Refrigerated transport: a growth opportunity?

The most obvious benefit of refrigerated transport is that it keeps products from deteriorating and losing their value during the transportation process. JACO DE KLERK takes a look at this industry’s trajectory and discovers how it has been affected by the pandemic.

Refrigerated transport is associated with temperature-controlled and conditioned freight shipment of perishable food items, including fruit and vegetables, dairy products, confectionery, seafood, fish and meat. The temperature-controlled system is designed to keep the food stored within it for longer.

The global refrigerated transport market was estimated at US$14,8 billion in 2019, according to the current analysis of Reports and Data, a market research and consulting company. It is projected to grow at a compound annual growth rate of 5,9% to reach US$23,1 billion by 2027.

An increasing number of small and large food chains across the globe, coupled with the growing hotel and restaurant sector, especially across developing economies, are projected to boost the demand for frozen food, which is further expected to drive the growth of the global refrigerated transport market during the foreseeable future.

Report and Data notes* that the increase of light commercial vehicles (LCV) for refrigerated transport is driven by factors such as raised demand for home delivery services and developments in the food-service business and food-processing companies.

“The need for refrigerated LCVs is further strengthened by the rise in the distribution of dairy products and pharmaceuticals by vans for short-distance transportation. Moreover, circumstances such as the availability of easy finance choices for fully built vehicles will contribute to the increase in the sales of refrigerated LCVs.”

It adds that rapid urbanisation in the emerging economies of the Asia-Pacific region provides opportunities for the cold chain, especially for trucking companies and cold chain warehouses.

“Sea is estimated to be the fastest-growing segment among various modes of transportation for refrigerated transport, due to the low cost involved with marine shipments. Being an affordable and efficient overseas mode of delivery, it has immense scope for future growth.”

Steve Wray and Christian Dalgaard, from the engineering professional services consulting firm WSP (more specifically its maritime advisory team in London), agree. “The long-term outlook for the use of reefer containers looks positive, especially with a steadily growing population, a global focus on healthier diets and an emphasis on sustainable supply, which acts as a powerful catalyst for reefer container growth.”

In their piece “Flexibility and Pandemic Proof – Future of Reefer Trade”, they explain that changes in diet and resupply cycles, as well as the fact that people are spending more time at home, have encouraged healthier diets and food preparation, which is inevitably tied to perishable foods.

“The demand for plant-based and vitamin-rich diets in Europe and North America, combined with a booming Chinese meat market, has led to an increase in the number of reefer containers, transporters and ports.

“Moreover, with seasonal foods becoming available all year round, consumer tastes and preferences have allowed growing regions to expand. Other food trends in terms of sustainable food supply – such as natural fish stocks complemented by agricultural intensification – will create more reefer trade.”

They add that other trends with an impact on maritime transport are also relevant. “While greater near-shoring may be one outcome of the global Covid-19 pandemic, the locations from which food and other products requiring refrigerators are exported or imported will not change significantly – hence the need for continued shipments.”

Reports and Data explains that roadways are supposed to be emerging as a foremost segment during the forecast period as well, “owing to rising adoption of light commercial road vehicles in the market, coupled with the presence of prominent market players that are concentrating on the development of innovative refrigeration transport systems”.

As for the technology, vapour-compression systems are also projected to grow. “Direct belt drive, auxiliary diesel unit, vehicle alternator unit and auxiliary alternator systems are some of the conventional refrigerated transport vapour-compression drive systems used in refrigerated food transport.”

Nevertheless, the Covid-19 pandemic is having a significant impact on the refrigerated transport industry. “Demand for the product is suffering severe shocks across various end-use markets, worldwide supply chains are upset, and the competitive order of manufacturers and producers has undergone a change. The shortage of demand has fast-tracked the global chilled and frozen sector into an oversupply situation.”

* In its report “Refrigerated Transport Market by Mode of Transport (Refrigerated Road Transport, Refrigerated Sea Transport and Refrigerated Rail Transport), by Temperature, by Technology, by Application (Chilled Food Products and Frozen Food Products), Forecast to 2017–2027”.

For the food industry’s benefit

Thanks to refrigerated transport it is possible for goods produced across the globe to reach various markets and stores. “Before refrigerated trucks or cold chain logistics were invented, produce couldn’t travel far before spoiling. Because of this, consumers could only eat foods that were in season or were produced locally,” notes Zero Rentals, an Australian long- and short-term refrigerated vehicles rentals company, in its piece “Three Key Benefits of Refrigerated Transport to the Food Industry”.

“Thanks to the continuous advancement of technology, what started as ice-based trailers in the 1800s became the refrigerated trucks that are immensely useful today.”

The first benefit listed is the most obvious. “[Refrigerated trucks and vans] maintain low temperatures that help extend the shelf life of the goods, allowing products to reach households in good condition, even after a few days have passed.”

The other two benefits make sense, but aren’t as apparent. “If you take a closer look, the use of refrigerated trucks and vans also contributes to the preservation and protection of the environment. These vehicles mainly prevent the spoilage of food items and ensure that they stay fresh as they reach stores and even households.

“Preventing the spoilage of food means that there are fewer items to dispose of and throw away into landfills. Aside from this, ensuring that most (if not all) produce goes to markets and then to households for consumption is a good sign for the food production industry.

“Imagine this: an increase in food spoilage can mean a smaller supply of food compared to the demand for it. A smaller supply of food naturally drives manufacturers to increase their production to meet the demand. This can put a strain on our food supply which consists of animals and plants.”

The second benefit is improved health and a stronger economy. “Cold transport services help preserve not only the food that reaches your home but also the nutrients in them. Consequently, eating fresh food positively impacts your health and enables you to do your best work. Looking at the bigger picture, refrigerated vehicles also contribute to the nation’s economic growth.

“Successfully transporting food items to every corner of a country means more revenues for the local producers. Keeping these items fresh and selling them to consumers means continued business for companies. Finally, income-generating businesses support the government through their taxes, as well as the employees through wages and benefits. The economy of the region and the country as a whole benefit from all of these.”

The task of delivering perishable goods to different parts of a country may seem like a trivial task at first. “However, much of the food industry’s success depends on what kind of fleets are used and how they are utilised.”