Connected Corners

Trends driving spotlight on cold chain segment in 2021 & beyond (Part 1)

Supply chain & logistics are amongst the most crucial business functions for a wide range of industries... with cold chain operations increasingly playing a front & center role for many businesses within; driven in part by variety of key consumer & industry trends

This segment briefly explores the key consumer & industry trends that are driving spotlight on the broader cold chain segment

The ongoing mass vaccination efforts are highlighting some of the many complexities involved in facilitating large scale joint supply chain operations involving public & private businesses and government bodies…

…particularly as it relates to the effective distribution of the (temperature sensitive) vaccine itself; which may also be sourced from more than one geographically dispersed manufacturer…

…thus placing a renewed spotlight on cold supply chain (or cold chain) operations – supply chain of product categories that require specific temperature & humidity controlled environment throughout their end-2-end distribution journey

Quick note: Despite some similarities inherent to the supply chain function across industry verticals, each brand is relatively unique (geographic presence, product mix, service offerings, strategic goals, industry partnerships, et al.) and as such their cold chain strategies, logistics solutions & CX programs will be reflective of their individual goals & capabilities

Cold chain – front & center

Supply chain & logistics are amongst the most crucial business functions for a wide range of industries (CPG/FMCG manufacturing, agriculture, healthcare, et al.)… with cold chain operations increasingly playing a front & center role for many businesses within

Cold chain entails optimally managing a complex network of temperature & humidity controlled assets throughout the product’s end-2-end journey…

…from the point of origin (manufacturing plant, farm, et al.) through to centralized / de-centralized cold storage facilities, distribution centers (DCs), destination customer solutions (think: last mile delivery & lockers) as well as multi-modal cold transport fleets

Balancing the function’s operational efficacy, process transparency, regulatory & safety compliance, ROI growth, real estate opportunities, CX and even carbon footprint (think: green supply chain) amongst others has also taken a center stage for its value chain players

Furthermore, just as with broader supply chain; businesses may choose to either entirely in-house or outsource (3PL/4PL/5PL) parts of their cold chain management & operations function… each presenting their own benefits & challenges

Key driving trends

Well before the ongoing global vaccination drive, there was already a growing focus on the broader cold chain segment; driven in part by a multitude of key evolving consumer & industry trends

Trends driving cold supply chain - Connected Corners

1. Continued demand for refrigerated/frozen food & snacks

Mainstay of today’s supermarkets; the refrigerated & frozen foods category (think: frozen dinner, snacks, desserts, et al.) is one of the key drivers of cold chain operations… and this category is only projected to continue its growth trajectory for the foreseeable future

As traditional food manufacturers & newer startups only continue to innovate & rapidly expand their product lineups within this category….

…so too would the need to bolster their cold chain capabilities that supports long term category growth goals

2. Growing demand for fresh, organic & local produce

Increasingly, consumers’ preference has been shifting towards fresh produceorganic where available and locally produced if possible

Businesses such as traditional supermarkets, local grocers and even modern day department stores (diversifying into fresh produce categories) are following suit by growing their organic product offerings to keep up with consumer demand

Additionally; consumers and even restaurants are increasingly looking to support local businesses & farmers and are actively seeking out for locally farmed and in-season fresh produce where possible

Value chain players from ‘farm-to-table are looking to develop cold chain solutions that ensure their customers receive the freshest produce (read: reduce wastage, JIT)… regardless of whether being sourced locally, regionally or globally

3. Emergence of ready-to-prepare meal kit category

Meal kit providers give consumers an out-of-the box solution that typically bundles individual fresh ingredients paired with recipes enabling them to prepare their meals with relative ease & convenience

Providers of this (mostly D2C) category had seen mixed results since its inception but owing in part to impacts from the pandemic (work from home, lockdowns, et al.) has recently witnessed a sudden growth

But… the success of ready-to-prepare meal kit category is closely intertwined with the provider’s cold chain capabilities

Why? One measure by which the category’s success is measured (KPI) is the service provider’s ability to not only acquire new customers but also retain existing paid subscribers in the long run…

…which is reliant on the freshness factor of the delivered meal kit (individual ingredients thereof)…. one negative experience may be enough for some customers to cancel their subscription and head back to their local supermarket & grocers (many of whom have been diversifying into similar product offerings – read: competitors)

Therefore building & managing a robust cold chain operation to ensure product freshness at the time of delivery is vital for meal kit providers’ long term success (or even survival)

4. Rising demand for robust healthcare logistics

Most medicines, vaccines and clinical trial materials are typically heat, light and humidity sensitive and are heavily dependent on robust cold chain ecosystems to maintain their effectiveness at the point of delivery

Those who for long have maintained a working cold chain (healthcare logistics) ecosystem – policies, networks, platforms, infrastructure & technologies – are more likely to be in a better position (vs. those who have been caught off guard) to effectively support their region’s mass vaccination drive… even to the remotest parts

Furthermore, with improving technologies, quicker innovation cycles and potentially shorter R&D & approval phase; pharmaceutical manufacturers are likely to continue to invest in cold chain ecosystems for the safe & effective distribution of their medicines/vaccines to front line healthcare providers and consumers alike

5. Growing need to improve first mile logistics

The fresh produce industry is constantly on the lookout for initiatives to optimize their crop yield in the face of multitude of variables (think: unpredictable weather patterns, fluctuating consumer demand, et al.)

One such growing need is for first mile logistics solutions that maximize the shelf life of their fresh produce from harvest to first point of storage

Put another way, the wider agriculture industry is driving the need for cold storage solutions that could dramatically reduce or entirely eliminate the distance their perishable produce has to travel from point of harvest to nearest centralized cold storage facility…

…which could include developing initiatives such as temporary cold containers, permanent decentralized cold storage facilities, co-op cold storage and even their very own onsite cold warehouses; each presenting their own sets of benefits & challenges

Furthermore; such cold supply initiatives would also benefit farmers & co-ops wanting to diversify into D2C models that enable consumers to source their fresh produce directly from them

Many of these cold supply initiatives would also be applicable to the dairy, meat and seafood categories that also require specific temperature & humidity control throughout their supply chain journey

6. Increasing shift towards D2C & eCommerce solutions

Traditional supermarkets and independent grocers alike are in a race to rapidly transform or extend their physical presence into online shopfronts; which also includes building scalable cold chain platforms, solutions & assets

…that seamlessly augments their existing supply chain capabilities to enable efficient last mile delivery of fresh produce and frozen foods to customers’ doorstep

Concurrently, consumers too are increasingly adopting D2C & eCommerce solutions for their everyday needs; which also extends to the aforementioned refrigerated product category


As the global demand for temperature & humidity sensitive products only continues to grow; so too would the spotlight on the broader cold supply chain segment…

…which would remain front & center for a wide range of businesses; from traditional supermarkets through to newly established vertically integrated startups and everyone else in between

In developing a scalable & robust cold chain operation, value chain players must also address a range of challenges such as maximizing product shelf life, introducing process transparency, eliminating wastage, reducing carbon footprint, improving CX and increasing profitability amongst others

Forthcoming segments will aim to explore some of these key challenges as well as a range of digital solutions (think: IoT, cloud, blockchain, et al) that could help address them

Stay tuned!