Well Integrated Cold Chain Solution is Need of an Hour

Hemant S. Naik, VP- Strategy & Supply chain at Kamath Ourtimes Ice-creams Pvt LtdWe, Kamath Ourtimes Ice-creams Pvt Ltd., are known for our artisan ice-creams brand “Natural’s”. We form subset of dairy sector, part of F&B on retail service platform. The nature of our ‘work in process’ which is fruit pulps and final offering i.e. ice-creams as an inherent nature and physical state of product, makes it must to have well integrated cold chain. Cold storages and temperature controlled logistic network are two components of this well integrated cold chain solution. For many products in F&B sector or in Pharmaceutical / nutraceutical space, refrigerated transportation is not an option, but an absolute necessity. The benefits of refrigerated transportation are centered around nature of product through its life cycle, Product quality, safety and even regulatory compliances.

If we speak about early phase of industrialization, business houses used to develop facilities to produce such temperature sensitive products close to market and consumer. Thus, the relevance of cold chain or refrigerated transport wasn’t the focus area. With industrialization and mass production through continuous process, based on complete integrated value chain, the first rudimentary version of refrigerated transportation was born in the 1800s, when cargo transporters would place brine below temperature-sensitive goods in train cars. This process was horribly inefficient and inevitably led to major losses in the value of goods and profitability. In the 1900s, more efficient modes of refrigerated transportation were developed. Improvements in technology have given us cold chain logistics, which has become a massive industry and continues to grow.

If we travel through that era to modern world i.e. 21st century, the global cold chain market size was valued at USD 167.99 billion in 2018 and is expected to expand at a CAGR of 15.1 percent from 2018 to 2025. Growing penetration of connected devices and automation of refrigerated warehouses across the globe is anticipated to spur the growth. Increasing number of organized retail stores in emerging economies is leading to increased demand for cold chain solutions. Moreover, trade liberalization, government efforts to reduce food waste, and expansion of retail chains
by multinational companies are expected to boost demand.The World Trade Organization (WTO) and bilateral free trade agreements such as European Union Free Trade agreement (FTA) and the North America Free Trade Agreement (NAFTA) have created opportunities for exporters in U.S. and Europe to increase trade of perishable foods in a manner that is free of import duties.

If we speak about our native industry, the Indian cold chain market, it was worth INR 1,121 Billion in 2018 i.e. 16.24 billion USD which is substantial 10 percent of Global cold chain. The market is further projected to reach INR 2,618 Billion by 2024, growing at a CAGR of 14.8 percent during 2019-2024. India is currently the world’s largest producer of milk, second largest producer of fruits and vegetables and has a substantial production of marine, meat and poultry products. Most of these products are temperature sensitive and require specific temperature ranges to be stored and transported. This has resulted in the establishment of a very large cold chain infrastructure in the country.

We cannot discount the fact that presently, more than 3,500 companies operating in this space are unorganized and fragmented in nature. But, organized players contribute 8percent-10percent to the cold chain supply base. Apart from this there are other challenges that industry is facing here in India such as,

• High operation costs, lack of small size reefer vehicles for shipment from distributor to retailer, high ambient temperature.
• 5,381 cold chain storages in India contribute 95percent of total storage capacity under private players.
• 36 percent of above-mentioned cold storages in India have capacity below 1,000 MT
• Unawareness on the significance of maintaining Cold chain services, poor road condition and high number of toll-nakas.

As a general opinion through the industry, ways to develop end-to-end Supply Chain Solutions for application across Industries includes,

• Introduction of processes for safety, handling, designing, operations for finishing of products and raw produce.
• Mobile infrastructure through pre-market and post-production stages, which are designed to meet the logistical load factors, as cold chain also extends to retail or point of sale for merchandise infrastructure.
• Improved Static infrastructure on the other hand deals with storage and cross doc distribution
• Controlled and focus efforts to develop skilled human resources for implementing the above-mentioned aspects in a cold chain and make use of advanced technology to ease the logistics business and supply chain management.

While all the infrastructure will be growing as per estimates, the key emerging component is global supply chain analytics market. It was valued at USD 3.05 billion in 2017 and is estimated to reach 10.6 billion by 2025-26. Globally, the supply chain analytics growth rate is fastest in the APAC, LA and MEA region because of the increasing awareness for benefits in supply chain analytics amidst the business organizations running in numerous verticals. India is estimated to contribute a big size of the pie as the backend service support through IT sector. We are late entrant in this whole game of cold chain and supply chain management and analytics, but we are catching up very fast and will be well placed on global platforms in near future with contribution of conventional wisdom and growing startups with smart ideas.