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Power Pack - Cold Chain PDF
Power Pack - Cold Chain PDF
Cold Chain
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• Industry Overview :3
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Industry Overview
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Cold storage facilities - A key infrastructural component for perishable
commodities
• Cold chains provide storage and distribution services for products that need to be
maintained at a given temperature.
• The industry comprises two segments - temperature-controlled warehousing and
temperature-controlled transportation/vehicles.
• The key components of the cold chain industry include pack-house, cold storage (bulk),
cold storage (hub), refrigerated vehicles, information systems and delivery tracking
systems.
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Cold chains provide storage and transportation services for
perishable goods
• A cold chain is a temperature-controlled supply chain that serves as a vital link between
production center and end-user market.
• It involves storage and distribution related activities at pre-determined temperatures
depending on the nature of the product.
• A cold chain does not alter the essential characteristics of the produce or product
handled, but preserves and temporarily enhances the product's life.
• A cold chain can be broadly classified into two broad segments: 1. Temperature
controlled warehousing (Immovable Infrastructure) - Includes static infrastructure at
the farm-gate (pack-houses with precoolers, value adding units), Cold storage bulk (to
store products for longer period), Cold storage hubs (Cold stores for last mile access to
endusers).
• 2. Temperature controlled transportation (Mobile Infrastructure) - Involves
temperature-controlled transportation (primary and last-mile) of perishable produce.
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Cold chain process
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Current Industry
Scenario
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Status of Cold Chain Infrastructure in India
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Key players in Cold-chain industry
Source: Industry
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Demand and Supply -
TCW
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Multipurpose cold storages to feed future growth in TCWs
• Growth in the cold storage industry, dominated by temperature-controlled warehouses
(TCWs) will be driven by multipurpose facilities rather than single commodity storages in
the next 5 years.
• The former command higher rentals and are also expected to show , strong volume growth.
• This, in turn, will be driven by rise in demand for frozen and processed foods, and from
quick service restaurants.
• Uttar Pradesh and West Bengal are expected to remain cold storage hubs, as they are major
potato producing states.
• Potato storage growth, however, is expected to be muted this fiscal.
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Growth in multipurpose cold storage to drive revenue in TCW segment
• Temperature-controlled warehouses (TCWs) contribute to ~90% of the cold chain industry's
revenue.
• Within this segment, the revenue share of multipurpose cold storage, which stood at 77-
79% in fiscal 2018, is expected to rise to 84-86% in fiscal 2023.
• Multipurpose cold storages derive higher rentals than single commodity storages. So, even
though the latter handle majority of the volume (~68%), they account for a much lower
proportion in value terms.
• However, margins for multi-commodity TCW players are expected to be under pressure
owing to intense competition in the industry.
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Meat, processed food, seafood, and pharma to lead multipurpose
cold storage growth
• Going forward, the cold chain industry will be driven by an increase in demand for meat,
seafood, pharmaceuticals, fruits and vegetables, quick service restaurants (QSR), and
organised retail. Within the multipurpose segment, organised players (which currently
account for less than 10% of the industry) are expected to grow faster as key end-user
segments mentioned above prefer them, owing to stringent quality requirements and
regulations.
• TCWs handled ~31 million tonne (MT) of volume in fiscal 2018. In fiscal 2019 the growth
in volume is expected to remain flat, as the demand for potato cold storage (~68% in
volume terms) declined due to a decrease in the potato production in the season.
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Meat, processed food, seafood, and pharma to lead multipurpose
cold storage growth
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Strong growth in end-user segments to lead volume growth
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Shift towards Integrated cold chain model to support growth of TCVs
over the next five years
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Integrated cold chains to support demand for TCVs
• Temperature-controlled vehicle (TCV) industry revenue to clock a moderate 6-8%
compounded annual growth rate (CAGR) over the next five years , compared with 8-10%
CAGR over the past five years.
• While intense competition and pricing pressure will drag down growth, volumes are also
expected to be low during this period.
• The industry is expected to grow from Rs 19 billion in fiscal 2018 to Rs 26 billion in fiscal
2023.
• Integrated cold chains, which offer a combination of temperature controlled warehouses
(TCWs) and TCV services, are the trend in logistics.
• Despite the need, investors are not comfortable putting their money in standalone TCVs,
primarily due to the low margins they offer.
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Growth in TCV segment revenue
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Key inhibitors to TCV segment investment
• Pharmaceutical raw materials are to be handled with extra care, as a majority of the drugs
are exported.
• Hence, optimum quality has to be maintained for the companies to meet strict foreign
import regulations.
• • Unavailability of return loads, leading to inefficient utilisation of vehicle Lack of first and
last mile connectivity deterring investments
• Hence, stiff competition and low preference of end-user industries for reefers (as it
increases costs) restrict private players from investing in the segment.
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