The cold chain industry in India has gained momentum with new investments in cold storage as well as in logistics. The cold chain industry has brought about a remarkable shift in India, with a change from seasonal to perennial market. The cold chain industry has become an essential part of the supply chain industry comprising refrigerated room or storage and refrigerated transportation. The cold storage facilities enhance shelf life of perishable foods by retaining desired temperature of the storage products from farm to end user. In the absence of proper cold storage and related cold chain facilities, agriculture and horticultural produce goes waste due to post-harvest losses and poor and inadequate infrastructure for perishable products. Postharvest losses for fruits and vegetables were as high as 18 per cent and 12 per cent, respectively, according to Ministry of Food Processing Industry in the absence of enough cold storages for fruits, while for vegetables, lack of adequate reefer vehicles leads to transportation losses.
A per the National Centre for Cold Chain Development, as against a requirement of 61,000-62,000 reefer vehicles, only 9,000 vehicles are available. There are many reasons for this: Lack of first- and last-mile connectivity, stiff competition, low margins, and low preference of end-users for reefer vehicles due to higher cost and unavailability of return load, which leads to inefficient utilisation of vehicles.
According to the Ministry of Food Processing Industries data, India’s cold storage capacity stood at 35 million tonnes (MT), as of July 2017. Single-commodity (potato) cold storages accounted for 68 per cent of the volume. Multi-purpose cold storages are expected to increase their share (volume) from 32 per cent to 43 per cent by fiscal 2023, states Hetal Gandhi Director, Research, CRISIL.
A report from National Cold Chain Development (NCCD) submitted during 2015 indicates around 70,000 pack houses, 32,00,000 MT storage, 52,000 reefer vehicles and 8,000 ripening chambers are required. Currently, developments in the last three years have reduced the figures.
While taking a note of trends in the cold chain industry, C S ubramaniam, National President, Indian Society of Heating, Refrigerating and Air Conditioning Engineers (ISHRAE) states, that several cold storage projects are in various stages of proposals or development. Cold storage with grants received earlier have been commissioned and are already being used. Many states in India are also encouraging investors to set up cold storage. Market predicts 10 per cent to 15 per cent CAGR every year for the next five years. Value wise it is estimated as INR 1000 billion last year to INR 2250 billion by 2023.
Gandhi says, “Players are increasingly investing in multipurpose cold storages, which have lower payback period – typically about six years, or nearly half of that for singlecommodity ones – and command higher margins. In the past year, organised players have also started putting their money in integrated models that combine temperature-controlled warehouse (TCW) and temperature-controlled vehicle (TCV) services to diversified end-users.”
Energy conservation, green manufacturing techniques, ecofriendly refrigerants etc have gained significance during selection of a cold storage. Positive temperature stores are required for perishables like fruits and vegetables, milk and dairy products, seeds, food at various stages, medicines, frozen and fresh marine, meat, etc. For completing the cold chain – farm to fork – pack house, with washing, grading and sorting of produce and precooling (removal of field heat) at the farm, refrigerated transport to the cold warehouse, reefer transportation to distribution cold rooms and to display counters at retailers and finally the refrigerators at homes – all are essential requirements of a cold chain. Door delivery to customers in eco-friendly last mile temperature-controlled delivery vehicles are being used to maintain refrigeration of products.
According to Shiv Kumar, Country Marketing Manager, Fujian Snowman, “Cold chain industry is undergoing consolidation and becoming organised pattern from scattered and unorganised form. In present scenario, we witness more responsible contribution, sensitivity towards environment and energy efficient solutions by stakeholders like end users, contractors, OEM and consultants.”
Demand is on the rise across the value chain, given changing consumer needs, growing penetration of quick service restaurants (QSRs), and expanding organised retail. Growing exports of processed fruits and vegetables, seafood, and meat also magnifies the need for organised cold storages and reefer vehicles, as stringent food safety norms in importing countries demand cold storage along the entire supply chain of export commodities.
The ready-to-eat food industry supports the fast food industry. The marine and meat industry is also on the growth path. Pharma sector has been witnessing rapid growth. All these sectors require blast coolers, blast freezers, Individual Quick Freezer (IQF), plate freezers, tube ice and flake ice machines, cold storage and reefer transport for both positive and negative temperature etc all of which driving the cold chain industry.
According to C Subramaniam, “The shelf life of seasonal produce varies and many have low and mid shelf life even under conditioned atmosphere. Fruits and vegetables with exception of onions need to be maintained at higher relative humidity in addition to temperature control. For low shelf life produce, individual quick-freezing process is commonly used to freeze the fruits like mango, papaya, musk melon etc in small cubes of sizes less than or equal to 10 mm, similarly vegetables like green peas, corn, cut beans, cut carrots, cut broccoli, cut onions, cut ladies finger all in cubical form are frozen, stored, shipped and sold. The exposure to and consumption of fast food and the various combinations available in the ice cream sector have created a demand for this sector.”
Significant growth is anticipated in storage sector and this would be due to the major growth in the organised retail industry, commodity markets and growth in industrial manufacturing and development. The cold chain industry is rising with major advancements and growth in the food processing sector and organised retail coupled with government initiatives that are driving the industry forward. A number of food parks have been commissioned in India and logistics and supply chain management form an integral part of these food parks. Many large food parks on the PPP model of financing would soon alter the economy of the country.
While talking about the growth drivers of the cold chain industry, Chandrakant Patel, Chairman-cum-Managing Director, Ice Make Refrigeration, says, “The rise would be complemented and supported by the rising retail in India which would generate huge infrastructural demand resulting in increased levels of revenue for the cold chain industry. The key growth drivers in this growth in cold chain industry includes growth in organised retail and food service industry, government’s initiatives, rising export demand for processed, frozen food, confectionery and meat products.”
Advanced technology is leveraging the growth of cold chain industry. Various technologies continue to have an impact on the cold chain industry. While giving a glimpse of the latest trends in technology, Patel informs, “Among various technologies, there is a noticeable movement towards alternative transport refrigeration systems with thermal energy storage plate for multi-deliveries of ice cream, frozen food, bakery and confectionaries products and fruits and vegetables. It offers significant noise reduction benefits as well fuel saving.”
CRISIL informs that organised multi-purpose storages have adopted environment-friendly refrigerants such as freon and diverse technologies (CO2 scrubber, vacuum-pressured swing absorption, nitrogen generator, etc) depending on the nature of the commodity, type and stage of processing, and extent of sophistication of value chain. Freon is used only in 30 per cent of cold storage setups at present, though the proportion is on the rise.
“Leakage of ammonia could cause deterioration in the quality of the stored produce. Therefore, freon is preferred in predominantly exported products such as meat and seafood, while ammonia is used for packed dairy products and pharmaceuticals. However, cold storage systems that are 10-15 years old have low adaptability to new technology, and therefore, need a complete overhaul. Also investment in freon technology is around1.5 times that required for ammonia,” states Gandhi.
Shiv Kumar from Fujian Snowman notes that the compressor market is driven by three factors like energy efficiency, environment friendliness and sustainability. Environment friendliness and lower Global Warming Potential (GWP) are the drivers for R&D department of any compressor manufacturers.
Industrial Refrigeration (IR) seems to be an easy sector regarding low GWP refrigerants, but Shiv Kumar still notices potential pitfalls as well as room for innovation. Due to low GWP, NH3 has been preferred refrigerant in IR, having a negative aspect of toxicity. Natural refrigerants like NH3 and CO2 are still preferred by users, companies like Fujian Snowman are working on lowering the charge of NH3 in the refrigeration system by adding cascade method and secondary refrigerant method using CO2 for circulating inside the larger cold-storages.
According to ISHRAE, variable frequency drives for various electric motors are used for energy saving in different applications. Solar energy is generated in many of these projects. Modern methods for storage of perishable goods like mezzanine and rack assisted storage are becoming common. Latest models of material handling equipment are used. As space is getting costlier, vertical stores are increasing. Cold storage plants are all prefabricated at manufacturing facility and are transported and installed at project sites so that time and labour dependency is saved. Project completion time is reducing as technology improves.
Internet of Things (IoT) has made inroads in cold chain sector. It helps not only to keep products at the desired temperature, but to watch better the load from temperature sensors and GPS tracking to self-reporting alerts for computers and mobile devices. Patel states, “Smart refrigerated units even help monitor the location, temperature, humidity and motion of shipments in real time. Advance tracking abilities give relevant parties advanced warning of any changes or malfunctions with the equipment. These types of notifications can help to ensure necessary maintenance is performed regularly or even secure alternate capacity before a load is compromised.”
Data storage and retrieval system have improved. Automated messaging and alarm generation in control systems are being made to ensure messages are directly sent to service team in case of fault or for preventive maintenance. Automatic storage and retrieval systems are being introduced for cold storage, improving speed of delivery and also reducing the input energy. Green manufacturing technology is used for manufacture of double skin sandwich insulated panels, states C Subramaniam.
According to CRISIL Research, it is expected that the industry will grow 13-15 per cent in value terms annually over the next five years, riding on demand from QSR, meat, seafood, biopharmaceuticals, organised retail, and exotic fruits and vegetables. Multi-purpose cold storages are expected to increase their share (value terms) from 80 per cent to 87 per cent by fiscal 2023.
Investments in reefers suffer from lack of first- and last-mile connectivity. Private players are averse to investing in these because of stiff competition and reluctance of end-user industries to transport via reefers as these involve higher costs. In this context, it makes sense for a player providing both TCW and TCV services to offer an integrated package to clients willing to pay, rather than as stand-alone services. That would help to improve utilisation, and thereby, drawing investments. Gandhi from CRISIL expects to see Rs 150-200 billion of investments to flow into the industry in next five years. “The demand for cold and frozen storage, cold chain and industrial refrigeration is ever increasing and this industry will grow and will last for a long time. This is the only solution for the economy to become very strong and we can increase our exports in areas where we are one of the leading producers in the world,” suggests C Subramaniam from ISHRAE.
“Over the next five years the Indian cold chain market is expected to witness consolidation due to growing private investments, entry of foreign refrigeration and insulation equipment manufacturers in the country and growing demand for cold storage facilities and logistics from the pharmaceutical, ice cream, frozen food, bakery and confectionery and meat products,” concludes Patel from Ice Make Refrigeration.
By Supriya A Oundhakar, Associate Editor