Not only are regulations around HFCs and blowing agents forcing the refrigeration industry to change its production processes, but trends around food consumption and the food chain are playing their parts in its development. Dow, Huntsman, Saip and UK plant distributor CTM shared their views with Jane Denny.
The cold chain is the almost invisible process which gets food from farms and food processors into the kitchens and diets of the developed world. Refrigerating or freezing food stops it spoiling along its journey and makes the process of growing, transporting and consuming food far more robust than it was even a few decades ago. The logistics of food delivery would be far more costly and much less efficient without polyurethane.
The global cold chain market was worth $167 bn last year and is projected to rise to $234 bn by 2020, reflecting a CAGR of 7% according to research firm MarketsandMarkets.
It is a market that is split three main ways. Firstly, domestic refrigerators, then secondly commercial refrigerators such as supermarket display cabinets and industrial refrigeration units within factories and the food service industry. The third group is made up of refrigeration solutions for the transportation of food globally, nationally and locally.
While the distinct market segments have different design aspects, insulating foam is the connecting factor for all units. However, the amount of foam required and design sophisitication of the units varies along the chain.
As for the industry’s potential to grow, this will be in line with rises in international trade in perishable and processed foods MarketsandMarkets predicts. The Pune, India-based firm predicts that changing consumption patterns for perishable foods and many governments’ support for infrastructure development along the cold chain will drive further market growth.
Appliance life expectancy
At one end of the cold chain is the domestic refrigerator. A study by Yuhta Horie from America’s University of Michigan found that domestic refrigerators are typically replaced after 14 years. That lifespan, according to Horie, did not significantly alter between 1980 and 2002. This is despite the average energy consumption of new refrigerators sold in the US decreasing by approximately 60% over that time frame.
According to research firm Euromonitor, the fridge market in the developing world varies between countries. Fridge ownership in China rose from under a quarter of households in 1994 to 88% in 2014. In Peru, which had similar GDP per head, to China 45% of households had access to a fridge in 2014.
In 2014 India however, Euromonitor found that 27% of households owned a fridge. AllianceBernstein fund manager Tassos Stassopoulos has since said that figure could double in less than a decade.
While the growth in domestic fridge ownership is certainly a market driver in emerging economies, western markets like the UK and Ireland have significantly different drivers said Shane Wootton, of CTM Equipment.
Wootton said the UK cold chain is in a “state of change more than it is in a state of growth and that change is mainly due to technical reasons.”
As partner to Italian firm OMS Impianti, CTM’s markets are the UK and Ireland.
In those markets, said Wootton, the changes that are taking place are “based on the need to keep up with foam formulation.” Formulations are increasingly being based around flammable pentane as the blowing agent.
“In chasing more and more efficient systems it’s the gas that’s changing. The fact that the fridge has to be warmed up [during production] also means more investment in more sophisticated plant. As a result, pentanes’ potential flammability calls for more expensive investment in equipment,” he said.
Trends in UK refrigeration markets
“We are seeing a move from low pressure to high pressure machinery.” Wootton said adding that is because of the need to show green credentials across the supply chain.
“As the bigger companies increase their commitment to maintaining green credentials, so the smaller companies, which supply them are compelled to adopt greener production methods,” Wootton said.
Low pressure to high pressure production processes
Foam formulation dictates the casing material of fridges should be heated during foam filling, according to Wootton. “Particular refrigeration casings require their blowing agents to be used at higher temperatures,” he said.
Since more and more refrigeration systems rely on the foam to provide a degree of structural integrity, the heat increases the foam’s capacity to stick to the casing material and increases rigidity," he explained.
Through thick and thin
“The choice is clear,” Wootton said: “You can make it a better insulator or you can make it the insulation thicker. But no one wants to buy a refrigerator only to find that you cannot fit anything bigger than a Pot Noodle inside it.”
Meanwhile, the driving force for domestic refrigeration sales in China is the growth in the Producer Price Index (PPI). China’s PPI has been in growth for a number of years and “this [has created] a relatively healthy environment for players in this area,” Huntsman Polyurethanes’ China commercial director Su Bingli.
Bingli added that a number of other factors are also driving growth for refrigeration and cold chain products within the country.
Particularly in the southern provinces of China, Bingli said, growth in the pork market has led to growth in the cold chain. “The price indexing for pork has been rising and in line with that there has been a growth in the cold chain, he said.
“Traditionally,” Bingli added: “The habit of Chinese people was to buy livestock, particularly chickens which were kept by the family, then slaughtered and eaten.”
Due to the potential threat from the H5N1 virus, he said, the typical southern Chinese family is now buying frozen chickens. According to Bingli, the Chinese government’s warning on the dangers of slaughtering self-sourced livestock, changed consumers’ behaviour.
Because of the trend, Bingli said, investment in cold chain equipment for food processing has risen. “Reducing wastage is the food processors’ main driver,” he said.
“Looking to the future, we see strong growth rates and in particular increased opportunity for the chilled chain. In relation to other rigid foam applications, this is the key growth area,” Bingli added.
“It’s the chilled chain that will provide the long term growth,” he said.
Urbanisation is also causing families to change their habits, Bingli said. “As families move into cities and have to work during the week they shop at weekends. So the domestic refrigerator market grows because of this. This changing lifestyle creates more need to store food for longer.”
Meanwhile, said Bingli, domestic demand is driving growth in the chilled chain sector. “The chilled chain is showing a 15% to 20% annual growth rate and we expect this to continue into the 2020s.”
China’s signing of the Montreal Protocol is another factor impacting the cold chain markets, Bingli said. Twenty years ago most of China’s foam producers were still using older blowing agents such chlorofluorocarbons (CFCs), hydrochlorofluorocarbons (HCFCs) and hydrofluorocarbons (HFCs), he added.
China's foamers were gradually moving away from CFCs but, he said, joining the Montreal Protocol is changing the dynamics of markets that rely on older production technology more quickly.
“This trend is a consequence of the government phasing out older technology to meet the requirement of the Montreal Protocol. Consumers are also trying to switch to good technology as their knowledge of what is good and bad for the environment grows.”
In China, said Bingli, “escalating electricity prices is a factor impacting the cold chain.” He said that with utility prices increasing on an annual basis, businesses that rely on refrigeration are opting for more energy efficiency storage.
“If you own a cold storage warehouse for example, you are going to take into account the energy efficiency of the product that you buy because lower energy efficiency means higher costs, he added.
Summing up, Bingli said the changes to foaming technology is based on improving the environment and quality of life.
“Limiting the wastage during the transportation of chilled and frozen foods from producers, processors to the consumer is also an important factor though,” he added.
Refrigeration industry in the Americas
According to Dow’s marketing manager for insulation science business, Robert York, the cold chain is an “evolving space” in which the his firm's approach to business is mainly driven by energy efficiency and sustainability regulation. “In the US there is not so much of a focus on end-of-life, the focus is more on energy consumption and global warming potential. There are also increasing requirements for energy efficiency.
“Many of the regulations have come about in the last few years.” York said the regulations concern the blowing agents used to make the foam and they have a tendency to change every two or three years. “Industry is always looking to meet them.”
“As a supplier we work very closely with regulators and consumers. We work together to ensure that they use materials that can meet those ever increasing targets for energy efficiency.
"The cold chain space in North America is everything from the global powerhouse companies all the way down to the smaller companies and everything between." Noting the acquisition of GE’s Louisville, Kentucky-based appliance division by Chinese firm Haier earlier this year, York said he did not envisage market structure changing dramatically in the coming years. “While there are couple of deals that have gone on recently, I don’t see a huge trend towards consolidation.”
“Some of our customers say they are seeing more growth and demand for refrigerator space then for freezer space and that perhaps the driver for that is a growing interest in fresh foods as people try to eat more healthily.”
“By far the two biggest driving factors in the Americas, which are very established markets are sustainability and energy efficiency regulations,” he said. “In emerging markets where markets are still being built, the space is different but for different reasons the US and Mexico markets are the largest."
In the more established markets of the US and Canada, the market is growing with GDP, “experiencing growth with the expanding population” he added.
“In emerging economies we are expecting good expansion of the cold chain and growth faster than the GDP,” he added.
According to York, the Montreal protocol and how it develops is pivotal to the South American refrigeration sector.
“The entire world is waking up to the issues in the environment and part of this is making changes about the use of HFCs everywhere. The latest version of the Montreal Protocol – although not finalised – suggests that the expectation will be placed on Mexico is “the phase down rather than the phase out of HFCs.”
This will greatly reduce HFC blowing agents and that will be a driving factor in South America.
Another factor is the US Environmental Protection Agency’s (EPA) SNAP Rule 21 proposal to ban the import of goods containing HFCs into the US market.
Unit 45 reefers blown exclusively with Honeywell LBA
Refrigerated shipping container firm Unit45 had its Chinese reefer manufacturer replace hydrofluorocarbons (HFCs) with Honeywell’s Solstice Liquid Blowing Agent (LBA) from July 2016.
Jiangsu-based Yangzhou TongLee Special Container, part of China International Marine Containers, is now using the blowing agent to insulate the reefers.
Unit45 ceo Jan Koolen said containers made with Solstice LBA provide “superior performance.” He added: “These reefers consume less energy and also help to keep us ahead of global environmental regulations calling for a reduction in climate impact.”
According to Honeywell, using the Solstice formulation provides “significant improvement in reverse heat leakage than containers made using an HFC blend.”
The new containers also show improved thermal conductivity, especially at lower temperatures (10°C), reducing energy consumption during operations, according to Honeywell.