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Emerging trends in refrigeration and cold chain!
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Thursday, 12 December, 2019, 08 : 00 AM [IST]
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Hemant S Naik
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“Cold is new Hot!,” “Frozen is Fresh!” or “Fresh is new Frozen!,” “Take the Shop to Consumer!” are phrases frequently used in addition to “Farm to Plate!”
Sounds like paradox! Not for anyone who’s been following this growing field.
For them, it’s like summing it up in apt one liner. The demand for refrigeration in the supply chain is greater than it’s ever been. Numerous trends are pushing toward an increased capacity for refrigeration in logistics and the logistics market is sweating it out to keep up and evolve in order to meet the newest developments. New ‘on-grid’ and ‘off-grid’ refrigeration solutions, newer devices, IoT, blockchain, shared resources - assets and services, cloud-based integrated solutions, you name it and it’s participating and contributing in this growing sector.
The global cold chain market size was valued at US$167.99 billion in 2018 and is expected to expand at a CAGR of 15.1% from 2018 to 2025. Share of Indian cold chain market was worth Rs 1,121 billion in 2018 i.e., US$16.24 billion, which is substantial 10% of global cold chain. The market is further projected to reach Rs 2,618 billion by 2024, growing at a CAGR of 14.8% during 2019-2024.
Most market evolutions have a multitude of factors in play behind them, ranging from consumer demand to regulatory changes. Industry trends, those have contributed to the spectacular growth of the cold chain logistics market can be termed as;
- Increased demand for fresh and locally-produced food or preserved food
- Increased demand for refrigerated pharmaceuticals and nutraceuticals and its need for MAP-CAP
- Higher scrutiny for refrigerated food and pharmaceutical products under new regulatory framework
- Consumer awareness driven demand for environmental consciousness in shipping and production practices
- Increased prominence of third-party logistics carriers (3PLs) in the cold chain market.
It is worth enough for businesses to actively participate in this growing sector and take advantage of these trends and make a stronger, more secured cold chain.
Cold is New Hot! Whether it is the normal day or fighting natural disasters, the significance of effective delivery of essentials such as food, pharmaceuticals and lifesaving products is increasing. Supply challenges related to handling, maintaining and keeping conditions through storage and transportation, quality of infrastructure and other influencing factors require careful planning and coordination. Deviations or variations or compromises on any related parameters are not options, simply because...
When customers lose, companies lose - And even in normal circumstances this “extreme” supply chain needs careful attention. Huge amounts of resources are invested in research, regulatory approvals, compliances, sourcing, manufacturing, storing, transporting, advertising - marketing and so on. The stakes are too high. Brand integrity, customer confidence and market share are all at risk in the fragile cold chain.
Fresh is the New Frozen - Consumer standards for food have continued to increase for years. The pleasure of eating fruit, vegetables, and meats when they are fresh is unbeatable; such products get wasted after a few days. Frozen food offers a practical alternative to busy households but preserving the original quality of the ingredients remains a challenge and primary concern of food producers and consumers. Therefore, businesses have invested in new technologies like IQF, quick freezing and high quality of inputs to protect the freshness and nutritional properties of fresh.
Many innovative technologies currently being researched and developed promise improvements in the quality of frozen foods. Some of these innovative technologies are in the development stage, while for others the biggest obstacle is high capital cost.
Healthy is the Way - As consumers are gradually becoming health-conscious with evolving consumer preferences turning towards healthier options without compromising on the taste which in turn has impacted the sales of bakery, meat and other significant products. Developed economies are witnessing health trends those are pushing more and more consumers away from packaged foods to fresh produce ‘farm fresh’ and bakery items i.e., ‘fresh from oven,’ where growth has outpaced other food and beverage departments over the past four years say analysts at market research firm IRI and the Food Marketing Institute.
Take Your Shop To Customer’s Doorstep - It is the mantra followed by e-commerce that just made life easier for consumer. Consumer expects everything at his doorstep on a touch of screen. The all-important Last Mile, a term used in supply chain management to refer to the last leg of the supply chain, denoting the transportation of goods from a transportation hub to its destination. Specially for India, given the vast expanse of the country's sheer size, a varied and uneven topography, coupled with the fact that a large number of the country's industrial clusters (dominated mainly by MSMEs) are based out of its tier 2 cities, and not in its large metros. Various studies have shown that Indian logistics landscape, typically comprises of isolated entities and depends heavily (about 60%) on the already congested and ill-maintained Indian roads.
The Indian coastline and river network have historically remained underused, even though such models are more energy-efficient, ecofriendly and come with reduced logistics costs. With all new resource pull in omni channels and infrastructures coming up under the term fulfillment centres and mosquito deliveries might change the dynamics of this industry in near future. Modern retail, cash and carry will change the retail for retailer and consumers and thus creating scope for organised players in this space.
Resource Sharing And Collaborative Communities - It is the future. Third-party logistics market can be segmented into 3PL transportation market and 3PL cold chain market, which has seen a healthy growth globally and India is not an exception to this trend.
Soon the trend will promote fourth-party entering in the space as aggregators or market place for trading spare capacity or load. Businesses are seeking solutions in 3PL and intermodal logistics as logistics costs are on the rise across the board and the cold chain is certainly no exception. It’s simply not feasible for businesses to operate their own refrigerated fleets and underutilised warehouses. Thus, they are turning to third-party logistics providers (3PLs) and intermodal transportation to find new solutions.
No matter what the specific needs of the client, the theme for 3PLs is that versatility and scalable capacity are increasingly necessary. Intermodal cold chain logistics and multi-temperature vehicles are also experiencing a boom.
Finger On The Pulse is the new norm for retailers and suppliers as businesses need real-time data. This can ensure the quality of fresh foods in transit by maintaining the unbroken temperature control. For instance, via sensors using IoT devices and cloud-based software applications, the refrigerated cargo containers can be remotely monitored and tracked down. Vehicle tracking, managing live data about location, status of device, temperature monitoring, fuel level monitoring, monitoring driver’s fatigue, tracking tampering through the route and so on are part of information flow and can be easily related to different components of overall cost in terms of spillages, spoilages and loss of opportunity to monetise product due to time lag.
Emerging Technologies Create New Opportunities is a well accepted norm. This upsurge in the cold chain market was due to growth of structured retail sector in this digital era, especially in the modern retail and e-retail sector. Cold chain is one of the highest growing markets, yet it constitutes a minor proportion to the growing logistics industry of India. Securing the cold chain requires continuous improvement lead by innovation, collaboration and communication, ensuring that each of the critical links in the chain understands product storage and handling requirements.
It’s all on the Cloud; catering the demand for real-time data needs an IT infrastructure that can collectively analyse and share the data where and when it’s required. So only by harnessing IoT technologies, organisations can utilise the data that exists within their physical environments in unlocking business value across the cold chain in the form of reduced waste, brand equity and rapid RoI (Return on Investment).
Blockchain Meets Cold Chain where blockchain aids in creating a more transparent route for fresh foods, and leading retailers are finding innovative ways to transform this data into multiple strategic and tactical initiatives.
Green is the Colour of Life Forever and 21st-century is not an exception to this rule. Consumers do not just want their products quickly, they are concerned about the environmental footprint and impact on overall ecology. Cold chain logistics, with its frequent use of refrigerants and high energy consumption, is not necessarily the poster industry for sustainability. Thanks to some new technical innovations, things might be heading in ecofriendly direction. Industry experts are predicting that the following technologies will gain increasing prominence in cold chain logistics as demand for green solutions continues to grow:
- Conserving resources through reusable temperature-controlled MAP-CAP packaging using refrigerated phase change materials
- Usage of AI & ML based smart systems in warehouses to reduce energy and refrigerant usage
- Dynamic routing, shared load, space trading to reduce idle time and idle capacity by using newer versions of logistics software
- Sophisticated insulation methods
- Reducing greenhouse gas emissions through use of alternative / non-conventional fuels such as compressed natural gas (CNG), bio diesel and electricity.
- Exploring more eco-friendly refrigerant alternatives such as ammonia.
These newer trends are keeping this sector young, agile. As they say, “Fresh is new Frozen!” and “Cold is new Hot!”
(The author is VP, strategy and supply chain, Kamath OurTimes Ice Creams Pvt. Ltd. He can be contacted at hnaik.ptis@gmail.com)
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