China’s cold chain logistics set for two-digit growth

China’s cold chain logistics set for two-digit growth
 
Shanghai – China’s cold storage and refrigerated vehicle segments are both expecting two-digit growth over the next few years, according to the China Federation of Logistics and Purchasing (CFLP).
 
Super-charged by the food industry’s development, the two markets have been expanding at between 10% and 20% annually since 2010, and still have great potential, claimed Kong Delei, deputy secretary general of CFLP’s logistics committee. He was speaking at the Frontier Polyurethane Technology Summit 2020, streamed online from Shanghai in June.
 
Last year, China’s cold storage volume grew by 14%, from 2018 to nearly 60MT, or 149m m³. Panasonic and Haier Carrier are among the largest cold storage contractors, but most contractors are smaller local ones, Kong said.
 
Freezer storage accounted for 72% of total. A majority of the facilities are located along the east and south coast where consumption is strong.
 
Urban distribution storage has been gaining traction, along with China’s fresh food e-commerce market. However, facilities in the producing regions are still inadequate. ‘It is the weakest link in the supply chain,’ Kong said. ‘Refrigerated transportation can’t make up for quality if the first mile is problematic.’
 
China had 214,700 refrigerated vehicles in 2019, up 19% from a year ago. The country gained 9,058 heavy duty lorries, 3,205 mid-sized trucks, 18,345 light vehicles and 2,092 micro-sized cars.
 
Urban distribution fuelled the increase of mid- and small-sized vehicles in 2019, but Kong expects heavy-duty lorries to show rapid growth over the latter half of 2020. This is because China banned interprovincial transport of live pigs in 2019 following swine fever outbreaks.
 
Kong noted that there is excess refrigeration in some areas. Although leasing costs are about half those of the estimated operating and construction costs, there can be opportunities for growth when the supply chain is upgraded.
 
During a new coronavirus outbreak in Beijing in early June that was linked to a food market, the virus was discovered on the chopping board used at a company that imports salmon. The incident calls for higher trackability in cold chain logistics, and may bring out new channels.
 
The older storage facilities will be phased out if they are not compatible with the new model, said Kong.
 
He also expects the refrigerated container segment to grow exponentially when multimodal transport becomes popular.