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IJPDLM
33,10 A cold chain network for food
exports to developing
918
countries
Victoria Salin and Rodolfo M. Nayga Jr
Received September Department of Agricultural Economics, Texas A&M University,
2002 Texas, USA

Keywords Frozen foods, Case studies, Exports, Developing countries, Philippines, Thailand
Abstract This article examines the business relationships in the cold chain used for exporting
food to new markets in developing countries. The American Potato Trade Alliance, a
cross-network alliance that includes all levels of the value chain, is the subject of case study research
involving participant observation and fieldwork in the Philippines and Thailand. Multinational
restaurant companies manage technical challenges in target markets with tight specifications and
exclusive supply chains, while smaller firms use extensive networks to supply imported frozen
potatoes. Pricing strategies for cold chain services are closely related to quality and potentially
affect the availability of outsourced cold chain services. Opportunistic behavior by buyers could
reduce incentives for private investment in cold chain infrastructure, while long-term commitment
by chain partners would strengthen the potential for private markets to provide cold chain services
in newly developing markets.

International Journal of Physical
Distribution & Logistics Management
Vol. 33 No. 10, 2003
pp. 918-933
q MCB UP Limited
0960-0035
DOI 10.1108/09600030310508717
Background
The equipment and processes used to protect chilled and frozen foods are
referred to as the “cold chain”. The cold chain is a physical process that
dominates the supply chain logistics of certain processed foods[1].
Temperature requirements vary among food items, whether frozen or
chilled and they even differ across types of frozen foods. For example, ice
cream must be held at a lower temperature than frozen vegetables. The
integrity of the cold chain must be preserved from the point of production or
processing, through each of the transport phases – loading, unloading,
handling, and storage – and extends to storage at the consuming household
or restaurant. Management tasks, from an engineering point of view, include
the need to monitor temperatures, install and maintain equipment, move
products rapidly, plug in the refrigerated containers, and keep the doors on
cold storage units closed.
While the mechanics of the cold chain are an important component of supply
chain management for chilled and frozen foods, to focus only on the
engineering aspects narrows the perspective on the networks that comprise the
cold chain and the food businesses that rely on it. It is important to consider the
broader value-based concept of chain advanced by Omta et al. (2001, p. 2), who
write:
 Chains are considered to be composed of the actors in these networks which vertically work A cold chain
together to add value to customers. A chain is defined as the processes linking supplier and
user companies, from the initial raw materials to the ultimate consumption of the finished network
product.
This definition highlights the purpose of chains in adding value. Certainly,
well-maintained cold chains allow sellers to move a product from its point of
origin to a location in which there may be more consumers or consumers who 919
consider the product to be of higher value. Time constraints are also eased
when cold chains function well. Firms can supply products for longer periods
of time than was previously possible, so market timing is facilitated, thus
enhancing value. At a minimum, we can say that the cold chain component of
certain networks serves to preserve value. As a value-preserving mechanism,
the cold chain is a necessary condition for world trade in certain higher value
foods.
In the remainder of this paper, we explore how businesses participate in the
development of improved cold chain linkages in new markets. The objective of
the study is to highlight business relationships within networks involving cold
chains through analysis of one cross-network alliance. The alliance, the
American Potato Trade Alliance (APTA), contributes to cold chain
development within the constraints of government policies affecting trade,
economic recession, and sometimes diverging individual interests of the
business and association members.
The results of this case study analysis have significance for the body of
knowledge regarding the extent of business networks in international trade.
This research focuses on chains that extend worldwide, from developed
countries into developing country markets. The fact that target markets are in
developing countries presents unique challenges to the functioning of these
chains. The technical aspects of the cold chains studied here highlight logistical
constraints and physical dimensions of cold chains, some of which are
exacerbated by the fact that they are located in developing countries. On the
managerial side, the alternative supply chain management strategies
uncovered by the study of these networks point out different approaches to
the challenges of exporting frozen products to developing country markets.
Other researchers have investigated the ways that business networks
function in the food industry. The emergence of a significant number of
restaurant chains has made the procurement process along the supply chain
increasingly complex and centralized. Mawson and Fearne (1996) identified key
elements of the buying process to facilitate the development of supplier-buyer
marketing strategies. Similar to our study, they utilized the case study method
and interviews to analyze the decision-making processes in the largest
restaurant chains in the UK, examining the large, centrally organized
purchasing departments of a sample of chain restaurants. They also
interviewed managers from the suppliers of these chain restaurants. Their
IJPDLM findings suggest that buyers at the chain restaurants value not only technical
33,10 competence and financial stability, but also consistency of their suppliers.
Buyers also attach more risk to trading with new suppliers. This finding
regarding the importance of consistency of supply, especially for chilled or
frozen foods served at the chain restaurants, is directly related to the adequacy
and reliability of cold chain networks.
920 One key business service in the cold chain, cold storage, was the focus of
Rae-Smith and Ellinger’s (2002) case study of the roll-out and implementation
of an online B2B logistics service system at a US public refrigerated warehouse
company in 1999-2000. They reported on the timeline of system design,
implementation, and assessment. Their findings on the extent of outsourcing,
sources of major delays, and differentiation of the service from competitors
provide interesting implications for companies considering online information
technology systems, but the case study does not provide any issues that are
unique to the cold chain services provided by the subject company.
Recent surveys on business implementation of supply chain management
provide general findings about the setting for this case study. A 1999 survey on
investment and competitive capability of multi-level, multi-node supply chains
in major industrialized countries suggests considerable inconsistency in the
way that businesses relate their supply chain strategy, corporate strategy, and
investment strategy (Harrison and New, 2002). More than 250 supply chains, in
a variety of sectors, responded to the survey and all included some form of
manufacturing process in the supply chain activities. While the survey results
yielded interesting insights by classifying respondents into groups of supply
chains that had similar characteristics, the fact that more than half the
respondents could not be classified suggests that a case study approach to a
specific supply chain will provide complementary information to the survey
literature. Another survey, by KPMG in 1995, examined the key supply chain
management issues that large businesses in the Asia-Pacific region faced
(McMullan, 1996). The results indicate the importance and costs of supply
chain management functions, reporting structure of supply chain managers
within the organization, types of value-added services offered by logistics
providers, plans for and experiences with new technologies, and performance
measures. Our study complements this survey through its focus on a specific
chain that encompasses both large and small firms.

Methodology
Case studies on the businesses involved in the export of frozen potatoes from
the northwestern United States and neighboring Canadian regions to two
Southeast Asian countries are used to illustrate the extent of business
cooperation in the cold chain. The case study effort centers on APTA, a
coalition of businesses involved in the production and export of processed
potatoes. To the extent that APTA members participate in multiple chains or
networks, this is a multi-case study. Our main unit of analysis is APTA as a A cold chain
whole and, to a lesser degree, the individual members. network

American Potato Trade Alliance

APTA was formed in 1997 under the leadership of Ray Cesca, a former
manager of global trade for McDonald’s Corp. His vision was to encourage 921
cooperation among all the stages of the value chain for frozen potato products
to enhance export opportunities. The breadth of the alliance membership is
unique among the industry associations that influence US agricultural and
trade policy. Current APTA members are: Tricon Global Restaurants Inc.,
Burger King, Wendy’s International, Inc., J.R. Simplot Co., Lamb-Weston Inc.,
McCain Foods Inc., Frymaster Inc., Basic American Foods Inc., RDO Foods,
Texas A&M University, the National Potato Council, the Idaho Potato
Commission, the Maine Potato Board, the Oregon Potato Commission, and the
Washington State Potato Commission. The members of APTA are mainly
US-based, although some business members are units of multinational
corporations and one member has Canadian headquarters. APTA retains a
management-consulting firm, Bryant-Christie, Inc., to handle coordination,
negotiation, and representation assignments.
The major products of interest to APTA members are marketed to the final
consumer as high value-added foods, mainly the french fries sold in quick-serve
restaurants (QSRs), retail supermarkets, and small kiosks worldwide. In
addition to frozen french fries, dehydrated potato products are included in
APTA’s portfolio; these are sold mainly to customers who process snack foods
in foreign markets.
A glance at the APTA membership list shows a typical business network for
the processed convenience foods that are destined for sale in restaurants. The
chain leader is a multinational QSR, such as Tricon (parent of Pizza Hut, KFC,
and Taco Bell) and Burger King. The QSRs supply thousands of retail outlets
worldwide. QSRs procure the processed food inputs from a few large
specialized suppliers; some have sole supplier arrangements and proprietary
recipes for flavors or coatings. Processors (McCain, Lamb-Weston, and J.R.
Simplot) obtain fresh potato inputs through annual contracts with many potato
growers. The fact that growers’ associations identify the needs of
export-oriented buyers such as the QSRs is the main unifying force in the
APTA organization.
Export-oriented consumer product companies focus their plans on markets
that are rapidly growing, rather than the saturated US market or markets in
other developed economies. The cold chain, to support exports to the
fast-growing developing countries, must cross international boundaries.
Development levels and local tastes are such that processed chilled or frozen
foods are in demand, at least in major metropolitan areas. Final consumers at
the QSR expect consistent, safe products, and they pay a premium.
IJPDLM The cold chain for frozen potato products extends from the processing plants
33,10 in the Pacific Northwest to thousands of locations worldwide. The trade pattern
shown in Figure 1 illustrates the chain that is needed to export to secondary
cities in two Southeast Asian countries, the Philippines and Thailand. These
target markets were selected because of their significant growth potential. The
secondary cities do not approach the population of the capital city in size, but
922 there are several centers with population exceeding 1 million people and
markets in which local demand is supplemented with international tourism.
Frozen potato products are typically packaged in cases and shipped in
refrigerated containers. Products change hands several times across common
carriers in ocean and overland transportation. Distribution from the destination
port into the capital city is well established in these markets, but in order for
significant growth in shipments to the less developed markets in secondary
cities to occur, additional loading, transportation, and storage functions must
be added to the chain.

Case study methodology

The case study research began with participant observation in February 1998.
The authors attended semi-annual APTA meetings representing Texas A&M
University and maintained e-mail and telephone contacts with APTA
members. Additional detailed study of the cold chain networks was
conducted in an infrastructure research project proposed by APTA and
funded by the US Department of Agriculture, Foreign Agricultural Service (see
Viator et al., 2001, for a detailed report on the project). The main question
behind the infrastructure research was: What commercially viable projects
could be recommended to improve the cold chain in the target market?
The infrastructure case study began with the collection and analysis of
existing market intelligence, mainly the detailed cold chain assessments
conducted by Beasley (1998a, b). Archival data on business and macroeconomic
conditions provided an understanding of economic constraints and helped locate
prospective interview subjects. On-site observations of ports, transportation
facilities, and warehouses were documented with photographs (when permitted
by the host company). Personal interviews were the primary source of field data.
A team of four researchers traveled to the Philippines and Thailand during
May-July 2000. Approximately, half of the time was spent in capital cities; the
remainder of the time was spent in outlying provinces in the southern
Philippines and in both northern and southern Thailand. Forty interviews were
conducted in the Philippines, including four government officials, and
responsible officials at three banks, nine cold storage warehouses, ten shippers,
brokers, and port management officials, three importers, four retailers and
QSRs, and seven others involved in food distribution. Forty-three interviews
were conducted with business officers from a variety of organizations in
 A cold chain
network

923

Figure 1.
Path of trade in frozen
potato products
IJPDLM Thailand, including banking, food import and processing, cold storage
33,10 warehousing, shipping, and government institutions.
The interview protocol called for two-person teams to conduct each
interview. The interviews were relatively short (1 hour, on average) in order to
cover the multiple contacts needed to understand the full extent of the cold
chain into secondary cities. A questionnaire (see Appendix) was used to guide
924 the interview, but many open-ended discussions took place. Interviews were
documented with written notes and, occasionally, tape recorders. Cross-firm
analysis of the interviews was completed within eight weeks of traveling in
order to document results and draw conclusions from the multiple-company
perspectives obtained during the interviews.

Findings of case studies

Significant insights into the technical features of the cold chain and the
business relationships involved in cold chain networks were obtained in the
case study field research. It was not difficult to find common problems
regarding the technical aspects of the cold chain. Major public infrastructure
(ports and roads) is basically good, although it is stressed by age and
congestion. In addition to the technical findings, the case research uncovered
divergent business strategies pursued by multinational firms and local
businesses in their use of cold chain services.

Technical constraints
The examination of logistical and physical aspects of the cold chain indicated
that the following were key stress points in the cold chain in Thailand and the
Philippines:
(1) shortage of quality cold storage capacity outside of the capital city; and
(2) high costs of distribution.
When excess capacity of cold storage space was observed in secondary cities, it
was often of poor quality, which was defined as variable or high temperatures,
dial temperature gauges rather than digital, no racks and perhaps no pallets,
lack of ante-rooms, insulation, and loading docks, and no mechanization (Viator
et al., 2001). Cold storage in some locations had been developed for the seafood
industry, which handles block-frozen products for export, and export-oriented
fruit and vegetable producers, but those facilities were either far from
population centers, not available for use by other firms, or could not satisfy the
restaurants’ specifications. High electricity costs were consistently named as a
problem that the cold storage facilities face, and electric power is more costly in
outlying provinces than in the capital city.
The second major physical limitation on the cold chain was the difficulty in
distribution within the destination country. Because the Philippines is an
archipelago, distributors must use road and/or waterway transportation to reach
the southern provinces. Costly inter-island freight is the major challenge for A cold chain
distributing frozen foods in the Philippines. In Thailand, substantial distances network
must be crossed between the capital and secondary cities. Because of high gasoline
costs, the expense of trucking distribution to secondary cities is significant.

Managerial choices 925

The ways in which the networks are developed to manage within the technical
constraints is of great interest. Smaller trading firms were observed using
wider networks. The importing firm directs this extensive business network.
The typical customers are smaller restaurant chains, both local and
multinational, and the micro-enterprise kiosk businesses that sell snack
foods in streets and shopping malls. These smaller firms deal with a variety of
cold chain service providers and rely on local entrepreneurs to supply trucking
and storage as needed. Direct ownership and close control of cold chain
infrastructure was not a feature of these networks.
The APTA network encompasses the world’s largest QSRs, which are a major
point of final sale of potatoes in the foreign market. These sales are driven by a
global brand image, which was protected by the development of closely controlled
cold chain distribution networks. For example, some QSRs circumvent the problem
of inadequate public storage by requiring each restaurant in the provinces to have
storage on its premises sufficient to hold a 20ft container, in effect making the
restaurant into a small cold storage facility. Another managerial choice is to develop
a tied commissary and distribution firm, either owned directly by the QSR or quite
closely linked as an exclusive provider to the QSR. These firms do not include
public warehouses or common carriers in their networks. Thus, when challenged to
extend to more distant locations, they use trucking linkages, sometimes combined
with restaurant storage, because there is sufficient scale to justify investment in a
commissary outside the capital city. Three features of the chain leadership by
multinational firms relate directly to cold chain infrastructure development:
(1) strict specifications;
(2) national pricing; and
(3) ability to leverage the investment of others.
The multinational QSRs lead a supply network primarily by establishing tight
specifications for product quality. Clearly, a strong cold chain is necessary to
guarantee the quality of frozen foods. When specifications are so tight, the
difficult task of monitoring the chain is eased by either owning the distribution
assets itself (a commissary and trucking fleet), or developing an exclusive
distribution relationship with one partner. The cold chain is maintained as a
supply chain and not a broader network. In the case of frozen potatoes, the
processors that supply the QSRs are also large firms with extensive
international business experience, so the supplier has the resources to assist in
the preservation of the cold chain.
IJPDLM In addition to using product specifications to create a consistent experience
33,10 in their outlets, QSRs prefer to establish a single national price for menu items.
National pricing prohibits operators in the more distant locations from
adjusting their margins to accommodate higher distribution expenses. When
the company needs to extend the cold chain into more distant locations, it must
either adjust national prices, accept the erosion of profit margins, or require
926 franchise owners to bear the higher marginal costs of distribution.
The volume of business available to a cold chain service provider that is
affiliated to a multinational QSR is an important attraction. Some parties in the
destination market hoped for direct investment or a joint venture with the
multinational. Others were willing to supply risk capital for an asset important
to the cold chain, based on a guarantee of business from the QSR. The ability of
a multinational QSR to leverage the investment of local business is a function
of its large scale. Further study of the mechanisms by which parties commit to
each other would be interesting, particularly when the multinational QSR has
established very close relationships with distributors in the capital city.

Role of APTA in cold chain development

As APTA membership includes companies along the entire value chain, the
coalition fits within the broad definition of a network. It is not a supply network
for a single firm, but a cross-firm and cross-chain alliance oriented toward
export promotion. APTA is not a business network, because the main agenda is
political and diplomatic activities relating to trade. At each meeting, members
identify priority target markets. Markets considered to have the greatest
potential have always been in developing countries. Members consider
strategies to encourage foreign governments to reduce or eliminate tariffs and
other trade barriers, in accordance with global trade agreements. APTA
members exchange information and develop strategies for lobbying activities
with the US government. Occasionally, delegations travel overseas. Information
is also shared on the topics of labeling, biotechnology, and infrastructure.
Cooperation and interest in these policy-related activities is deep and broad
within APTA. Legislative authorities in the United States have responded
positively to the unified industry position and the fact that APTA membership
extends from the farm to retail levels of the food value chain. These benefits suggest
that cross-border chains can benefit from a network approach to policy, when the
interest lies in export promotion. Because an export-oriented chain depends on the
access to consumer markets overseas in order to capture the highest value from the
finished product, the trade policy agenda is a strong unifying interest.
APTA’s contribution to study the commercial viability of projects to
improve the cold chain in target markets indicates its interest in the cold chain,
but direct investments by APTA members in cold chain infrastructure is
limited by the nature of infrastructure as a public good. Public goods,
according to economic theory, are those goods whose consumption by one
agent does not reduce the amount available to be consumed by another, and A cold chain
which cannot be effectively excluded from consumption by those who have not network
paid for them (Varian, 1992). Highways and reliable electric power systems are
examples of public goods. Public goods, by their nature, will not be supplied
efficiently by private markets, thus government must fund them. One can see
the public good aspect of infrastructure in APTA’s choice of target markets.
Developing countries that have the basic infrastructure in place are selected.
927
Markets in which the basic public investment questions have not been resolved
are not considered strong locations for development of a cold chain.
Much of the cold chain infrastructure is too specific in its purpose to be
considered a pure public good. For example, an ocean shipper or a trucking
company provides an excludable service in hauling refrigerated containers, and
therefore can potentially gain by participating in a business network involved
with the cold chain. The findings from this case study, that there are many
multi-use transportation service firms available for hire, and significant
entrepreneurial activity in cold chain shipping, support the non-public good
nature of most of the cold chain infrastructure. Figure 2 shows the range of
infrastructure facilities associated with chain functions, from origin to
destination, mapped against the observed ownership characteristics of the
assets. The predominance of private ownership of cold chain infrastructure
requires a shift in focus from an assessment of government support of
infrastructure to consideration of which cold chain services are best completed
within a firm and which are outsourced. Handling and delivery roles are
important to the cold chain, but not necessarily a core competency of the chain
leader. It is important to the functioning of the cold chain that certain services
be available for hire. Ocean shippers, refrigerated trucks, and public cold
storage warehouses would be examples of the types of assets that are not
typically under direct government ownership, but are essential business
services for many cold chain networks.

“Make or buy” and economies of scale

For a firm to have the option to “buy” cold chain services rather than develop its
own cold chain along with its marketing business, the nature of the market for
logistics and transportation services becomes important. Features that help a
company “buy” cold chain services relate to specifications, monitoring, and
pricing. Buyers who identify clear, feasible specifications for quality assurance
are likely to find a supplier to meet their requirements. As stated previously,
firms that have very stringent specifications more often choose to internalize the
operations or develop single-source supply relationships. When supply
relationships involve other firms, outside inspection from government
authorities and certification by international accreditation agencies can assure
minimum performance in accordance with basic needs of a cold chain. Both these
monitoring features were evident in the cold chain industries in the case study.
IJPDLM
33,10

928

Figure 2.
Integration of services
with infrastructure and
ownership
characteristics of the cold
chain
Finally, and most important to the outsourcing of cold chain services is pricing. A cold chain
Buyers must be willing to pay variable costs associated with the level of quality network
desired. The premium for quality can be eroded quickly when users observe the
lower cost, but lower quality, services existing in the same market and exert that
leverage in price negotiations. Although it was more common for the best quality
cold chain services to be heavily utilized, implying willingness to pay for quality,
opportunistic behavior by buyers could reduce incentives for private investment
929
in cold chain infrastructure. A close relationship between chain partners, perhaps
including long-term commitment, would mitigate the potential for price
negotiations to impact the availability of high quality infrastructure. Quality is
partly related to best practices that can be taught or paid for with variable inputs,
but quality in the cold chain depends more on investments in modern technology.
Quality, therefore, usually involves fixed costs – for purchasing new equipment,
computerized control systems, or renovation – and pricing strategies to recover
fixed investments that are more problematic in a competitive market.
Economic pressures that mitigate against the ability of suppliers to commit
to the needs of a modern cold chain network are especially pronounced in
developing countries. In the context of an economic recession, which was
experienced at the time of this case research in Asia, demand was uncertain,
supply of credit was constrained, and few investors were prepared to undertake
the investment needed to offer modernized cold chain facilities.
Within the developing country, the cold chain must extend into locations that
present greater challenges in terms of economies of scale. The different stages in
the cold chain have different scale economies. For example, transportation
services are based on containerized freight systems, which have fairly standard
unit costs and are nearly scale-neutral. Trucking for hire is also a relatively
small-scale business and familiar to many private owners in the target markets.
Cold storage services are slightly more challenging in their technical and
managerial complexity, and in economies of scale. More capital investment is
required to install the compressors, insulated panels, and computerized
temperature control systems that are used in modern cold storage. Managers can
substitute repair and maintenance expenditures and keep older cold storage
facilities operating, but this can be at the expense of quality. In addition to the
initial investment, warehouse services have increasing returns to scale when
operating because of the indirect costs of keeping the warehouse cold, whether it
is full or not. These features suggest that the cold storage segment of the cold
chain faces higher barriers to new entrants than trucking. This is consistent with
our case study findings that cold storage capacity is lagging and businesses are
maintaining the cold chain through more intensive use of transportation rather
then developing new distribution centers in the secondary cities.
Investment decisions, either by a chain leader developing its own cold chain or
a cold chain service provider, are key in developing the cold chain for growing
markets. Standard capital budgeting analysis sheds light on these decisions and
IJPDLM suggests that expected future cash flows from the equipment and costs of capital
33,10 to the investor are key drivers in the economics of investment in cold chain
equipment and facilities. A multinational firm, through its access to global
capital markets, would be expected to have access to debt capital at lower costs
than an equity investor within a developing country. However, the opportunity
cost of funds for the multinational firm must include possibilities worldwide,
930 which may be less risky or even more profitable than the opportunities for a local
investor. The riskiness of investments in developing markets may be offset by
strategic options associated with projects that allow the investor to gain a
foothold in the new market. While these issues are best analyzed on a
project-specific basis, the fieldwork undertaken for this research suggests that
many investors were postponing new projects due to economic recession.
In the developing countries studied in this case, it is clear that companies
choosing to “make” cold chain services coexist with those choosing to “buy”
cold chain services. The coexistence of two strategies allows us to draw
conclusions about the relative position of cold chain infrastructure within the
network. The cold chain is a necessary condition, but it does not compare in
priority with the proprietary manufacturing processes, brand names, and
secret recipes that are the major sources of value in consumer food products. As
a secondary value-preserving feature, the cold chain is critical to business
networks. It is a source of differentiation and potentially competitive advantage
for firms that manage the cold chain in an efficient manner. Cold chain
infrastructure requirements are sufficiently flexible so that the cold chain can
be managed well, either as an owned feature within a chain, or as a service for
hire from multiple sources in a business network.

Conclusions
APTA is a coalition of networks that is bound together by common policy
objectives. It has succeeded for five years as a network oriented toward trade
policy and has served the interests of both the multinational firms and the farmer
associations among its membership. It is adept in choosing target markets to
enhance export potential for the high value products sold by its members. It is an
interesting example of an alliance that builds the policy foundation that is
required for a global cold chain to succeed. Its inter-organizational relationships
are limited to common interests in policy and it avoids any issues that directly
touch on competitiveness of one member versus another. Its success indicates
that cross-border chains can benefit from a cooperative network approach to
policy, when the interest lies in export promotion.
The business networks within APTA provide examples of management
strategies undertaken in response to the technical challenges of the cold chain
in the developing countries. Several alternative types of supply networks
co-exist. While products must be high-value in order to bear the cost of
maintaining a global cold chain, the same product can be well-managed under
different types of network arrangements. Even among the multinational
corporations marketing a Western-style product in Asia, different forms of cold A cold chain
chain networks were observed. Scale economies present a common limiting network
factor for the capital-intensive infrastructure, particularly cold storage
warehouses. The more scale-neutral transportation linkages allow firms to
reach more distant locations. The flexible nature of cold chain assets enables
workable arrangements during a phase in which new markets are developing.
The cold chain is not a generator of value itself; thus scale and capacity 931
utilization are the keys to efficiency in preserving the value of foods that rely on
cold chain infrastructure. The fact that a developing country is the location of
final customers in the chain offers the prospect of higher growth, but
potentially higher risk. This case study of networks involved in frozen potatoes
demonstrates that ordinary supply chain logistics challenges are compounded
by economic crisis and resource limitations of the destination market. Chains
led by foreign multinationals managed these challenges with tight
specifications and exclusive supply chains, rather than the extensive
networks that supply the less formal kiosk outlets.

Note
1. In addition to foods, certain technology products such as semiconductors require storage and
handling in temperature-controlled conditions.

References
Beasley, S. (1998a), “The current state of the cold chain in the Philippines”, United States
Department of Agriculture, Trade and Investment Program of Food Industries Division,
Foreign Agricultural Service.
Beasley, S. (1998b), “The current state of the cold chain in Thailand”, United States Department
of Agriculture, Trade and Investment Program of Food Industries Division, Foreign
Agricultural Service.
Harrison, A. and New, C. (2002), “The role of coherent supply chain strategy and performance
management in achieving competitive advantage: an international survey”, Journal of the
Operational Research Society, Vol. 53, pp. 263-71.
McMullan, A. (1996), “Supply chain management practices in Asia Pacific today”, International
Journal of Physical Distribution & Logistics Management, Vol. 26 No. 10, pp. 79-95.
Mawson, E. and Fearne, A. (1996), “Purchasing strategies and decision making processes in the
food service industry: a case study of UK restaurant chains”, Supply Chain Management:
An International Journal, Vol. 1 No. 3, pp. 34-41.
Omta, S.W.F., Trienekens, J.H. and Beers, G. (2001), “Chain and network science: a research
framework”, Journal on Chain and Network Science, Vol. 1 No. 1, pp. 1-6.
Rae-Smith, J.B. and Ellinger, A.E. (2002), “Insights from the introduction of an online logistics
service system”, Supply Chain Management: An International Journal, Vol. 7 No. 1,
pp. 5-11.
Varian, H.R. (1992), Microeconomic Analysis, 3rd ed., W.W. Norton and Co., New York, NY.
Viator, C.L., Fang, W.Y., Hadley, J.L., Aiew, W., Salin, V. and Nayga, R. (2001), Infrastructure
Needs Assessment for Distribution of Frozen Processed Potato Products in Southeast Asian
Countries, Final report on Cooperative Agreement No. 5599-109, prepared for US
Department of Agriculture, Foreign Agriculture Service, available at: http://agecon.tamu.
edu/faculty/salin/research/aptapg.htm
IJPDLM Appendix. Questionnaire used in field research
33,10

932
A cold chain
network

933