The value of the cold chain logistics market in 2022, evaluated by Allied Market Research, stood at $304.8 billion USD. According to forecasts from specialists at the American consulting agency, the global market for cold chain logistics is projected to grow to $647.47 billion by 2028, showing a Compound Annual Growth Rate (CAGR) of 15.1% between 2021 and 2028.
By 2030, the market is anticipated to exceed $892.6 billion, according to the Precedence Research report, with a projected CAGR of 14.7% during the period from 2023 to 2030.
The European market for cold chain logistics, estimated at $64.10 billion in 2022 by Allied Market Research, is expected to reach $239.71 billion by 2032, demonstrating an average annual growth of 14.6% in the period from 2023 to 2032.
“The cold chain logistics market is expected to grow at a Compound Annual Growth Rate (CAGR) of 14.7% during the period from 2023 to 2030,” states the Precedence Research report.
Factors contributing to the development of cold chain logistics
As referred to earlier, the COVID-19 pandemic provided a significant impetus to the development of cold chain logistics. The increasing demand for temperature-controlled storage and transportation of pharmaceuticals, vaccines, and other medical products emerged as a major driver for the cold chain logistics industry. Investments, both public and private, in cold storage and transport infrastructure saw a notable increase.
Moreover, the aging population of Europe is further fueling the expansion of the pharmaceutical sector, leading to an increased demand for services in the field of cold chain logistics. This growing demand fosters supply, and the subsequent rise in the number of logistics companies involved in the transportation of pharmaceutical products contributes significantly to the development of cold chain logistics.
The rise of the global middle class, as noted by Maersk in their e-book “Cold Chain Logistics in Europe,” with its opportunities for greater consumption, also acts as a catalyst for the industry’s development.
A trend towards a healthy lifestyle and, consequently, healthy food, has contributed to an increase in production volumes and the expansion of world trade in vegetables and fruits, particularly between Europe and North America.
According to the UN Comtrade database, in 2022, the European Union imported vegetables, fruits and nuts worth $6.96 billion. In December 2022, Europe accounted for more than 68.13 billion US dollars, representing 43% of the total value of world trade in fresh fruits and vegetables, as reported by the Center for the Promotion of Imports from Developing Countries (CBI).
The increase in trade volumes necessitates efficient cold chain logistics, and stricter food safety regulations are also playing a role in fostering industry growth. The expansion of the food processing industry sector and the subsequent rise in the number of cold storage facilities further contribute to the development of cold chain logistics.
The landscape of cold chain logistics in Europe has been transformed by a surge in e-commerce. Since the outbreak of the COVID-19 pandemic, Europeans have increasingly made purchases of temperature-controlled goods, including pharmaceuticals, food and beverages, and perishable goods, online. One of the challenges faced is the need for delivery on the same or next day.
Factors restraining the development of cold chain logistics
The main problem in cold chain logistics is the observance of storage conditions at all stages of the chain. This branch of logistics requires a considerable number of equipped transport vehicles, an extensive cold storage system, and the avoidance of long delays during the loading and unloading of goods at all storage points.
Standards and practices in cold chain logistics differ fundamentally between developed and developing countries. The former boasts advanced infrastructure and strict rules, while the latter faces challenges such as poor road quality, equipment wear and tear, instability in power sources, and a lack of specialized knowledge.
Vehicles equipped with temperature-regulating equipment are designed for driving on flat roads. The poor condition of road infrastructure in developing countries, including unpaved rural roads or abandoned routes, presents serious challenges for cold chain logistics.
A significant problem for this type of logistics is power outage, even if short-term, as a disruption in the temperature regime adversely affects the quality of goods.
Geopolitical and economic instability has a negative impact on Ukraine’s cold chain logistics industry. Russia’s large-scale invasion of Ukraine has raised questions about the industry, leading to ruined road infrastructure, periodic power outages, and last year’s blackout, necessitating the restructuring of supply chains.
Several warehouses ended up in the occupied territory, and part of the refrigerated premises for storing goods with controlled temperature were destroyed, compelling many companies to relocate to central and western Ukraine.
Technological dependence poses another challenge for cold chain logistics, as devices require regular maintenance and calibration. A malfunctioning sensor in a vehicle can provide inaccurate readings, leading to a loss of temperature control and deterioration of cargo quality.
Software failure in supply chain management, which monitors cargo location, temperature, and delivery priority, can also cause disruptions in the delivery of temperature-sensitive cargo.
Environmental issues related to greenhouse gas emissions take on a larger scale in cold chain logistics. One of the factors restraining the development of the controlled temperature industry in Europe is higher logistics costs.
Cold chain logistics trends in 2024
Automation
One of the trends in cold chain logistics is automation. The entire cold chain is monitored and regulated automatically, ensuring constant temperature and cooling parameters of goods in warehouses. Automated systems are integrated into warehousing and transportation processes.
This minimizes human intervention, thereby reducing the risk of error. Thanks to automation and robotization, even partial integration into the cold chain enables faster, more accurate, and more cost-effective operations. This helps increase the competitiveness of companies and reduce labor shortages.
Digitization and Software Improvement
In 2024, there will be a surge in the use of IT solutions and automated software for cold chain logistics. For efficient cargo monitoring, there is a need to receive continuous data and track them in real time. This necessitates the development of better software, utilized in the warehouse (IoT), electronic data interchange (EDI), and cloud computing.
IT solutions in cold chain logistics ensure the smooth and efficient functioning of the entire supply chain, adding economic value to the cold chain. Investments in software upgrades and improvements will enhance visibility into supply chains.
Use of Artificial Intelligence
In 2024, artificial intelligence in cold chain logistics will be even more widely used. AI will make forecasts, take over the function of cold storage inventory management, predict demand, optimize inventory levels, adjust transport routes, and manage labor efficiency.
Real-time monitoring will reduce the risk of product spoilage, helping to avoid many problems. With the development of digital technologies, investments in cybersecurity will also increase.
Integration
Fully integrated supply chain suppliers are a priority when selecting partners. Such collaboration can lead to more efficient and cost-effective cold chain solutions. Analysts expect that this year will see the creation of more strategic partnerships, with an increase in takeovers.
Sustainability and Environmental Friendliness
Sustainability is becoming an increasingly important factor in the cold chain. Environmental requirements to reduce greenhouse gas emissions are growing, and attention to environmental problems is increasing. Actions are expected from logistics service providers regarding the transition, with companies looking for ways to minimize their carbon footprint.
In the current year, the energy transition will intensify. Due to the energy-intensive nature of the cold chain industry, special attention will be focused on the use of renewable sources for on-site production. To meet energy efficiency requirements, there will be a phased abandonment of inadequate and outdated infrastructure, not only in Europe but throughout the world. The demand for reliable sustainable development strategies will grow.
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