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Scramble to save $500m in frozen food stranded by major transport group collapse

Scramble to save $500m in frozen food stranded by major transport group collapse

Suppliers are scrambling to retrieve $500 million worth of frozen food from refrigerated warehouses belonging to a recently collapsed logistics group.  

Key points:

  • About half a billion dollars worth of food is stuck in limbo in Scott’s Refrigerated Logistics warehouses
  • The Refrigerated Warehouse and Transport Association says there is not enough capacity for warehouses elsewhere to take the food
  • A rail freight company is helping customers of the recently collapsed transport company track down missing refrigerated containers in its network

Most of the 1,500 workers employed by Scott’s Refrigerated Logistics have been made redundant with a skeleton staff remaining on the books. 

At a creditors meeting on Thursday, administrators said Scott’s reported a loss of $41 million in the current financial year. 

The freight company appointed Korda Mentha as receiver after entering voluntary administration last week. 

Korda Mentha has confirmed a race is underway to relocate more than 110,000 pallets of frozen goods worth half a billion dollars from Scott’s cold storage warehouses.

Nowhere else for frozen goods to go

Refrigerated Warehouse and Transport Association executive officer Marianne Kintzel said the speed of Scott’s liquidation was a challenge. 

“Taking 750 trucks and 200,000 pallet spaces out of the market in a week is very hard to absorb,” she said. 

“A more planned rundown would have helped supply chain stability and reduced waste.”

Ms Kintzel said there was not enough warehouse capacity elsewhere to cover the loss of Scott’s, which was one of the biggest transporters in the market.

She said other cold-chain companies were pulling together, making “thousands of phone calls”, to fill the gap. 

But labour shortages, the cost of fuel, insurance, tolls and energy are impacting the whole cold-chain sector. 

Building and maintaining refrigerated warehouses is one of the biggest costs. 

“Margins are very tight due to the incredibly competitive nature of the industry,” Ms Kintzel said. 

“Some facilities will be paying half a million dollars a month in energy costs and when they rise that is extremely concerning. Where does that cost go?”

A woman in a business blazer with blonde curly hair stands at a podium speaking.

Refrigerated Warehouse and Transport Association executive officer Marianne Kintzel says the cold chain network is agile, but it is under significant pressure.(Supplied: Refrigerated Warehouse and Transport Association)

Supermarket giant Coles has successfully removed all its stock from the Scott’s network and did not use its warehouses but it’s a different story for its suppliers.

A Coles spokesperson said it was working with suppliers who used Scott’s to help them secure new delivery options. 

“We are working hard to minimise disruption for customers and our farmers and suppliers as deliveries ramp up,” the spokesperson said.  

Transport Workers Union assistant national secretary Nick McIntosh said while potential shortages in supermarkets were a short-term problem, they were part of a larger issue.

“We know there is a lot of stock caught up in Scott’s warehouses as we speak, that some of these clients are struggling to get to and transport to other areas in time before it all goes off,” he said. 

“It’s clearly a long-term issue if the biggest refrigerator company in the country is unable to have commercial contracts that are sustainable.”

Mr McIntosh said it was a problem governments had ignored for decades and it was time to address the commercial pressures in transport contracts. 

“Otherwise we’re going to see shortages on our supermarket shelves as a more regular occurrence, and of course in a time of high inflation that’s going to make matters even worse.”  

A picture of hundreds of boxes on storage shelves in a warehouse with cold lighting.

The Refrigerated Warehouse and Transport Association says it can cost $500,000 a month to power a cold chain warehouse.(Supplied: Refrigerated Warehouse and Transport Association)

‘Team effort’ tracking down containers

Meanwhile, rail freight company Pacific National is supporting previous customers of Scott’s to locate stock scattered around Australia. 

Pacific National CEO Paul Scurrah said work was underway to track down thousands of refrigerated containers deposited by Scott’s within Pacific National’s network of depots and terminals. 

Mr Scurrah said it was an “enormous and complex nationwide exercise”.

Working with freight forwarders like Linfox and Lindsay Transport, Mr Scurrah said was “helping to mitigate the worst elements of this sad and disruptive situation”. 

The Transport Workers Union is helping members who lost jobs at Scott’s find work with other companies, including Wodonga’s Ron Finemore Transport, Global Express, Linfox, ACFS, Pacific National and FBT Transwest.

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