Cold chain · Logistics and supply chain
Cold chain costed per pallet-day and per reefer trip
A cold chain business sells temperature, and temperature is paid for in power, diesel and maintenance whether the chamber is full or not. We cost storage per pallet-day by chamber and reefer movement per trip, so pricing reflects what each product and season actually costs to keep cold.
In one paragraph
Cold storage operators, multi-temperature warehouses and refrigerated transport firms serve agricultural produce, dairy, seafood, food processing, quick-service restaurants and pharmaceuticals. Energy is the dominant cost and demand is often seasonal. A temperature excursion can destroy a client's stock. GST on storage can differ by what is being stored, and owners and finance heads have to carry that through pricing and input credit.
Owner or managing director
The economics
How the money moves in this trade
A cold store runs compressors around the clock, so power is the largest operating cost. Maintenance of refrigeration plant, standby generation and labour follow. Chambers are run at different temperatures for different products, and holding a pallet of frozen seafood costs more than holding a pallet of fruit. Occupancy often swings with harvest and festival seasons, so the fixed cost of the plant has to be recovered over a year of uneven demand.
Refrigerated transport adds diesel for both the truck and the reefer unit, return legs that may run empty, and route-specific tolls and loading delays. A temperature excursion in storage or in transit can turn into a claim for the full value of the client's goods. Storage of agricultural produce, raw or only processed as a farmer ordinarily would, is exempt from GST. Storing processed foods, pharmaceuticals and other goods is taxable, so a facility serving both has to apportion its input tax credit. Some facilities were built with capital subsidies that carry conditions on use and reporting.
The problem
Where the numbers usually break down
Power is not allocated to chambers
One electricity bill for the facility is treated as overhead, so the cost of keeping a deep-freeze chamber running is spread over chill storage that uses far less.
Contracts are priced on peak-season occupancy
Annual rates assume the facility is as full as it is at harvest, so the off-season fixed cost is never recovered.
Excursion risk is not provided for
Temperature excursions are logged by the plant team, but the potential claims, insurance cover and actual payouts never reach the accounts until a client sues.
Input tax credit is not apportioned
A facility storing both exempt and taxable goods claims full input credit on power, equipment and services, leaving an apportionment that has to be reversed later with interest.
Reefer trips are costed as averages
Fuel for the vehicle and the reefer unit, empty return legs and loading delays are averaged across routes, so unprofitable lanes stay hidden.
What we do
The work, and the result each part produces
Power metering and allocation by chamber
Power cost allocated to chambers from sub-meters or a stated basis, and expressed per pallet-day.
Storage rates reflect the temperature each product needs.
Seasonal occupancy and pricing
Occupancy by month compared with fixed cost, with off-season and peak pricing tested against full-year recovery.
Annual contracts cover the cost of a full year, not a peak month.
Excursion and claims register
Excursions, claims received, insurance recoveries and payouts tracked by chamber, vehicle and client.
Temperature risk carries a cost in the books.
Input credit apportionment
Taxable and exempt storage identified by client and product, with common credit apportioned on a documented basis.
Credit claimed is credit that can be kept.
Reefer trip costing
Vehicle fuel, reefer fuel, tolls, driver cost and empty legs booked to each trip and lane.
Unprofitable lanes are visible and repriced.
Subsidy condition tracking
Conditions attached to capital subsidies recorded and monitored against operations and reporting deadlines.
Subsidy conditions are met and evidenced.
Where we start
The first steps of an engagement
Power bills, logs and contracts
We ask for electricity and diesel bills, chamber-wise occupancy and temperature logs, client contracts with product lists, reefer trip sheets and fuel records, and any subsidy sanction letter.
Power cost per pallet-day
Power is allocated to chambers from sub-meters, or on volume, set-point and running hours. It is then expressed per pallet-day against the rate each client pays.
Taxable and exempt split
Storage is classified as exempt or taxable by client and product, and common input tax credit is apportioned on that documented basis from then on.
Chamber and lane margin report
The first report shows cost and margin per pallet-day by chamber, occupancy by month against break-even, margin per reefer trip and lane, and the input credit position.
How it is measured
The reports the work is judged on
Each is recorded as a baseline before the work starts, so later reports have an honest comparison.
- Power cost per pallet-day, by chamber
- Occupancy by month against break-even
- Excursions, claims and payouts
- Input credit apportioned against claimed
- Margin per reefer trip and lane
- Subsidy conditions met and outstanding
Who it suits
Written for, and not the right fit for
- You need temperature-mapping validation or quality certification for pharmaceutical storage; that is issued by an accredited body.
- You need a statutory audit, or a certificate required under a subsidy scheme, on its own; those are signed by an independently engaged professional.
- Cold storage operators, multi-temperature warehouses and refrigerated transport firms.
- Facilities serving a mix of agricultural, food, seafood and pharmaceutical clients.
- Operators expanding capacity, seeking a capital subsidy or preparing for a bank limit review.
Services
Services this work draws on
Costing and profitability
What each product, line and customer really contributes.
Explore service ↗GST, TDS and tax compliance
GST, TDS and income-tax prepared from reconciled data, not a working file.
Explore service ↗Outsourced accounting
Your books kept current and reconciled, closed to a published calendar.
Explore service ↗Internal controls and risk
Controls sized to your business, documented and actually tested.
Explore service ↗Every other service, also available in this trade
Common questions
Questions owners in this trade ask
We have one electricity meter. Can power still be allocated?
Yes, on a stated basis such as chamber volume, temperature set-point and running hours, until sub-meters are installed. Sub-metering the main chambers usually pays for itself quickly once the numbers are visible.
Does all cold storage carry GST?
No. Storing agricultural produce that's raw, or processed only as a farmer ordinarily would, is exempt. Storing processed food, pharmaceuticals and other goods is taxable, and simply renting out space can be treated differently from a storage service. A facility serving both has to apportion input tax credit, and we set that up from your client and product records.
Is reefer transport costed differently from storage?
Yes — per pallet-day for storage, per trip and lane for transport. We report them side by side so you can see which part of the business carries the other.
5th Quadrant performs costing, accounting, GST and subsidy-record work. Statutory audit, tax-audit reports, certificates required under subsidy schemes and accredited quality or temperature certification are issued by independently engaged licensed professionals or accredited bodies, coordinated through 5th Quadrant. Full detail is on our Professional Scope page.
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