value of goods of €100, they account for about €8. This corresponds to almost 30 percent of the usual gross margin here. The most important cost factors in conjunction with the last mile include fuel, personnel expenditures, software solutions and equipment for the delivery, such as thermal totes, dry ice and ice packs. Special challenges apply to the transport of frozen products (FZP). FZP orders from several customers are generally bundled in one transport tote, and the required temperature is set by using dry ice. In general, 2-3 kg of dry ice are used per tote for refrigeration. The price of dry ice fluctuates from €0.50 to €1 per kg and amounts to up to 12 percent of the gross margin. This results in a significant savings potential since passive totes with special ice packs, such as those

from va-Q-tec, lower the operational delivery costs. With lower costs, the margin of the retailer can be increased and new customers can be acquired as a result of lower delivery costs.

Electrified transport vehicles require passive refrigeration

Due to rising fuel costs, stricter regulatory requirements and for reasons of sustainability, transportation vehicles are also becoming increasingly electrified. Active refrigeration of the vehicle is energy-intensive and means that the batteries are used to the detriment of the range or separate batteries have to be installed. This is why passive solutions, i.e. highly insulated transport totes, are particularly advantageous for food transportation. Passive refrigeration makes it possible to transport products of different temperature ranges in one vehicle and thus achieve optimum vehicle utilization. The example calculation from va-Q-tec shows that passive refrigeration in the FZP sector saves up to 70 percent of operational costs. In view of the higher investment costs, the payback period is just under one year. In the Fresh Food sector, up to 50 percent of operational costs are saved compared to the solution with dry ice.

"When starting an online retail business, dry ice, which causes significant problems, can be a solid option as it involves lower investment costs. However, as the business grows, a long-term cost-effective solution with reduced operational costs becomes increasingly important. The rapid payback period in the Frozen Food and Fresh Food area is therefore an important factor that lowers the business risk and allows for an efficient investment," says Marc Moelter, Head of Sales Food at va-Q-tec.

The white paper can be downloaded via the following link:
https://www.va-q-tec.com/en/infocenter/publications/cost-efficient-cold-chains/.