The cold chain industry experienced rapid growth in 2022 and will continue to undergo development and change in the foreseeable future. The impact of the pandemic, however, remains, creating opportunities for the pharmaceutical cold chain to innovate and better serve pharmaceutical and healthcare customers.
The cold chain market sells cold chain and related services by entities (organizations, sole traders, and partnerships) that provide cold chain storage services. As Dickson Data suggests, these services manage and transport temperature-sensitive products through refrigeration, thermal packaging, and other methods. As a result, it plays a crucial role in controlling the temperature of perishable goods. It also ensures the quality and healthiness of perishable goods for the end consumer throughout the distribution chain.
Cold chains are of numerous types, with the main categories being cold storage and cold transport. Cold storage is where goods are cooled or stored at a controlled temperature to prevent them from rotting or failing and maintain the required sustainable environment that applies to the item.
Refrigerated transport or refrigerated cargo are core components of cold chain facilities. These vehicles transport products using a built-in refrigeration system that helps maintain the required temperature during the transport process. The different temperatures used in the cold chain include frozen and chilled.
Cold chain storage is instrumental in various pharmaceutical, healthcare, food and beverage, and chemical industries. Their needs are increasing as more sectors widen their reach and explore cross-border markets. In addition, cold storage has witnessed remarkable development in the last few years due to the substantial increase in demand for online grocery shopping due to changing consumer preferences.
The healthcare and cold chain market
Pharma Supply Chain
The pharmaceutical industry has not historically been a big consumer of cold chain logistics, as most of its drugs did not have such requirements. However, in the last five years, there has been an explosion in cold storage requirements with the growing adoption of a new class of biologics. They’ve entered the world of medicine and are taking things by storm regarding their therapeutic capabilities and the demands they place on the pharmaceutical supply chain. Most biologics require temperature- and time-controlled storage distribution, and the requirement for cold storage increases.
In addition to biologics, various types of breakthroughs in precision medicine have recently emerged, such as cell therapies, biomarker testing, and regenerative medicine in the form of stem cells. Transportation and storage of these materials will enable these therapies to be completed and fall under the cold chain circuit. In addition, blood products and some vaccines also need cold storage for their preservation.
A growing focus on direct-to-patient and direct-from-patient care led to a substantial increase in market evolution. For example, in December 2019, pharmaceutical and contract research organizations anticipated engaging in high volumes of virtual research trials, expecting to conduct a trial with most activities performed in participants’ homes. Subsequently, programs like these have increased the need to distribute pharmaceutical supplies to at-home patients across the nation, and these supplies sometimes require cold chain practices.
Temperature control logistics remain a challenge, especially given the tight timeframe for delivery and pickup of biologicals or sample materials. All timing must coordinate with home care visits and ensure that temperature-sensitive materials arrive at their destination within the required temperature range.
Services such as phlebotomy, medication administration, and sampling that require refrigeration will require a pharmaceutical cold chain solution. These needs further contribute to the constant market growth of the cold chain industry.
Other trends leading to cold chain market growth
Online grocery shopping is a significant driver driving demand for cold storage even before the COVID-19 pandemic. Online ordering is estimated to account for the increased rates of grocery purchases in 2022, fueled by the growing popularity and consumer acceptance coupled with favorable pandemic-driven trends.
This development is forcing various companies to build new cold storage facilities to preserve perishable foods and reduce their spoilage. In addition, the manufacturing activity of cold chains has received support from the sharp rise in food sales in recent years. Furthermore, the COVID-19 crisis further accelerated the shift to online grocery shopping, which changed consumer preferences and market conditions. This scenario has enabled the online platform in the food industry to show exponential growth, leading to increased demand for cold storage.
The risk of COVID-19 infection prompted a large number of consumers to avoid in-store grocery delivery and instead consider an online channel to have these products delivered directly to their doorstep. Cold chains also benefit from the growing demand for frozen food, especially among health-conscious people. In addition, frozen foods have received much press from various studies that have pointed to their ability to store nutrients effectively.
The demand for cold storage in the pre-pandemic scenario may be due to the significant popularity of online grocery shopping applications and the growing consumption of frozen foods for their nutritional and health benefits.
The current trend is to create a massive demand for warehouses that store food purchased online. In addition, expect constant changes in consumer shopping behavior to lead to a gradual shift from traditional grocery store routes to online platforms. These trends have resulted in the growth of cold storage construction projects.
Can things go south for cold-chain manufacturing?
The high operating cost of cold chains could act as a restraint for the market. Operating expenses include utility, electricity, real estate, and labor costs. In addition, high operating costs could hamper R&D spending by companies, which could affect the cold chain market. However, many logistics companies are constantly working on making the process cost-effective as it is the need of the hour.
Cold chains are becoming a global requirement with every passing day as they engage with multiple sectors and offer them constructive inputs in terms of storage and transportation. As a result, numerous businesses are exploring the efficient use of cold chains.
The industry, therefore, has high growth potential, with the global cold chain logistics market illustrating a forecast to grow to over USD 800 Billion between 2023 and 2030. This projected acceleration is proof enough that the cold chain logistics industry is here to stay and dominate for years to come.