Explosive growth and the global cold chain

If the world had a properly functioning cold chain, it is claimed that perishable food loss could be brought down to just 2%.

Rising disposable income, growth in the food retail market and rapidly growing demand for frozen food are forecast to drive high growth in the cold chain industry.

While North America dominates the cold chain market with a 40% share in global market in 2014, the highest compound annual growth is expected in the Asia Pacific region.

Zion Research’s report ‘Cold Chain Market for Fruits & Vegetables, Bakery & Confectionery, Dairy & Frozen Desserts, Meat, Fish & Seafood, and Other End-users: Global Industry Perspective, Comprehensive Analysis, Size, Share, Growth, Segment, Trends and Forecast, 2014–2020’ estimates that the global cold chain market was worth US$110.20 billion in 2014 and forecasts it growing at a CAGR of 13.9% between 2015 and 2020. This will make the market valued at about US$271.9 billion in 2020. In 2014 the global cold chain market was estimated at 552.09 million m³.

What is the cold chain?

The cold chain is a temperature-controlled supply chain that involves the storage and transportation of temperature-sensitive, perishable goods. This means that all storage and distribution activities must occur under temperature-controlled conditions. It is no good keeping your ice-cream stored at -18°C but moving it in unrefrigerated trucks where it can melt and spoil.

Good cold chain management will help to preserve and extend the shelf life of products including meat and poultry, seafood, fruit and vegetables, and frozen foods. The food and pharmaceutical industries are the major end users of cold chain services.

The global cold chain market is mainly driven by increasing need for an efficient storage system for perishable goods to avoid wastage of food products. Cold chains facilitate farmers to store perishable agriculture produce such as vegetables and fruits and increase its shelf life.

Rapid growth in the frozen food market is also expected to drive the cold chain market in the years to come. However, the high cost of real estate and energy are expected to produce significant challenges for the growth of this industry.

Meat, fish and seafood currently dominate the global cold chain market with around 45% share. Fruits and vegetables, bakery and confectionery, dairy and frozen desserts are also key end users of the cold chain market.

Why the cold chain needs to expand

The International Institute of Refrigeration estimates 23% of food loss and waste in developing countries is due to the lack of a cold chain. For perspective, Ethiopia has just 2 L/person of refrigeration compared to 344 L/person in the US.

Prevention of waste is one of the main drivers of the global cold chain market. This was explored in depth in December last year at Carrier’s World Cold Chain Summit to Reduce Food Waste.

“Only 10% of worldwide perishable foods are refrigerated today, so there is immense opportunity to cut food waste and the resulting greenhouse gas emissions by implementing or improving the cold chain. As a leader in high-technology refrigeration solutions, Carrier actively contributes to the development of the cold chain by providing a communication platform, like this summit, where all stakeholders have the opportunity to share, learn and build sustainable cold chain solutions to reduce food waste.

“One-third or more of the food we produce each year is never eaten, yet more than 50% of the wasted food can have its shelf life extended by the cold chain,” said David Appel, president, Carrier Transicold & Refrigeration Systems.

The conference, which was held in Singapore, convened 131 delegates from 33 nations, including global leaders in the supply chain private sector, academia and government to discuss and develop scalable, sustainable solutions to expand and improve the cold chain to reduce food loss and waste.

Summit highlights

• The summit endorsed the new United Nations Sustainable Development 12.3 Goal that calls for halving food waste — at retail and consumer levels, as well as reducing food losses along the entire global food supply chain — by 2030.
• A new, independent study shows that greenhouse gas emissions associated with food waste could see a 10-fold net reduction if developing countries have the same level of cold chain implementation as the developed world. This is powerful evidence that a green cold chain can be effective not only in feeding more people, but taking a bite out of the astounding 3.6 gigatons of CO₂ associated with food waste every year. If food waste were a country, it would be the third-largest emitter of greenhouse gases. The study confirms that clear improvements are achievable.
• According to Professor Judith Evans of London South Bank University, in developed countries, 42% of food waste happens at the household level, confirming the need for greater consumer awareness. The UK awareness campaign ‘Love Food Hate Waste’ is credited with generating a 21% reduction in household food waste since 2010, she shared.
• The US Green Building Council’s LEED green building standard could be an effective model for consideration for a green cold chain standard.
• One of the keynote speakers at the conference, Dr Joseph Mpagalile, agro-food industries officer, Food and Agriculture Organization of the United Nations (FAO), said the FAO is considering a new Cold Chain Coalition to fight food waste in developing countries.
• The summit also endorsed the new UN Sustainable Development Goal that calls for halving food waste — at retail and consumer levels, as well as reducing food losses along the entire global food supply chain — by 2030.

According to John Mandyck, UTC chief sustainability officer: “We know there are many reasons why food is lost or wasted — but among them is the lack of or the underdevelopment of the cold chain.

“Refrigeration is the best technology to ensure food safety for perishable goods and prolong its shelf life. That’s why this summit is so important, as it helps connect a global dialogue on how we can sustainably grow the cold chain — which, in turn, can reduce food waste and feed a growing population with fresh foods containing necessary micronutrients for good health and development.

“Over the last 20 years,” Mandyck added, “we’ve experienced the ‘Age of Energy Efficiency’, taking the same power base and spreading it more efficiently to urbanise in a sustainable manner. Energy efficiency has gone far, with more to go. It is now time for the ‘Age of Food Efficiency’, using the same food supply base that produces enough to feed 10 billion people — enough for those on the planet today and enough for those that will join us in 2050 — and in the process avoid more production and environmental emissions that come with it. The potential to extend food supplies, with the help of an improved green cold chain, is extraordinary.”

Image credit: ©iStockphoto.com/leonello calvetti