Cold Chain Market

The global cold chain market is estimated to be worth over $278.2 billion in 2023 and over $428.4 billion by the end of 2028, growing at a 9.0% CAGR between 2023 and 2028.

This growth is primarily driven by the increasing demand for temperature-controlled storage and transportation across various industries, including food, pharmaceuticals, and chemicals.The globalization of trade has led to an increase in the transportation of goods across borders. This has driven the need for cold chain logistics to ensure that temperature-sensitive products are maintained at the required temperature during transportation and storage, irrespective of the distance and time taken. The pandemic has further highlighted the importance of the cold chain market, particularly in the distribution of vaccines and other medical supplies. As a result, the market is expected to continue to grow in the coming years, with significant investments in technology and infrastructure to improve cold chain logistics and ensure the safe and efficient distribution of temperature-sensitive products.

The cold chain market is also benefiting from advancements in technology, such as the Internet of Things (IoT), which allows for real-time monitoring of temperature and humidity levels during transportation and storage. This technology helps to ensure the safety and quality of products, reducing the risk of spoilage and waste.

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Some current trends in the cold chain market:

• Growing demand for temperature-controlled storage and transportation: The cold chain market is witnessing a surge in demand for temperature-controlled storage and transportation services due to the increasing global trade of perishable goods, such as food and pharmaceutical products.
• Adoption of automation and IoT technologies: Cold chain companies are investing in automation and Internet of Things (IoT) technologies to enhance operational efficiency, reduce costs, and ensure compliance with regulatory standards.
• Rising focus on sustainability: There is a growing emphasis on sustainable and environmentally friendly cold chain practices, which is driving the adoption of green technologies, such as alternative refrigerants, energy-efficient systems, and eco-friendly packaging materials.
• Increasing need for end-to-end visibility and traceability: Cold chain stakeholders are increasingly seeking end-to-end visibility and traceability of their products, from origin to destination, to ensure compliance with regulatory requirements and to mitigate risks of product loss or damage.
• Emergence of new business models and partnerships: The cold chain market is witnessing the emergence of new business models and partnerships, such as the sharing of cold storage facilities and transportation assets, to optimize capacity utilization and reduce costs.

Cold Chain Market Dynamics

Driver: Increasing need for temperature control to prevent food loss and potential health hazards

Food security, food safety, economic and environmental sustainability, and minimal food waste are major focus areas in the food industry. Food loss and waste are caused due to various reasons. For instance, perishable products are often exposed to fluctuating temperatures during transit and handling, which results in food spoilage and wastage. To overcome this, the demand for refrigerated storage and transportation services has increased across the globe. According to UNEP 2021, an estimated 17% of total food produced for human consumption is wasted, costing the world economy USD 936 billion each year. Food loss is caused by the absence of cold chains during food processing, packaging, distribution, and consumption. According to the International Institute of Refrigeration 2021, a lack of proper refrigeration directly led in a loss of 526 million tons of food production, or 12% of total global production.

This is enough to feed an estimated 1 billion people in a world where 811 million people are hungry and 3 billion cannot afford a nutritious diet. According to the Food and Agriculture Organization (FAO) 2021, India is one of the world’s largest food producers and has a lot of food produced in the country to meet its food requirements, but because of the fragmented and unorganized supply chain, storage, and logistics, gives an inadequate food distribution system. Each year, over USD 14 billion in crops are wasted owing to inefficient cold chain and disorganized logistics. According to a 2021 study on All India Cold Chain Infrastructure Capacity (Assessment of Status & Gap) conducted by NABARD Consultancy Services Pvt. Ltd. (NABCONS) for the National Centre for Cold Chain Development (NCCD) under the Department of Agriculture, Cooperation, and Farmers Welfare in the Ministry of Agriculture & Farmers Welfare, the country’s requirement for cold storage is 35 million MT, while the capacity for such storage is around 32 million MT. According to Colliers’ newest report, opportunities in Indian cold chain assets, India’s cold storage capacity is expected to reach 40.7 million metric tons by 2023, up 8.2% from 2020.

According to the International Institute of Refrigeration 2020, food loss is especially prevalent in developing countries. While poor countries have over 80% of the world’s harvested cropland, they only refrigerate about 20% of the perishable food they produce (compared to 60% in developed countries). In India, post-harvest losses for some crops exceed 40%, and only about 4% of the country’s food moves through the cold chain, compared to 70% in the UK. Farmers suffer significant financial losses as a result of post-harvest losses. According to the Cool Coalition UNEP 2022 report, farmers in India lose roughly USD 12,520 million per year due to inadequate storage facilities and a lack of energy infrastructure. This is concerning because about 82% of farmers in the country are small and marginal, with less than two hectares of land. Currently, between 25% and 35% of grown food is wasted due to a lack of proper refrigeration and other supply chain bottlenecks, and only 6% of food produced in India moves through the cold chain. According to the National Centre for Cold Chain Development (NCCD), an autonomous organization established by the Indian government to establish cold chains for perishable agriculture and horticulture produce, the country had a shortfall of 12.6 million tons of cold storage capacity at the start of 2020.

The Government of India’s Ministry of Agriculture & Farmers Welfare issued a statement in September 2020 regarding the country’s cold storage capacity and infrastructure. According to the press release, the country has 8,186 cold storages with a capacity of 374.25 lakh MT for preserving perishable horticulture produce such as fruits & vegetables. Private players own the great majority of these cold storage facilities. To meet future needs, the government implemented schemes such as MIDH (Mission for Integrated Development of Horticulture) and PMKSY (Pradhan Mantri Kisan SAMPADA Yojana), which provide financial assistance for the establishment of cold storages across the country, bridging the gap between available resources and required cold storage capacity.

Apart from food wastage, food manufacturers and cold chain service providers need to comply with international standards and specific requirements for keeping potentially hazardous food at specified temperatures. Potentially hazardous food products might contain harmful bacteria and are capable of supporting the growth of these bacteria or the formation of toxins to levels (if not stored at the required temperatures) that are unsafe for consumption. As a result, cold chain services play an integral role in ensuring food safety and minimizing food loss and potential health hazards.

Restraint: Environmental concerns regarding greenhouse gas emissions

Cold chain development places a significant burden on the environment since refrigeration is energy-intensive and has greenhouse gas emissions. The food cold chain has environmental and global climate change implications. According to the International Institute of Refrigeration 2021, overall, the food cold chain accounts for approximately 4% of total world greenhouse gas emissions, including emissions from cold chain technology as well as food loss and waste due to a lack of refrigeration.

Food cold chain equipment emits emissions from both indirect and direct sources. The electricity used to power refrigeration equipment, as well as the fuel used to power-refrigerated vehicles and generators, cause indirect emissions. The leakage of refrigerant gases into the atmosphere causes direct emissions. Mechanical refrigeration equipment uses electricity to operate. According to the Environmental Investigation Agency (EIA) 2021, refrigeration in supermarkets accounts for up to 4% of the total electricity use in developed countries. Producing this electricity emits CO2-equivalent emissions and contributes to global warming, particularly if it is generated using carbon-intensive fossil fuels. Emissions are also produced by fossil fuel (mostly diesel) generators that are commonly employed for off-grid applications. During transportation, both vehicle engines and transport refrigeration units contribute to fuel consumption emissions.

Meanwhile, the leakage of many common refrigerant gases into the environment directly contributes to global warming. This happens throughout the operation and servicing of cooling equipment, as well as after disposal at the end of its life. As some refrigerants used today have a large global warming potential and are hundreds to thousands of times more potent than CO2, refrigerant leakage has a considerable impact on total refrigeration emissions. According to the UNEP Ozone Secretariat 2021, in all, approximately 80% of greenhouse gas emissions from refrigeration, air-conditioning, and heat pump systems are linked with indirect emissions from energy use, whereas 20% are associated with direct emissions from refrigerant use.

Some refrigerant leakage causes ozone depletion in addition to contributing to global warming. Ozone-depleting compounds such as chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs) were generally phased out globally under the 1987 Montreal Protocol. Meanwhile, hydrofluorocarbons (HFCs), which were created as HCFC substitutes, have no ozone-depleting potential, although some HFCs have extremely high GWPs. According to UNEP 2022, today’s cooling market relies on around 16 pure HFCs and 30 mixes with GWPs ranging from less than 100 to close to 15,000. The R-404A, a common blend14 used in medium- and low-temperature refrigeration applications, particularly in the food retail and transportation industries, has a high GWP of 3,920. According to the North American Sustainable Refrigeration Council 2021, because of the rising global demand for cooling and refrigeration in the residential, commercial, industrial, and transportation sectors, HFCs are among the fastest-growing sources of greenhouse gas emissions. Cooling and refrigeration account for approximately 35% of overall HFC consumption in the cooling sector.

According to the International Institute of Refrigeration 2021, 261 million tons of CO2-equivalent emissions were emitted by food cold chain equipment. When this is combined with the emissions from food loss and waste due to a lack of refrigeration (an estimated 1,004 million tons of CO2-equivalent), the total greenhouse gas emissions associated with the global food cold chain are an estimated 1,265 million tons of CO2-equivalent, or about 4% of total global greenhouse gas emissions.

Emissions from food cold chain equipment are expected to climb significantly in the coming decades as additional cold chain capacity comes online in emerging countries, particularly if this infrastructure is delivered in traditional patterns. In India, for example, food cold chain emissions are expected to double by 2027 if no measures are implemented, according to UNEP 2021. Continued growth of cold chains using conventional fossil fuel-based technology can result in much increased cooling emissions, detracting the benefits gained by reducing food loss emissions.

Opportunity: Government support for cold chain infrastructure development

Governments in many nations are taking steps to reduce food and agricultural waste by developing food waste regulations and promoting food-related sectors such as the cold chain industry. In many countries, however, there is still a gap between food production and cold storage capacity. For example, India is the world's largest producer of milk and the second-largest producer of fruits and vegetables. But still, a lack of reliable, integrated cold chain facilities leads in significant food waste across the country.

The schemes for the preservation and growth of the cold chain Industry have been given below:

The Indian government has now allowed 100% FDI in the cold chain sector to witness the much-needed boom of this business on a global scale and to enable the construction of cold chain infrastructure completely and without hindrances. Under the current FDI policy, a minimum investment of USD 100 is required, with at least 50% of that investment in back-end infrastructure. Furthermore, according to the Department of Industrial Policy and Promotion, the exact figure for FDI in only cold chain is still unavailable. However, given that overall FDI in food processing industries, including the cold chain industry, was USD 904.7 million in 2019-20, a similar deduction can be made. According to the Minister of State for Food Processing Industries, food processing industries (FPI) got USD 393.4 million in FDI during 2020-21, compared to USD 904.7 million the previous year.

FDI in the FPI industry reached USD 628.24 million in 2018-19. Since 2016-17, the ministry has been implementing the Central Industry Umbrella Scheme - Pradhan Mantri Kisan SAMPADA Yojana (PMKSY) - for general growth and development of the food processing sector, including agro product processing, and therefore enhancing farmer income. PMKSY’s component schemes are as follows: Mega Food Park, Integrated Cold Chain and Value Addition Infrastructure, Food Processing & Preservation Capacity Creation/Expansion, and Infrastructure for Agro-Processing Clusters. Under these schemes, the ministry primarily provides credit-linked financial assistance (capital subsidy) to entrepreneurs in the form of grants-in-aid for the establishment of food processing/preservation industries. So far, the Ministry has approved 41 mega food parks, 353 cold chain projects, 63 agro processing clusters, 292 food processing units, 63 backward and forward linkages projects, and 6 operation green projects across the country.

MoFPI’s Scheme of Cold Chain

Financial help in the form of grant-in-aid is provided to industry participants under this scheme. The assistance is provided up to INR 10 crore for each project involving technical civil works and all eligible plant and machinery, subject to the following conditions:

• The grant-in-aid for storage infrastructure, which comprises the pack house and pre-cooling units, ripening chambers, and transport infrastructure, will be 35% for General Areas and 50% for Northeastern States, Himalayan States, Integrated Tribal Development Project (ITDP) Areas, and islands. This must be included in the entire cost of the plant and machinery, as well as all technical civil work.
• In the event of any value addition and processing for such infrastructure, including frozen storage and deep freezers associated with such projects and integral to the processing, the grant-in-aid shall be provided at a rate of 50% for all General Areas and 75% for Northeast States, Himalayan States, ITDP Areas, and islands.
• If irrigation facilities are required, the grant-in-aid will be 50% for general areas and 75% for Northeast States, Himalayan States, ITDP Areas, and islands.

Challenge: Maintaining product integrity during transportation of perishable commodities

Constant temperature monitoring while storage and transportation is essential for preventing product degradation and spoilage. This ensures that products that appear to be safe are actually safe. Cold-chain companies use IoT temperature sensors to keep an eye on the temperature when loading and transporting products.

The following are the best practices for maintaining a cold chain from beginning to end:

• Checking the packing during arrival, transportation, and delivery.
• Proper pre-cool inventory.
• Maintain cold storage temperature.
• Ship the products at the appropriate temperature (Maintain the temperature at the time of loading).
• Monitor the temperature during transport.
• Ensure that the goods are kept at the optimal temperature by the recipients.

To ensure that the food is kept in the best possible condition and of high quality, supply chain companies must stay alert and resolve any issues as quickly as feasible. Cold chain logistics links manufacturing facilities to the market. The success of cold chain transportation is determined by how well it serves as a channel from the origin to the destination for products that are sensitive to air compression, temperature, microbial load, etc. with full integrity.

During transport, a malfunction (or an involuntary interruption of power) of the refrigeration equipment can, in a couple of hours, compromise the cold chain depending on the ambient temperature. Since refrigeration equipment is designed to maintain a set temperature level, a load that has not previously been cooled may put undue stress on the device, causing the temperature to fall below the specified range. Due to wear and tear or defective equipment, the reefer may offer an inadequate cold storage environment, such as poor air circulation and defective insulation at seals (such as doors).

Drivers may also willingly turn off the refrigeration unit to conserve fuel, leave doors open for too long during deliveries, or be forced to do so by local legislation to cut idling time. A cold chain can be compromised in a variety of ways during the loading, unloading, or storing of a product. For example, a product could be left on the loading dock for an extended amount of time, or the refrigeration unit could be switched off during transshipment. Some warehouses may have poor temperature maintenance and control, while others may lack temperature storage facilities, resulting in all freight being stored at the same temperature. A consignment may also be stored at the wrong temperature due to a clerical error. As a result, the challenge remains the conditions in which products are exposed to intermittent and temporary lapses in the integrity of the cold chain, because these breaches in integrity are more difficult to identify. This reduces the product’s shelf life, if not spoilage and loss of market value.

The LCV, by vehicle type dominated the cold chain market and is projected to have the fastest market growth during the forecast period.

LCVs are commonly used in the cold chain logistics industry for the transportation of temperature-sensitive products. The demand for LCVs for cold chain logistics is driven by various factors, such as the size and weight of the cargo, the distance to be covered, and the type of product being transported. Overall, LCVs are an important component of the cold chain market, particularly in the last-mile delivery of temperature-sensitive products. As the demand for fresh and frozen food items, pharmaceuticals, and other temperature-sensitive products continues to grow, the demand for LCVs equipped with refrigeration units is likely to increase as well.

The frozen segment by temperature type is estimated to account for the largest market share in the global Cold chain market.

The food industry is a major driver of the frozen segment in the cold chain market. The demand for frozen foods is increasing due to their longer shelf life, convenience, and ease of preparation. Frozen foods are also less prone to spoilage during transportation and storage, which makes them ideal for long-distance transportation. The growing demand for frozen products and the need for strict temperature control during transportation and storage are driving the frozen segment of the cold chain market. With the increasing demand for frozen food, pharmaceuticals, and other products, the demand for cold chain logistics services for the frozen segment is expected to continue to grow in the coming years.

The fruits and vegetables by application is projected to attain the fastest market growth in Cold chain market over the forecast period.

With the growing demand for fresh fruits and vegetables, the need for cold chain logistics has increased to maintain the quality and freshness of these products during transportation and storage. Cold chain logistics plays a crucial role in maintaining the nutritional value and taste of fresh produce, thereby meeting the rising demand for high-quality fresh produce. Overall, the growing demand for fresh produce, globalization of trade, reduction of food waste, and demand for organic produce are driving the fruits and vegetables segment of the cold chain market.

Asia Pacific is projected to account for the largest share in the Cold chain market during the forecast period.

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The e-commerce industry is growing rapidly in the Asia Pacific region, which is driving the demand for cold chain logistics for the last-mile delivery of temperature-sensitive products, such as fresh food, pharmaceuticals, and other products. Governments in the Asia Pacific region are investing in the development of cold chain infrastructure to support the growth of the food and pharmaceutical industries. For instance, the Indian government has launched the Pradhan Mantri Kisan Sampada Yojana to create modern infrastructure for the food processing industry, which includes cold chain logistics. The growing demand for food products, increasing urbanization, rising e-commerce industry, government initiatives, and focus on sustainability are driving the growth of the cold chain market in the Asia Pacific region.

Key Market Players in Cold Chain Market

The key players in this market include Americold Logistics (US), Lineage Logistics Holdings, LLC. (US), Nichirei Corporation (Japan), Burris Logistics (US), A.P. Moller Maersk (Denmark), United States Cold Storage (US), Tippmann Group (US), VersaCold Logistics Services (Canada), Coldman (India), Congebec Inc. (Canada), Conestoga Cold Storage (Canada), NewCold (Netherlands), Confederation Freezers (Canada), Seafrigo (France), and Trenton Cold Storage (Canada). These players in this market are focusing on increasing their presence through agreements and collaborations. These companies have a strong presence in North America, Asia Pacific and Europe. They also have manufacturing facilities along with strong distribution networks across these regions.

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Scope of the Report

Cold Chain Market Report Segmentation

This research report categorizes the cold chain market based on type, temperature type, application, and region.

Cold Chain Market

Recent Developments

• In September 2022, Lineage Logistics acquired Spanish transport and cold-store operator, Grupo Fuentes. This expansion in Spain will reinforce Lineage’s footprint in Europe’s main markets for fresh produce. This acquisition will strengthen Lineage’s footprint for cold storage distribution across Europe.
• In June 2022, Americold Logistics announced the opening of its newest facility in Dunkirk, NY. This facility has over 181,000 square feet of cold storage & operational space, and 25,000 pallet positions, to support cold storage needs in the western New York region. This new facility will expand the company’s footprint across the US.
• In December 2022, A.P. Moller Maersk announced on opening of a new facility in Norway. This new facility is specifically designed to accommodate the needs of the vast Norwegian seafood industry. The new facility will serve as a seamless supply chain link for customers when transporting frozen and refrigerated products.
• In June 2021, Frigologix, a cold storage provider, was acquired by Stockhabo. As a result, three new sites joined the Stockhabo network: Lommel (Belgium), Herk-de-Stad (Belgium), and Val-de-Meuse (France). Frigologix is a strong player in the market of controlled temperature storage. For the expansion of its network in Belgium, this acquisition takes the first for the company. Stockhabo’s total capacity now rises to 235,000 pallet positions and potential increase in the revenue flow.

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