Cold Chain Logistics: Keeping things cool in a hot market

I started my career with a background in end to end supply chain management for some of the largest multi-national apparel, footwear and accessories companies. While there are many nuances to these supply chains and no customer had 100% the same as another, there was oftentimes a consistent theme: “China makes and the world takes.”

How exciting and invigorating it was for me when I found myself, accidentally, thrust into the world of cold chain logistics. This broad term covers the production, transportation and distribution of products that must be kept within specific temperature ranges. This “chain” of handoffs between numerous parties in the supply chain must remain unbroken or the products may lose quality, shelf life, or altogether become ruined. Different from other industry supply chains, countries known for being the vast majority importers suddenly become net exporters and vis-a-versa. In this world, fish are caught in Alaska, US, sent to China to be processed, and then returned to the US as fish fillets and served in our restaurants. In this world, avocados are grown in California, Texas and Florida and exported to the European Union while at the same time the US imports avocados grown in Mexico and Columbia. In this world, fruits are grown in South Africa and sent to Russia.

The following article will give a very high level overview of the market and why people should care where their food comes from and how it came to be on their plate.

First, lets look into the main commodities requiring international temperature controlled logistics.

Fruit/Vegetables – global market size (2023) estimated at 55.9 million (Mn) tons. The top exporting countries situated around the equator and in the southern hemisphere whereas the top importing countries are in North America and Europe.

Meat/Dairy– global market size (2022) estimated at 36.2 million (Mn) tons. The top exporting countries regions being East coast South America, Australia/New Zealand, and North America. The top importing regions are North Asia and Middle East.

Fish/Seafood – global market size (2022) estimated at 27.5 million (Mn) tons. The top exporting countries regions being South America and North Europe. The top importing regions are Middle East, North America, and North Asia.

Banana/Pineapples– global market size (2023) estimated at 25.2 million (Mn) tons. The top exporting countries being Ecuador, Philippines, and Costa Rica, whereas the top importing regions are in North America, Europe, and Asia.

Pharmaceuticals– While relatively small in transported volumes, the value of goods being transported is estimated (2022) to be $1.5 trillion USD. The top exporting regions being the Indian subcontinent, Europe and Asia, which supplies the rest of the world. Due to its unique supply chain, this segment will be excluded from comment in the rest of the article.

The global demand for all commodities has risen but supply is facing increased disruptions from weather, diseases, and geopolitical tensions along with increasing costs. At the same time there is a geographical shift happening with increasing demands in regions such as India, Far East Asia and the Middle east. Additionally, there is a never ending quest in the industry to reduce loss (quality, freshness) and secure longer shelf life, which opens up even more new markets for growers. According to the World Bank, extending the shelf life of fruits and vegetables by just one day can save up to 40,000 tons of food.

Cold Chain logistics transportation providers range across the supply chain. There are the global freight forwarders who offer end to end temperature controlled transportation with limited owned physical assets. You have asset owners extending their end to end cold chain coverage from both ends. You have cold store (temperature controlled warehouse providers) who are moving from warehousing into trucking and even international transportation via ocean/air freight. You have ocean carriers who own the reefer containers (temperature controlled ocean containers) and are moving outward to do trucking, cold storage and even air freight.

Why should you care? There is massive growth expected across the whole end to end cold chain. Cold storage for example is projected to grow at an compound annual growth rate (CAGR) of 14%, reaching almost 400 billion USD from 2023- 2030. Temperature controlled trucking over the same period are expected to grow at CAGR 6.9%, reaching 5.6 billion USD. Even cold chain monitoring, visibility and tracking of shipments to ensure an unbroken end to end cold chain is expected to grow at a CAGR 16.6% until 2026, to 10.2 USD Billion.

Conclusion

With huge growth potential, growing populations that need to eat, and changing climates, more and more investment dollars continue to flow into the cold chain logistics industry. While much of this is going into physical infrastructure (cold storage, trucks, ocean containers and air), we will see more and more investment in technology to track/trace products, extend shelf life and reduce food waste.

So the next time you go shopping for your family’s next meal, know that there are millions of people across the world, working behind the scenes to deliver that meal to your plate.

““**The views and opinions expressed in the following article are those of the author and do not necessarily reflect the official policy or position of Maersk**“”