The cold chain market is estimated to account for a value of USD 203 billion

Date: 06 January 2020
The cold chain market is estimated to account for a value of USD 203 billion
Cold Chain Market - Global Forecast to 2023

The cold chain market is estimated to account for a value of USD 203 billion in 2018 and is projected to grow at a CAGR of 7.6% from 2018, to reach a value of USD 293 billion by 2023. The rise in consumer demand for perishable food items, growth of international trade due to trade liberalization, and expansion of the organized food retail industry are some of the factors driving the growth of the market. Government support for infrastructural development in several developing regions also fuels the growth of this industry.

Cold Chain Market

MnM Approach

This will have information on market inter connectedness MarketsandMarkets assisted the client by providing information on the overall number of units in the market in various retail outlets, total number of various types of units installed in various stores, servicing market, and projection of the installation of new refrigeration systems depending on the increasing number of stores. MarketsandMarkets also helped the client better understand the various types of stores coming up in the market and the impact of alternatives on the refrigeration market. During the study, MarketsandMarkets also interviewed key opinion leaders in the supply chain, which included customers visiting the store, store managers and workers, service providers, and consultants to understand their unmet needs. This helped the client in understanding the current scenario of the services market in the space and refined the strategy for providing cost-effective services along with the most-widely used refrigeration systems.

Revenue Impact (RI)

Our work resulted in the client tapping into market more than worth a USD 10 Bn market, with a projected revenue of USD 500 Mn in the coming years. The client was successfully able to establish and grow its service and manufacturing business in the US, Canada, and Mexico.

Selected Market Dynamics in Cold Chain Market

Growth of international trade due to trade liberalization

Globalization has increased due to trade liberalization, advancements in transport infrastructure & communication technologies, and growth of multinational companies in the food retail sector. It has boosted international trade in perishable foods such as dairy & frozen desserts, fruits & vegetables, meat, fish and seafood, and bakery & confectionery products. Every region or country exports food and agricultural products that it produces and imports food products that it is deficient in. This has resulted in almost any fruit, vegetable, or processed food being available at local supermarkets all the year round.

Several forces drive and enhance the trend of perishable commodities trade at the global level. The lowering of tariffs and non-tariff barriers to international trade has encouraged rapid growth of cross-border movement of perishable commodities. Growth of international trade in perishable foods is affected by the following factors:

High energy & infrastructure costs

Ensuring food quality and safety by preventing premature expiry, decay, and spoilage are major priorities for manufacturers, retailers, and consumers. To achieve this, it has become necessary for service providers to invest in modern cold storage facilities, advanced vehicles, and system technologies.

High energy costs are a growing concern for cold chain providers. Energy costs are the highest in North America and Europe, followed by labor costs. In refrigerated storage facilities, traditional florescent light fixtures (which are switched on throughout the year) are used because it is mandatory to do so for a refrigerated storage facility. This leads to loss of energy and high costs.

Due to an increase in the number of refrigerated vehicles in North America and Europe, the main cause of concern for cold chain providers is the rising fuel costs and efficient management of fuel consumption, which depends on the type of product—frozen or chilled—and the delivery route.

In emerging economies, the annual operating costs for cold chain businesses are much higher, per cubic foot. Energy expenses alone account for about 30% of the total expenses of the cold chain industry. The entry barriers in the industry are, therefore, high. In these countries, power deficit is another concern, as this is such an energy-intensive sector. Small players cannot invest in energy back-up systems because capital investment costs escalate.

The refrigerated storage segment is projected to be the fastest-growing segment in the global market during the forecast period.

The cold chain market has been segmented, by type, into refrigerated storage and refrigerated transport. Refrigerated storage capacities are growing in Asia Pacific countries due to the increased need to reduce wastage of perishable foods. In the last few years, the market for refrigerated storage has drastically grown, with a shift from food products stored in cold storage warehouses to the provision of value-added services to customers.

By temperature type, the frozen segment is projected to dominate the market during the forecast period.

A cold chain for chilled and frozen foods provides uninterrupted handling of the products within a low-temperature environment during each stage of the value chain—including harvest, collection, packing, processing, storage, transport, and marketing—until it reaches the final consumer. By temperature type, the frozen segment is estimated to have a comparatively larger market share in 2018. The chilled segment is expected to grow due to a large-scale chilling of food products for their preservation and to extend their shelf lives from few days to few weeks.

By application, the dairy & frozen desserts segment is projected to dominate the market during the forecast period.

The cold chain market has been segmented, on the basis of application, into fruits & vegetables; bakery & confectionery products; dairy & frozen desserts; fish, meat, and seafood products; and others. Dairy & frozen desserts are witnessing high demand due to economic growth, rapid urbanization, and the use of sophisticated marketing channels, which have led to significant changes in dietary patterns. Frozen fruits & vegetables are often available in easy-to-open re-sealable packaging, which allows longer storage and portion control without wastage.

Cold Chain Market

The increasing demand for cold chain services in the European and Asia Pacific regions is driving the growth of the market.

The European region is estimated to account for the largest share, in terms of value, in the global market, in 2018. There is a steady increase in demand, particularly for cold chain due to a continuous increase in domestic consumption of high-quality perishable commodities. Asia Pacific shows significant growth potential for the cold chain industry due to the increase in awareness about the prevention of food wastage before consumption, growth of the organized retail sector, rise in consumer demand for perishable foods, and government support & initiatives in this sector. The region is projected to surpass the size of the European market by 2023.

Key Market Players

The leading players that dominated the cold chain market include Americold Logistics (US), Preferred Freezer Services (US), Burris Logistics (US), Lineage Logistics (US), and Nichirei Logistics (Japan).

The key players have been exploring the market in new regions by adopting mergers & acquisitions, expansions, investments, new service launches, agreements, collaborations, and joint ventures as their preferred strategies. These players have been exploring new geographies through expansions and acquisitions across the globe to avail a competitive advantage through combined synergies.


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