BY BASMA HUSSAIN
The cold chain industry in India plays a critical role in preserving the quality and safety of temperature-sensitive products, and a considerable portion of the country’s food production goes to waste due to inadequate cold storage and transportation facilities, leading to substantial economic losses. Despite being the world’s largest producer of milk and the second-largest producer of fruits and vegetables, India faces significant challenges in its cold chain infrastructure.
The size of the India Cold Chain Logistics Market is expected to grow from USD 9.75 billion in 2023 to USD 12.85 billion by 2028, at a CAGR of 5.67% during the forecast period (2023–2028).
The rising demand for perishable goods has been propelling market growth. Furthermore, due to a shift in consumer behaviour, e-commerce and online shopping for pharmaceuticals are driving the market.
The Indian cold chain industry is still in its infancy, making it one of the most promising fields in the cold chain warehousing and logistics industry. India is on track to become the world’s fifth-largest economy by 2027. As a well-established key player in the global market, investment in India’s supply chain infrastructure is expected to rise year over year.
And undoubtedly, India is the world’s largest producer of milk, the second largest producer of fruits and vegetables, and a significant producer of seafood, meat, and poultry products. However, about one-third of the total food produced in the country is lost owing to the poor cold chain conditions.
The country’s growth story raises an important question: Can India’s cold chain logistics infrastructure support its fast-growing industries?
Notably, the Indian cold chain logistics market was valued at USD 9.75 billion in 2023, and the booming market, however, needs a robust cold chain infrastructure, including temperature-controlled vehicles, storage, and packaging, among others.
To understand what we mean by an efficient cold chain infrastructure, let us first dig into what cold chain fleet management is. This generally involves the movement of temperature-sensitive goods from one place to another within the required timeline. A successful cold chain requires a stable chain of refrigerated manufacturing, production, storage, packaging, tracking, transportation, management, and safe and secure delivery and distribution.
This entire process is cumbersome and heavily relies on technology in cold chain management for temperature maintenance, product efficiency, logistics, and delivery, among others.
Cold chain challenges
Despite being such a crucial aspect of the country’s economy, India’s cold chain faces several challenges, among the most important being establishing the kind of infrastructure required for effective integration at various stages of the chain.
Other problems include transportation, the unavailability of proper equipment, frequent power shortages, and a deficit of skilled staff.
Besides, India experiences an annual average temperature of 30°C, with even higher temperatures in the summer. Adding to this, its geographical terrain and complexity and the compromising logistics infrastructure lead to most of the temperature-sensitive products in the country arriving damaged or degraded because of broken or insufficient cold chains.
Furthermore, equipment failure is another barrier causing losses in the cold chain. Trucks are complex electromagnetic machines, and their breakdowns lead to risks in transporting temperature-sensitive cargo. Another important point is that of temperature fluctuations. Even small aspects, such as the frequent opening and closing of doors, can lead to the exposure of goods to ambient temperatures, which may be higher than the temperatures required. Hence, real-time temperature monitoring is crucial for cold chain transport to ensure that the quality of products is maintained.
Poorly designed packaging can also lead to damaged goods, even if the goods are in a temperature-controlled environment. For this, aspects such as heat transmission from products through the package, carton, and pallet stack must be considered.
Besides, vehicle breakdowns due to untimely maintenance can be another huge problem when delivering temperature-sensitive packaged goods due to their low shelf lives.
The important thing for India to do to enhance its logistics is to develop transport units such as freezer trucks, freezer containers, reefer vans and trucks, carriers, merchandising carts, etc. This can also result in a higher transportation cost, as one needs to invest heavily in getting the right equipment and fleet.
Plus, fuel costs in India constitute around 45% of the operating expenses of cold storage in India, leading to significantly higher costs. Indian cold storage businesses pay approximately Rs 100 plus per cubic foot every month as operating costs. It costs half of that in the West, as fuel costs constitute a mere 10% for them.
While the West has integrated technologies such as artificial intelligence, machine learning, and the Internet of Things, among others, into their operations, India lags way behind in this aspect. Lack of technology leads to unoptimized and broken cold chains, which create losses for both operators and food manufacturers.
Power outages or electricity fluctuations can cause the breakdown of the powered cooling systems. Coolant failures and poor cooling circulation can also impact cold chain management, leading to increased costs due to maintenance needs. It can also lead to a lot of waste as perishable goods get affected by heat exposure for a prolonged period, leading to a loss of product quality and profitability.Cold chain logistics management requires highly trained professionals who are well-versed in all the processes and protocols and have hands-on experience operating various cold storage and transportation equipment.
Also, the unorganized industry holds 92% of India’s cold chain facilities and is operated by the private sector. The industry is very fragmented and virtually non-existent in many states; in fact, only four states account for 60% of the country’s cold storage: UP, Gujarat, West Bengal, and Punjab.
Creating a Resilient Cold Chain Infrastructure
The significance of effective cold chain fleet management cannot be overstated. It encompasses various critical components that must be developed to ensure the seamless preservation and transportation of temperature-sensitive goods. These components include mobile infrastructure, such as reefer trucks and containers, freezer trucks and containers, carriers, and the appropriate equipment for the fleet. Moreover, the establishment of a reliable power supply and backup infrastructure is imperative to mitigate the risks associated with power outages or voltage fluctuations, which can potentially disrupt powered cooling systems. Static infrastructure is equally vital, spanning facilities at the farm gate, including modern pack houses equipped with pre-coolers, bulk cold warehouses, and strategically located cold distribution hubs.
In addition to these physical requirements, there is a pressing need to establish industry standards and protocols, along with developing a skilled workforce capable of minimizing human errors. Managing cold chain logistics demands the expertise of well-trained professionals who possess in-depth knowledge of the intricate processes and protocols, complemented by hands-on experience in operating cold storage and transportation equipment.
The cold chain industry in India faces a formidable challenge due to its unorganized and fragmented nature. Notably, a staggering 92% of the country’s cold chain facilities are privately owned and operated. Nevertheless, concerted efforts are underway to bolster the nation’s cold chain sector. The Ministry of Food Processing Industries, for instance, has initiated a scheme focused on cold chain development, value addition, and preservation infrastructure.
In the pursuit of a robust cold chain infrastructure, the adoption of cutting-edge technology emerges as a paramount priority. Encouragingly, the industry is increasingly recognizing the pivotal role that technology plays in addressing the complex challenges associated with cold chain management.
Technology Revolutionizing India’s Thriving Cold Chain Industry
India’s burgeoning economy has earmarked the cold chain sector as one of its most promising industries, poised for year-on-year growth in supply chain infrastructure investments. At the heart of this transformative journey lies the pivotal role of technology in establishing a resilient cold chain infrastructure.
In the year 2023, the cold chain industry is gearing up for a substantial surge in technological integration, driven by the ascent of smart logistics. This revolutionary paradigm involves harnessing digital solutions for real-time monitoring and tracking of perishable goods, encompassing vital parameters such as temperature, humidity, and location. It also encompasses route optimization, ultimately ensuring not only the safety and quality of goods but also curbing waste, enhancing efficiency, and boosting overall returns.
Cutting-edge technologies, including the Internet of Things (IoT), blockchain, radio frequency identification (RFID), and a gamut of logistics innovations, are poised to leave an indelible mark on the cold chain landscape. RFID tags, when equipped with the requisite sensors and battery power, can store Electronic Product Code (EPC) data for logistics management and a limited set of temperature readings. IoT solutions, on the other hand, enable seamless connectivity throughout the logistics process, offering the flexibility to adjust temperature settings in response to local climate changes, product conditions, unexpected delays, and even human error.
Real-time truck GPS tracking systems and temperature data loggers are increasingly gaining popularity, providing continuous monitoring of reefer trucks and facilitating swift interventions in case of extended halts or breakdowns. Dedicated IoT devices tailored for cold chain monitoring further augment the industry’s technological arsenal.
Sensor monitoring stands as another pivotal technology where temperature sensors diligently oversee the ever-changing conditions within transport vehicles, closely tracking humidity and moisture levels. These sensors promptly transmit alerts to managers if temperature conditions deviate from the specified requirements.
The deployment of door sensors represents yet another technological advancement, alerting stakeholders to the frequent opening and closing of reefer truck doors—a seemingly minor detail that can profoundly impact the secure delivery of temperature-sensitive cargo. Implementing a fleet management system equipped with cargo temperature sensors and door-opening sensors not only safeguards against cargo loss through temperature control alarm monitoring but also eliminates unauthorized door access, effectively combating cargo theft.
Beyond these innovations, the cold chain industry is witnessing the emergence of several other transportation technologies, including autonomous vehicles and fleets, hyper-loop concepts, drone-based deliveries, harnessing the power of big data, robotics technology, innovative packaging solutions, machine learning (ML), and artificial intelligence (AI), among others.
As technology continues to reshape the landscape, India’s cold chain industry is poised to deliver enhanced efficiency, reliability, and quality in the preservation and transport of temperature-sensitive goods.
In-Depth Analysis
Thankfully, the Indian government plays a pivotal role in propelling the development of the cold chain industry, actively fostering private sector involvement through an array of subsidy schemes and grants. The Ministry of Food Processing Industries (MoFPI) has spearheaded a dedicated initiative aimed at bolstering cold chain, value addition, and preservation infrastructure.
India boasts the distinction of being the world’s largest milk producer and the second-largest producer of fruits and vegetables. Additionally, it generates substantial quantities of seafood, meat, and poultry. However, due to the nascent state of the cold chain supply network, a substantial portion of food and agricultural products experience significant losses. Shockingly, according to the Food and Agriculture Organization, approximately 1.3 billion metric tonnes of food go to waste annually, amounting to one-third of the total global food production.
These losses translate into substantial economic consequences, estimated to range between USD 8 billion and USD 15 billion each year. To mitigate these challenges, it is imperative to accelerate the development of the cold chain sector. Beyond the realm of perishable foods, the pharmaceutical industry stands as another critical sector reliant on a robust and well-managed cold supply chain network.
The storage and transportation of life-saving vaccines, crucial drugs, and other pharmaceutical raw materials hinge on the efficiency of this network.
Over the past two years, profound shifts in consumer behaviour and purchasing patterns have emerged, primarily driven by the global health crisis.
There is a burgeoning demand for digital and home-delivered shopping, accompanied by heightened sensitivity to pricing, eco-friendliness, health consciousness, and locally sourced products. These dynamics present an opportunity for India to harness its cold chain infrastructure more effectively.
The surge in demand for processed foods is a major catalyst fuelling the growth of the perishable goods transportation market. However, challenges like ensuring food safety may potentially hinder this market’s expansion.
India’s annual production of perishable food exceeds 400 million metric tons. As the world’s largest producer and consumer of dairy products and the second-largest producer of fruits and vegetables, the country’s food supply chain is vast. Nevertheless, up to 40% of the nation’s food succumbs to spoilage within this supply chain, exerting a direct impact on the income of farmers who are already grappling with financial challenges.
In addition to perishable foods, the pharmaceutical sector hinges on an efficient cold supply chain network. This network is critical for the storage, transportation, and delivery of life-saving vaccines, underscoring the urgency of establishing a robust and well-coordinated cold supply chain.
As of 2021, India’s cold storage capacity is estimated to reach between 37 and 39 million metric tons. Official statistics indicate the presence of approximately 7,645 cold storage facilities, with potato storage constituting 68% of the capacity and multi-commodity cold storage accounting for the remaining 30%.
Recent research by the Central Institute of Post-Harvest Engineering and Technology (CIPHET) underscores the magnitude of the issue, revealing that India loses a staggering 16% of its annual fruit and vegetable production due to the absence of an adequate cold chain infrastructure. Experts contend that the Indian perishable goods market necessitates the deployment of 1.5 to 2 lakh reefer trucks to meet the demands of transporting perishable goods across the country.
In this critical context, the Indian government’s proactive role in advancing the cold chain industry through various subsidy programs and grants is a beacon of hope. The MoFPI’s dedicated scheme on cold chain, value addition, and preservation infrastructure exemplifies its commitment to driving positive change in this pivotal sector.