Cold Supply Chain is basically a temperature-controlled and temperature-sensitive supply chain. This ensures supply of perishable, temperature sensitive products. The products may be raw or ready food items, or pharmaceutical items, or any other type of temperature sensitive ones.
A good Cold Supply Chain needs continuous monitoring, automation and other kinds of management. So, today a robust Cold Supply Chain needs different kinds of technologies and their effective deployment.
The very basic elements of a Cold Supply Chain include: Cooling systems, bringing commodities for processing, storage, cooling to the appropriate temperature, and transportation to the point of selling etc. Out of all these, storing the perishable commodities is of vital importance because collection and sales of any commodity are always two varying factors. Thus, in this article, I will try to present a glimpse of the present status quo of the global Cold Storage Market.
The present global scenario
According to a recent report published by Reportlinker, titled, “Cold Storage Global Market Report 2023,” the global cold storage market is expected to grow from $141.39 billion in 2022 to $161.92 billion in 2023 at a Compound Annual Growth Rate (CAGR) of 14.5%. The Russia-Ukraine war has disrupted the chances of global economic recovery from the COVID-19 pandemic, at least in the short term. The war between these two countries has led to economic sanctions on multiple countries, a surge in commodity prices, and supply chain disruptions, causing inflation across goods and services and affecting many markets across the globe. The cold storage market is expected to grow to $303.22 billion in 2027 at a Compound Annual Growth Rate (CAGR) of 17.0%.
The Cold Storage Market consists of sales of compressor, condenser, evaporator and throttle valve, and other auxiliary parts. Values in this market are ‘factory gate’ values, that is the value of goods sold by the manufacturers or creators of the goods, either to other entities (including downstream manufacturers, wholesalers, distributors and retailers) or directly to end customers. Of course, the value of goods in this market includes related services sold by the creators of the goods.
Types of Cold Storage
The main types of cold storage are private, semi-private, and public. Private and semi-private products refer to cold storage that is owned or operated by the company that produces or owns the products kept in the warehouse used for storing purposes.
The various construction types include bulk storage, production stores, and ports, and involve several temperature forms, such as frozen and chilled. It is used in storing fruits and vegetables, dairy, fish, meat, and seafood, processed foods, pharmaceuticals, and other applications.
The driving factors
As per Reportlinker, the rising perishable products are expected to propel the growth of the cold storage market going forward. Perishable products are those that easily deteriorate and have a short life span, which includes products such as fruits and vegetables, dairy products, pharmaceuticals, and others.
The growing trade of perishables compels the cold storage market to provide better quality products to serve their customers. For instance, according to a report published by the Food and Agricultural Organization of the United Nations in 2021, global milk production reached 906 million tonnes in 2020, which has risen approximately 0.2% from 2019.
Another article by the Food and Agricultural Organization of the United Nations and the Organization for Economic Co-operation and Development, an intergovernmental organization of 38 member countries, has said that total meat production in 2020 was approximately 134 megatons, which was 1.2% more than in 2019. Therefore, the rise in the trade of perishables will increase the demand for cold storage.
Technology to boost Cold Storage operations
Advancements in technologies (like AI, ML, Robotics) are constituting a key trend that is gaining popularity in the Cold Storage market. Major companies operating in the Cold Storage market are using new technologies such as automation in warehouses, taller warehouses with temperature control, and others to sustain their position in the market.
As of 2020, India had about 8,200 cold storage facilities, 75% of which were suitable only for storing single commodities, mainly potatoes…
A few recent developments
In May 2021, Vertical Cold Storage, a US-based temperature-controlled and dry storage facility provider, unveiled its new cold storage facility, Vertical Cold facilities. The Vertical cold storage facility, Vertical Cold facilities. The Vertical Cold Facilities contain the most reliable automation in the industry along with cost-effective refrigeration facilities that use green practices and improve performance through decision-making technology.
In August 2022, Lineage Logistics LLC, a US-based warehousing and logistics management company, acquired Cold Storage Nelson Limited for an undisclosed amount. This acquisition would expand Lineage’s presence in the Asia-Pacific region by using New Zealand, a significant exporter of primary products.
Customers in New Zealand will benefit from CSN’s facilities as well as Lineage’s technology and innovation as they
negotiate the country’s and the world’s rising supply chain demands. Cold Storage Nelson Limited is a New Zealand-based cold storage business.
Indian scenario today
As per Colliers, “The cold storage market in India is currently very fragmented and unorganized with facilities being largely setup on an ad-hoc basis by occupiers in the food, grocery and healthcare businesses, or by their suppliers. As of 2020, India had about 8,200 cold storage facilities, 75% of which were suitable only for storing single commodities, mainly potatoes.”
According to their observation, there are large gaps in the cold chain for products such as exotic and domestic fruits, vegetables and flowers), dairy, frozen meat & seafood, pharmaceutical products (drugs, vaccines) and chemical products, resulting in about 16% spoilage of perishables every year.
They feel there is ample opportunity for developers and third party logistics players to develop a multi-purpose cold chain in India, driven by the growth in the industry, among other factors. With a surge in online grocery sales, demand for exotic fruits and vegetables, and the pressing need for vaccines and drugs storage, they forecast the cold storage sector revenue to grow at 14% CAGR by the turn of 2023. This is, in part, likely to be driven by 57% CAGR growth of online grocery sales in India over the next three years followed by 22.4% CAGR growth in the pharmaceutical sector sales.
They also estimate that total cold storage capacity in India is likely to reach 40.7 million metric tonnes of total perishables by 2023, rising 8.2% from 2020. Over the next three years, they expect the segment to become more organized, with increased interest from third party logistics providers and institutional funds.
By P. K. Chatterjee (PK)
