The Changing Present and Future of the Food Chain
COVID 10 has changed endless things about our everyday lives from the way we work to the way we shop. For the food chain, and the cold chain industry as a whole, that also means big changes- on a global scale. Producers, distributors, suppliers, and consumers are all feeling the squeeze, especially as we change how we shop and ship our perishable products.
The cold chain isn’t exactly a new concept. In fact, historians can trace the cold chain to the 1700’s and even earlier. However, the way the cold chain operates today has changed as much as the way we order products has.
What’s Causing the Change?
With stay at home orders continuously in flux, varying quarantine orders that change with every location, and the very real risk of catching a highly contagious and potentially fatal virus- the way we go about our everyday lives is changing. That includes the way we shop for even the most vital items, like our groceries.
There’s no doubt that the market for frozen food is rapidly growing. While some of this is due, in no small part, to the pandemic, another part of this is due to the increasing desire for easy, convenient solutions to everyday tasks. Why pick up your own groceries when you can pay a nominal fee to have someone else do it for you?
Of course, most people don’t need to think about the complex food chain that precedes their purchase and consumption of their groceries. And why not choose frozen foods to stock your freezer with some long lasting staples while we’re in these uncertain times?
Of course, that also means that while more people are buying frozen foods, it’s not just the food chain that has to keep up. Another integral part of the food chain production process is the cold chain. Essentially, the cold chain is an entirely new set of processes that facilitate our delivery of perishable goods. While this can include other products like cosmetics and pharmaceuticals, food products are one of the biggest contributors to the cold chain’s work.
How is the Increasing Demand Affecting the Cold Chain?
The first, and most glaringly obvious effect of increasing demand on the cold chain is that there’s more work to do, more products to ship, and more movement worldwide. As with any other industry, the more demands placed upon it, the more opportunity there is for error, even in the smallest of processes. Unfortunately, these “small” errors in the process often actually escalate and cause much more drastic issues in the cold chain, and inevitably, in the delivery of our frozen food items.
As compared to decades ago, the food standards for safety are rather stringent. Regular checks are required to ensure that all food products are at safe temperatures. Production facilities are required to meet compliance standards, and can be penalized if they fall short.
When cold chain products arrive, they often have to undergo temperature checks. These checks are to ensure consumer safety, and when products become too warm, they can’t be sold. These rejected shipments go to waste, at great cost to everyone involved in the food cold chain. Not only that, but with increasing demand for cold storage products, a missed shipment also often means some empty shelves until another supply truck comes through.
In short, the cold chain is valuable not only in economic terms, but also in the goods it supplies. Increasing demand is keeping the cold chain busy, and fueling growth that will continue steadily for many years to come.
Current Value of the Cold Chain
The most recent studies already show a vast investment in the cold chain, and that value is only expected to continue climbing. As of 2019, the cold chain logistics market alone was worth $225,580 million, USD. The food cold chain market in 2019 was estimated to be $149.43 billion, USD. In 2020, the cold chain reached an astonishing value of $210.49 billion, USD. Most research firms expect the cold chain to grow with a Compound Annual Growth Rate (CAGR) between 12% to 14.8%.
The current value of the cold chain is in the hundreds of billions of dollars. With no end in sight, the ascending worth of the cold chain will continue to rise exponentially.
In fact, in the United States, frozen meat sales were recently reported to be $484.31 million dollars. Not only that, there are currently 2.5 billion pounds of frozen vegetables in storage.
Globally, the revenue earned in the food and grocery sector is reported to be $17.5 billion, USD.
The Future of the Cold Chain
Even the current statistics surrounding the cold chain are enough to make you do a double take. The leap in value from 2019 to 2020 was staggering. This year, in 2021, the food cold chain is expected to reach $14.90 billion. Globally however, the predicted value for the cold chain in 2021 is even higher. Including cold chain activity from all sectors, the value is expected to leap from $212.24 billion (from 2020) to $239.67 billion.
By 2026, the value will continue to rise, with the overall value predicted to be $22.81 billion. However, with our rapidly changing circumstances, this figure could end up being much higher. In the midst of the pandemic, some food retailers reported an increase in revenue reaching 150% beyond average.
Add to that regions with developing or escalating markets for perishable, cold stored foods, and the size of the global cold chain could grow even faster. While we may be out of the thick of the pandemic, there is still a high demand for transporting perishable goods, vaccines, and other temperature sensitive consumer products.
In a recent report, the research firm IRI stated, “At-home consumption remains elevated due to lingering stay-at-home behaviors, and as mobility improves, this elevation may erode but will remain higher compared to pre-COVID-19 levels.”
With this in mind, we can only expect the demand, and value of the cold chain to continue to elevate.