Do you keep it cool? These are the trends in cold chain logistics
As a logistics service provider in cold chain logistics, you have to deal with various challenges. The corona crisis continues to hit the sector and Brexit has greatly affected both trade flows and the labor market. At the same time, many goods have been imported from China to Europe in recent months and this growth is expected to continue until the summer. At sea, the full capacity is used, making shipping costs five times higher according to the GCCA. So, buckle down! Because the fresh and frozen goods do not automatically arrive at your customers. Nevertheless, we see that despite these challenges, there is a lot of market demand. And that offers opportunities. What are these opportunities and what trends do we see in cold chain logistics? In this blog we list all trends and challenges for you.
Growing market demand
Despite the many challenges, the value of cold chain logistics is growing. According to a 2017 market research report, global cold chain logistics were estimated at 188.42 billion dollar and is expected to reach 269.61 billion dollar by 2024. The global cold storage construction market was also in 2019 no less than 6.97 billion dollars and is expected to be nearly three times that by 2027. This high demand is driven by several factors, according to Emergen Research.
#1 Growing e-commerce
The growth can mainly be explained by the growing e-commerce. Online food sales are increasing in developed and emerging economies. This, in combination with the increasing preference for online shopping as a result of the corona pandemic and the growing e-commerce channels, means that more and more online food orders are placed. The perishable food segment accounted for the largest market share of 36.0% in 2019.
This growth in the e-commerce sector provides an enormous boost to cold chain logistics. The need to use larger and more industrial cold storage facilities is growing along. The main reason? To enable better and faster delivery. Moreover, the increasing demand for processed and fresh food products through online channels is expected to continue to drive market growth.
Did you know that, the total capacity of cold stores in 2020 was no less than 719m3 according to the GCCA 2020 Annual Report. That is 16.7% more capacity than in 2018.
#2 Growing import and export
Secondly, it is not only e-commerce that stimulates the market demand. Worldwide there is also an increasing demand for cold storage around ports to accommodate the growing import and export of perishable products.
#3 Government, pharmacy and catering
The government, pharmacy and catering also play a role in the growing market demand. To reduce food waste, governments want to enlarge the cold storage facilities. In addition, there is an increasing use of cold storage in hospitals, and other pharmaceutical sectors and research institutes. In addition, large restaurants and catering companies are increasingly using cold storage facilities due to the expansion of outlets and opportunities in the market. This creates an increasing need for cold store facilities.
What awaits the cold chain market in 2021?
In other words, the market demand is growing, but what challenges can you expect in 2021? In Europe, according to GCCA’s European Market Snapshot, the cold chain market is characterized by high storage utilization and low stock rotation. Electricity prices and insurance costs have gone up, impacting your already tight margins. Other challenges you will face in 2021 include recruiting and maintaining qualified personnel, reducing your carbon footprint and cyber security. Moreover, consideration for more sustainable buildings is becoming increasingly important and the use of automation is increasing. How do you ensure to overcome these challenges?
Did you know that 41% of the members of the GCCA invested in more automation in 2020.
Software for cold storage logistics
With the increasing use of automation, you may ask yourself: how do I ensure a strong competitive position? And how can I keep up with growing technological developments? Especially for you, Boltrics developed Nekovri Dynamics.
“Nowadays no one builds a house with a hammer and a saw. There are rotary hammers, impact wrenches and sawing machines that make building a house much easier, faster and more efficient. The same applies to your logistics processes. You can work with paper or Excel sheets, but a WMS or TMS solution ensures that you actually improve your efficiency.”
– Daniel Feltham-Lauzon, Consultant at PL Solutions (Canadian partner of Boltrics).
In other words, if you use modern technology, it provides freedom, flexibility and maneuverability. The ingredients for a profitable business. Would you like to know more about Nekovri Dynamics? Send an email to firstname.lastname@example.org.