Doug Bowen and Darren Winstead picked a nearly perfect time to go into the cold storage business.
The two Alma men are co-owners of Doug’s Produce in Mulberry (Crawford County), a refrigerated trucking company that has grown steadily since Bowen founded it in 2003. The partners began planning to expand with a $24 million cold storage facility a little more than three years ago to provide additional service to their wholesale food customers.
Then the COVID-19 pandemic hit in March 2020. One of the trending effects of the pandemic was a sharp increase in online orders of refrigerated or frozen foods. That has resulted in a jump in demand for cold storage facilities. The real estate firm CBRE of Dallas released a report in June that showed nearly 3.3 million SF of cold storage was in development as of the second quarter of 2022; three years previously, that number was 300,000 SF.
The 70,000-SF Mulberry project may be just a small portion of that national number — as is Americold’s expansion of a cold storage facility in Russellville — but the Alma partners think the state needs the added capacity. Bowen said that in his nearly 20 years in transportation, he has seen way too many loads of protein, mostly poultry, produced in Arkansas but shipped out of state to be stored.
“COVID opened up our eyes to understanding that we have, especially on the protein side of things, a shortage of storage in the area as a whole,” Bowen said. “We have shipped this stuff out of state, and, quite frankly, Darren and I are ready to make one little small earmark in keeping Arkansas money in Arkansas. We have been hauling this stuff for years to Alabama and Louisiana, states that have room.”
According to the CBRE report, the vast majority of 3.3 million SF in cold storage development is in populous states such as Texas and Arizona and in big cities like Miami. The pandemic also resulted in higher meat imports, meaning more storage facilities were needed at or near port facilities.
Americold in Russellville
Americold, a real estate investment trust in Atlanta, is one of the nation’s largest providers of cold storage facilities and has a significant footprint in Arkansas.
According to the CBRE report, Americold is second nationally with 27.5% of the country’s share of cold storage space. On its website, Americold said it has 249 facilities totalling 1.5 billion SF worldwide.
Americold has 10 facilities in Arkansas and is spending $84 million to add 131,000 SF to its existing location in Russellville.
“Russellville is ecstatic Americold has chosen to invest $84 million in the expansion of their local operations,” said Megan Selman, the interim CEO of the Russellville Area Chamber of Commerce. “This will create 30 new jobs, rounding out Americold’s employment footprint in Russellville at 100 jobs. Their economic impact in our region is significant, and their expansion will, in part, serve another of our largest employers, ConAgra Brands.
“Americold’s expansion strengthens our local manufacturing ecosystem and will help attract more business to Russellville and the surrounding areas over the next several years.”
Cold storage facilities are not simple constructions. While they may look like square box buildings from the outside, they require specialized materials and technology inside.
The new innovation is making cold storage facilities taller. Frozen food is stacked on pallets inside, and the higher the stack can go, the greater the capacity.
The Americold expansion is scheduled to have room for 42,000 pallets — 13 million cubic feet of storage. Bowen and Winstead said their smaller facilities will have space for 8,500 pallets.
“We have absolutely been educated over the last 3½ years on the technology, the technology of today and the technology of next month,” Winstead said. “It’s amazing how this all transpired. Our facility will have state-of-the-art equipment in it.”
Bowen and Winstead created a subsidiary called Compass Cold Storage to run the warehouse segment. The expansion isn’t just cosmetic. The partners believe the added service will help them continue to grow their transportation business.
Under the new model, for example, a poultry producer would harvest and quarter a weight of chicken and ship it to Mulberry. Compass Cold would then blast freeze the product and store it until it is time to ship to the next stop in the distribution line.
Bowen said the facility will be able to blast freeze about 200,000 pounds of protein a day.
He said Doug’s Produce will be a true third-party logistics company by saving poultry companies money on the back end of the production line.
“The last thing on your Tysons of the world’s checklist is to build a warehouse to store the stuff,” Bowen said. “They have to spend so much money on the front end. When you go to the customer, the more that you can off-load off the back end, the more you can take off as a complete 3PL program at the end of it, the better.
“We are just furthering ourselves starting at the back of transportation and working forward toward the customers’ need to alleviate more needs on the back end. It’s a win-win. It helps us grow our business in more diverse ways, and also the customers like it.”
Ti Cold of Melbourne, Florida, a leader in the segment, is building the Mulberry facility. It is scheduled to open in 2023.
Doug’s Produce has grown from one truck in 2003 to 55 trucks and 86 trailers. Bowen and Winstead hope to bump up those numbers to 69 trucks and 100 trailers by the end of the year, even before the additional capacity brought by the cold storage service.
“We are trying to provide a turnkey 3PL service for these customers,” Winstead said.
“With trucking, that allows us the full circle. We don’t know how much [growth] it will be. We have a good guesstimate that it could yield 20 more trucks and 40-60 trailers,” he said.
“It is an educated guess at this point in the game. We are crossing our fingers and shooting for the moon, for a ton of growth.”