The Cold Chain: Potential for Huge Growths?

The cold chain is a segment of the supply chain that is experiencing marked current growth. For those who are unaware, the “cold chain” refers to a temperature controlled supply chain. Many or all segments of the cold chain utilize temperature controlling methods or technology. These segments can include everything from production, transportation, delivery, and packing. This article will examine the structure of the cold chain, the products that benefit from it and the potential market growths of the cold chain.

The Structure of the Cold Chain

By its very nature, the cold chain needs refrigeration processes and technology. This temperature control appears in most if not all segments of the cold chain. Not only are immobile brick-and-mortar production or distribution centers climate controlled but even the mobile aspects of the cold chain employ refrigeration. Quick history lesson: mobile refrigeration was invented by Frederick Mckinley Jones in 1940. Since then, mobile refrigeration has sprung up in almost every aspect of the modern supply chain. We have discussed in previous articles the processes and uses of refrigerated trucks, also known as reefers, and their utilization has grown by leaps and bounds as the demands for the cold chain have increased. Many of the products within the cold chain are highly responsive to changes in temperature. Failure to create a consistent climate controlled environment may lead to valuable products, such as medicine or produce to be ruined. This can be extremely detrimental to companies both financially and reputationally. We have all heard the horror stories, such as a produce supplier shipping lettuce only to open the back of the truck and finding puddles of water. The structure of the cold chain is designed to protect against the outcomes and help keep your valuable if fragile products safe.

Products of the Cold Chain

As mentioned above, there are a wide variety of products that are shipped via the cold chain. Many of the products are not only temperature sensitive, but time sensitive as well. They often must reach their destination quickly and at the right time. Pharmaceutical products such as vaccines frequently have very demanding fulfillment time requirements. Hospitals cannot afford to wait when their patients’ health is on the line. Likewise, restaurants and supermarkets depend on daily fresh shipments of food products to continue operations. Because of the inherent demands of the products in the cold chain, there is very little room for error. But with great risk comes great reward. The companies who utilize the cold chain are willing to pay well for the safe and reliable shipment of their temperature-sensitive products. This translates into many avenues for potential market growth in the cold chain.

The cold chain is a segment of supply chain management that offers phenomenal potential for international market entry and opportunities for diversification in revenue streams. The modern economy relies heavily on the cold chain to effectively and efficiently transport environmentally sensitive products. Without it, many parts of the world would be without countless goods essential for maintaining a modern society.

The Future of the Cold Chain: Continued Growth?

Many industry professionals are predicting that the demand for temperature-controlled supply chain services is going to continue to increase. Perhaps the biggest indicator of this claim is the trade of cold chain services grew substantially in recent years as the industry stagnated. This expectation has led to increased investments into cold chain operations. For example, Americold Realty Trust is expecting their IPO raise more than $330 million dollars. Americold is one of many new cold chain providers that offer both domestic and international refrigeration services. Large foreign markets such as China are putting increasing emphasis on developing the operations and capacity of cold chain services. Furthermore, sea-based shipments of produce such as vegetables grew at a rate of over 8% in last year’s fourth quarter. This represents a huge opportunity for logistics companies to gain access to new markets and additional revenue streams.

If you have any further questions regarding the cold chain, or any other logistics topic please do not hesitate to contact us. Redwood's knowledge and expertise make it your number one source for information regarding the freight and supply chain industries. Stay updated, we will be releasing several e-books on some of the most important and current industry topics.