As we’re now in Q2 of 2023, we’re taking the time to evaluate the current state of the cold chain market. While reports on the logistics market, in general, show mixed signals of increased volume in some areas and decreased in others, there are a few notable trends. Due to inflation, many consumers are spending less, resulting in higher-stocked warehouses and stores. This has caused a subtle shift to increased short-haul shipments rather than long-haul as companies are having no difficulty keeping everything in stock.
Naturally, there is some overlap between the general logistics market and cold chain logistics; however, the cold chain market is influenced by a few unique factors, requiring its own evaluation. This article examines the current cold chain market, its challenges, and how companies can build resilience.
The Cold Chain Market, By the Numbers
If we first step back and get a bigger picture view of the global cold chain logistics market, we can see the growth it’s experiencing.
- The global cold chain logistics market size in 2021 was $231 billion.
- The market is expected to grow at a compound annual growth rate (CAGR) of 15.1% from 2022 to 2030.
- By 2030, the market is forecast to reach $696.5 billion.
- The estimated market value for the pharmaceutical logistics industry in 2021 was $92.66 billion.
- The market is expected to grow at a compound annual growth rate (CAGR) of 7.9% from 2022 to 2027.
- By 2027, the market is forecast to reach $146.71 billion.
These numbers are influenced by rising demand for temperature-controlled food and pharmaceutical products, advancements in cold chain technologies, and increasing international trade of perishable goods fueling this level of growth. But we can also look more specifically at other influences in the past few years, since the start of the COVID-19 pandemic, that have led to effects on the cold chain market today.
The Cold Chain Market Shows Signs of Recovery
During the first phase of the pandemic, consumer demand for cold chain logistics within the food sector did experience some slight shifts. For example, consumers increased demand for milk and milk substitutes by more than 300%. Yet at the same time, people also cut back on purchasing chilled and frozen products. Of course, at the early stage of the pandemic, the entire freight market was shaken up by low inventory problems and delays in supply chains that took time to resolve.
However, the demand for pharmaceuticals requiring cold chain logistics increased substantially due to COVID-19 vaccines. Now we’re seeing the presence of overall growth as the industry is evolving.
The pharmaceutical industry has undergone advancements in manufacturing in recent years, resulting in the increased production of drugs that require temperature control. This has led to an increase in demand for related cold chain solutions, making logistics technology all the more critical.
The market for cold storage is also booming, as evidenced by the numerous construction projects for cold storage warehouses. One way to think of this is by the fact that smaller cities, rather than the largest cities, are currently experiencing growth, and therefore, more storage facilities and even grocery stores are being built as these cities expand to accommodate larger populations and commerce, increasing demand for cold chain logistics.
Rising Demand Points to a Bright Future for the Cold Chain Industry
Overall, the demand for cold chain logistics will likely continue to rise as the global economy expands—along with consumer demand.
- Growing demand for perishable goods: With many places experiencing new population growth and increased consumer demand for fresh and high-quality perishable goods, the need for efficient and effective cold chain logistics solutions also grows.
- Expansion of e-commerce: With the rise of e-commerce, more consumers are buying perishable goods online, which require temperature-controlled storage and transportation.
- Increasing globalization: As trade between countries increases, there is a greater need for transporting perishable goods across long distances, which requires reliable cold chain logistics solutions.
- Advances in technology: The development of new technologies, such as temperature sensors, data loggers, and cloud-based monitoring systems, has made it easier to monitor and maintain the temperature of perishable goods during transportation and storage. More efficient cold chains bring growth potential.
Within the pharmaceutical sector, cold chain logistics will be shaped by several trends, including the growing demand for temperature-sensitive drugs, the increasing complexity of supply chains, and the need for greater transparency and traceability.
Key Challenges of Cold Chain Logistics in 2023
Despite bright prospects, the cold chain logistics industry faces several challenges for 2023, including the following three.
1. Ongoing Labor Shortage
According to a recent report by MHI and Deloitte, most survey respondents named the hiring and retention of qualified workers and, secondly, the scarcity of talent as among their top supply chain challenges — 57% and 56% of respondents, respectively. Companies dependent on hiring for the cold chain, whether drivers, warehouse workers, or any other role, will need to learn to address skill gaps and develop strategies to attract and retain top talent.
Rates of Cargo Theft
The logistics industry faces a significant problem of cargo theft, driven by either fraudulent tactics or simply the physical stealing of cargo. The increasing sophistication of thefts — plus scarcity and supply chain disruptions — make recoveries difficult, posing financial losses and added supply chain challenges for those affected. Cargo theft is a growing concern for the industry globally, resulting in a multimillion-dollar loss in 2022, with an estimated 20% jump in reported cargo thefts that year.
Poor Visibility Over High-Stakes Shipments
The lack of visibility into high-value shipments poses a significant problem for shippers. Even a single exception, such as a delay or disruption, can have catastrophic consequences for a high-dollar cold chain shipment. Without sufficient visibility, logistics teams cannot identify and address issues that may arise during transportation. This lack of insight hinders their ability to navigate challenges effectively and efficiently, leading to costly delays and potential product spoilage. As a result, shippers must prioritize visibility to reduce risk and streamline transportation.
Building Resilience Through Cold Chain Logistics Visibility
To help overcome these challenges, shippers can leverage visibility technology to improve their cold chain logistics. By implementing real-time temperature monitoring solutions, such as temperature loggers, shippers can automatically record temperature data and receive notifications if there is a temperature excursion. This not only provides shippers with visibility into their shipments but also enables them to take action quickly to mitigate any risks.
One of the main challenges for drivers in the cold chain market is the pressure to maintain proper temperature control for sensitive shipments. Without the right tools and visibility, drivers may feel unable to meet the demands of their job, leading to burnout and high turnover rates. By investing in technology such as temperature monitoring devices and real-time visibility systems, drivers get the tools to do their job effectively. This helps improve driver satisfaction by reducing stress and uncertainty while enabling shippers to meet delivery deadlines and maintain customer satisfaction.
Shippers can utilize solutions like Hwy Haul, which provides cold chain visibility and a platform to support this data for fresh produce shipments. With real-time visibility into load conditions like temperature, humidity, and shifts inside the trailer, shippers can make informed decisions quickly and reduce the risk of product degradation. Hwy Haul offers route optimization, data insights, and analysis all from a single platform, which can help shippers reduce wait times, lower detention costs, and optimize their supply chain.
Shippers can work closely with their carriers and logistics providers to identify areas of the cold chain where they need to improve practices and update procedures to reduce risk. By partnering with Hwy Haul for reliable capacity, touchless load booking, real-time visibility, actionable data insights, and dedicated support, shippers can build resilience and optimize their high-stakes cold chain operations.
Unlock a More Resilient Cold Chain with Hwy Haul
In 2023, businesses need agile and reliable logistics partners to meet the challenges and demands coming their way. Hwy Haul’s digital freight platform offers advanced solutions for fresh produce and perishable shipping that help shippers and truckers navigate the complex logistics landscape with ease. By utilizing real-time transportation visibility and the latest technology like Tive Tag labels for temperature logging, Hwy Haul ensures that your shipment is taken care of throughout the transport process.
With Hwy Haul, you can count on the support of streamlined load booking to make your shipping process stress-free and efficient. Contact us today to see how Hwy Haul can help unlock advantages for your business and enhance your logistics operations.