The global cold chain logistics market size was valued, at $159,988.1 million in 2018. It is estimated to reach $585,105.6 million by 2026, at a CAGR of 17.9% from 2019 to 2026. Asia-Pacific is anticipated to maintain its lead throughout the forecast period since 2019.
The cold chain refers as a combination of temperature-controlled transport and supply chain, essential for extending the products life, avoid overcapacity, reduce wastage during transit and maintain the quality of the products. The process involves the utilization of temperature-controlled warehouses for storage and cold isolated vehicles for distributing products. Cold chain logistics solutions are broadly used to transport and store agricultural produce, seafood, frozen food, chemicals, and pharmaceutical drugs. These products are transported, via modes such as refrigerated trucks, refrigerated railcars, refrigerated cargo and air cargo.
The cold chain helps reduce wastages of the decomposable products and commodities overall providing profitable prices to the farmers. In the pharmacy industry, it increases the ability of the drug throughout the supply chain to the end consumers. Increase in the number of refrigerated warehouses within the food sector and the pharmaceutical sectors are estimated to drive the market growth of the cold chain logistics trend.
Factors such as lack of uniformity and high operational cost restrain the growth of the market. However, RFID technologies for cold chain applications and adoption of software provide lucrative growth opportunity for the cold chain logistics players.
Factors influencing the growth of Cold Chain:
Spike in refrigerated warehouses
Warehouses including, cold chain systems are designed ensuring the ideal storage and transportation conditions for temperature-sensitive products. Multiple export industries are dependant on such cold chain systems. Businesses invest millions of dollars in their cold chain operations to design an effective and efficient process as end-to-end cold chain security is the delicate link in the system. Furthermore, the growing online grocery sales in the U.S. market is likely to boost the demand for up to 100 million sq. ft. of cold-storage space over the next five years, according to the latest report from CBRE.
Pharmaceutical logistic sector
Pharmaceutical manufacturers majorly focus on quality and product sensitivity. Increase in development of more complex biological-based medicines, shipments of hormone treatments, vaccines and complex proteins that require cold chain refinements need to transport within a controlled temperature. Transportation of temperature-controlled pharmaceutical products and devices, witness significant growth in the healthcare logistics industry. The cold chain logistics sector will have to be swift at handling an increase in the volume and quality standards of goods and continually mounting regulations. Additionally, the entire cold chain supply chain and logistics for the pharmaceutical industry is becoming more strategic and reliable. There has been an increase in biopharmaceutical products at a rapid rate than small molecule drugs. The growth in vaccines is the reason for temperature-controlled pharmaceutical products to increase double the rate than that of the pharmaceutical industry as a whole. Hence, growth in pharmaceuticals is foreseen to fuel the Cold Chain Logistics market size.
Factors restricting the Cold Chain market growth:
Operations in the cold chain logistics industry require massive electricity consumption making it difficult for cold chain service providers to minimize their operational costs. Also, high energy and real estate costs are likely to make operating, process challenging. For instance, refrigeration consumes 53% of the total power in operations. Further, applications such as lighting, heating, ventilation and cooling consume a significant amount of electricity. Due to which high operational cost is anticipated to hinder the cold chain logistics market growth.
Lack of uniformity.
The lack of standardization and credibility are significant challenges to the Cold Chain logistics industry, where quality and availability of cold warehousing space is a concern at the moment. In many cases, companies have to invest supplementary to upgrade the space and its specifications to standards that support an individual industry segment as per their requirement. The standards formulated by the policymakers build pressure on developers. Upgrading the facility in terms of temperature compliance or accommodating automated equipment is challenging. Further, training and developing the manpower on the technology and handling the products involve heavy capital.