“Resilience is the key theme of the last few years, and will continue to be throughout the supply chain,” That was the opening message from Shane Brennan, Chief Executive of the Cold Chain Federation at IMHX 2022.
With 190 companies represented across the UK and forming part of a wider international network, the cold chain forms a vital part of the supply chain for several industries – from pharmaceuticals to food storage.
It’s an industry that was relied upon during the last couple of years, to ensure the safe and secure passage of vaccines and medical supplies. However, the pandemic is just one facet that is influencing several trends in the sector at present, Brennan outlined at IMHX.
Brennan highlighted four major market drivers throughout his presentation, which, he remarked, are “overlayed by an era if crisis that is being dominated by uncertainty”.
The changing nature of demand
- The delivery of the vaccine significantly increased demand and put the cold chain in the spotlight
- The last 48 months have witnessed a growing demand for frozen food and online grocery delivery services – the cold chain is critical to this delivery
- Retail facilities are extending and automation has been introduced as new facilities have been invested in
Money and investment
- There is a global growth race and demand for warehousing and storage facilities – being driven by investment from private equity firms
- The growing investment is providing more money to invest in solutions that are driving rapid productivity gains
Climate and sustainability
- This is an existential challenge, and the cold chain is at the forefront of it – the challenge of using CO2 materials while preventing the loss of harvests and ensuring the flow of food
- “A warming world will need more cold chain”
- Government policy in the UK remains “more about ambition than delivery” – how does the cold chain prepare for what the Government is planning to do to get to net zero?
- The cold chain is now 20% more efficient than it was 10 years ago, but this still requires a significant step change as the climate crisis continues
- Also provides the cold chain with an opportunity to invest in new solutions – can we utilise centralised cooling networks or more sustainable sources of renewable energy?
Costs and cost control
- Energy costs have spiralled in recent months as a result of geopolitical factors – while diesel and fuel costs have precedence to be passed onto the supply chain, passing on electricity costs is not a well-established mechanism, yet electricity a vital component in the cold chain
- Wage inflation and labour shortages are pushing businesses towards automation – this is a structural change, not a temporary one
All this, argued Shane, is underpinned by an era of crisis, as Brexit, the pandemic and the war in Ukraine have introduced significant unpredictability into the supply chain.