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Emerging trends in refrigeration & cold chain sector
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Monday, 24 February, 2020, 08 : 00 AM [IST]
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Laltu Sinha
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The global market for refrigeration and cold chain is undergoing a revolutionary change because of expanding middle class and affluence entering the middle classes. With consumers becoming increasingly health-conscious and proactively gravitating towards healthy food, manufacturers need to adapt to thrive and offer significant innovation to overcome capacity, infrastructure constraints and mitigate disruptive risks to ensure quality delivery.
The changing consumer behaviour, growth in e-commerce sector, and technological advancement are key factors driving the refrigeration and cold chain sector. Due to its immense value-adding potential, especially within the food-processing category, refrigeration and cold chain has emerged as one of the key markets for the logistics industry.
A significant challenge facing the global food processing industry is the level of waste across the perishable goods value chain, and this has increased the global market demand for refrigeration and cold chain. During the last three years, the industry has witnessed growing mergers and acquisitions. The industry is transforming towardsmultipurpose cold storageand providing end-to-end services to monitor parameters across the value chain.
Advancement in technology Perishable commodity trade pattern, combined with liberal trade barriers across several economies is helping the smooth movement of perishable food products worldwide. Advancement in technology, coupled with intelligent tools, allows retailers and manufacturers to ensure the quality of fresh foods in transit by making it easier to keep temperature control unbroken. For instance, IoT devices and cloud-based software applications are monitoring and controlling refrigerated freight containers remotely.
In addition to standard refrigeration equipment, smart reefer containers are in demand as they can utilise ozone generating units, ventilation valves, and other measures to create optimum conditions for perishable products. Moreover, innovative approachesand creative solutions that are shaping across the refrigeration and cold chain industry are more focussed on new-age storage systems, real-time monitoring of storage and quality parameters, data recording applications, using ICT resources as well as the use of renewable energy sources.
Increasing trend of 3PL -The logistics market for third-parties involves 3PL transport market and the 3PL cold chain market. 3PL cold chain market displays healthy growth worldwide. Growing trend of international & convenience food, brand awareness, increasing disposable income, and rising global food chains, offers an attractive market for investment.
Eventually, the trend is encouraging fourth party as aggregators into space or market place for spare capacity or charge trading. Companies are actively looking for options in 3PL and intermodal logistics as logistics costs are rising across the board, and the cold chain is no exception. Operating refrigerated fleets and underused warehouses are not feasible for refrigeration and cold chain businesses, thus, they are turning to third-party logistics providers (3PLs) and intermodal transport to find new solutions.
In terms of refrigerated warehouse capacity, India, the United States, and China dominated the global market with a market share of 24%, 21%, and 17% in 2019 respectively. Countries with larger populations, consumer incomes, and geographic areas likely have different needs for refrigerated warehousing services.
India is amongst the largest producers of agricultural products and has an ample supply base of different products. There is a profound need for agro-logistics to evolve with a distribution bias to connect with regional demand and not merely as a buffet for the local market.
Also, the World Trade Organization (WTO) and bilateral free trade agreements such as the Free Trade Agreement of the European Union (FTA) and the Free Trade Agreement of North America (NAFTA) have created opportunities for exporters in the US and Europe to expand the trade in perishable food which is free of import duties. It will further push the demand for better cold chain infrastructure for dairy and frozen desserts, to provide ideal transport and storage conditions in coming years.
In the past few years, the refrigerated storage market has grown significantly, with a move from food products stored in cold storage warehouses to delivering value-added services to customers. Dairy & frozen desserts are experiencing high demand due to economic growth, rapid urbanisation, and the use of sophisticated marketing channels, which have resulted in significant changes in dietary patterns. Frozen fruits and vegetables are now available in easy-to-open resealable packaging, enabling for more extended storage and portion control without wastage.
Looking at the growth opportunities of refrigeration and cold chain in the emerging markets, farmers are investing in the supply chain to save costs and preserve food. Moreover, manufacturers are using simple packaging techniques to minimise product temperatures without burdening local infrastructure. Rather, they are relying on independent and reliable energy sources, such as wind or solar, to maintain constant temperatures throughout the processing, transportation, and sale of their goods.
Leading cos operating in global cold chain warehouse industry
- Americold Logistics (operating in Argentina, Australia, Canada, China, New Zealand, United States and so on)
- Lineage Logistics (Belgium, the Netherlands, United Kingdom, United States and so on)
- Swire Cold Storage (China, Sri Lanka, United States and so on)
- Agro Merchants Group (Australia, Austria, Brazil, Chile, Ireland, the Netherlands, Poland, Portugal, Spain, United Kingdom, United States and so on)
- Nichirei Logistics Group, Inc. (France, Japan, the Netherlands, Poland and so on)
- Kloosbeheer B.V. (Canada, Germany, France, the Netherlands, Norway, South Africa, Sweden, United States and so on)
The efficient control of cold storage depends heavily on the software and hardware modules used for monitoring. The use of monitoring components, particularly in the cold chain, is on the rise due to technological advances and the increasing need to ensure shipment quality, efficiency, and safety.
Advances in back-end IT infrastructure and front-end devices used to collect and report real-time shipment information are equally noticeable. Moreover, the upcoming trend in IoT evolution for refrigeration and cold chain is towards the integration of IoT with analytics tools such as machine learning. IoT with machine learning will provide diagnostics and pre-maintenance to the refrigeration and cold chain industry.
(The author is director at Syndicated Market Research Reports/ Custom Market Research, US, Canada. He can be contacted at laltusinha@blueweaveconsulting.com)
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