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Cold Chain Logistics

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Complete sector analysis on cold chain logistics in India serving the food and quick service restaurants industry

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Cold Chain Logistics

  1. 1. Cold ChainLogisticsSector Analysis Nov-Dec, 2011 Rishab Sapra & Shridhar Joshi
  2. 2. Cold Chain Logistics Sector Analysis by Rishab Sapra rishabsapra@gmail.com Shridhar Joshi joshridhar@gmail.com Business Design, 2011-2013Welingkar Institute of Management and Research
  3. 3. • What is Logistics ?• Introduction to Cold Chain Logistics• History and Breakthroughs• Global Scenario• Indian Ice Age• Value Parameters• Users
  4. 4. What is Logistics ?Logistics is the managementof the flow of goods from Transportationorigin to destination tomeet customer requirements Security InventoryRight Time, Right Place@ Minimum Cost Logistics Packaging WarehousingStarted as a businessconcept in 1950’s Information Management Source: Global Agri System Pvt. Ltd. Report
  5. 5. What is Cold Chain Logistics? TEMPERATURE COLD CHAIN LOGISTICS CONTROL LOGISTICS (REFRIGERATION)Major Sectors : Food and Beverages, Bio-PharmaceuticalThe Cold chain logistics infrastructure Supply Transport Storage Transport End Customer Procurement• Precooling System • Refrigerated • Cold Storage • Refrigerated • Retail, Terminal,• Farms (Rural Trucks • Warehouses Trucks Markets, Factory, Markets) • Refrigerated • Refrigerated Ports, Airport• Manufacturers Railway Wagons Railway Wagons • Refrigerated Cargo • Refrigerated Cargo Containers Containers
  6. 6. Global Cold Chain Facts: Food Sector Fruits & Meat Fish & Seafood Dairy Products Beverages VegetablesIn European and American developed countries, the rate ofrefrigerated transport is up to 80-90%,pre-cooling preservation is up to 80-100%,and the loss rate is below 5%.25% of the total food production is processed foods. A booming industry
  7. 7. Cold chain in Food SectorIndustry Temperature StandardsBanana Chill Frozen Deep Frozen13 C 2C -18 C -29 C
  8. 8. Temperature Product Refrigerated Shelf Life Optimum (Days) Temperature (Celcius)and Apple Bananas 90-240 7-28 0 13.5Shelf Life Bell Peppers Cabbage 21-35 14-20 7 1 Eggs 180 1.1 Onions 30-180 1 Lettuce 12-14 0.6 Fresh Meat (beef, 14-65 -2 lamb, pork, poultry) Oranges 21-90 7 Pears 120-180 -0.6 Potatoes 30-50 10 Seafood (shrimp, 120-360 -17.8 lobster, crab) Strawberries 5-10 0.6 Tomatoes 7-14 12
  9. 9. Global Cold Chain Facts: Bio-Pharmaceutical Pharmaceutical Biotech Vaccines Blood Products Clinical TrialsGlobal Bio-Pharma Cold-chain market2010 : $5.1 billion 2011 : $6.6 billion2014 : 7 of the top 10 global pharma products in will require cold-chain handlingVaccines growing on average 8% per year for the next five years Source: www.fiercebiotech.com/press-releases/ source: www.coldchainpharm.com/
  10. 10. Cold chain in Pharmaceutical Sector
  11. 11. Global Cold Chain- Pharmaceutical SectorBio-pharma logistics spending growth Cold chain logistics spending expanded from $5.1 billion in 2008 to $6.6 billion in 2011Cold chain shipment growth by region Sources: http://www.aircargoinsights.com/news/cold-chain-pharmaceuticals-worth-billions/ http://www.aircargoinsights.com/more-market/global-biopharma-demand-on-the-rise/
  12. 12. HISTORY & BREAKTHROUGHS 1797 British fishermen used natural ice to preserve their fish stock pilesLate 1820’s Movement of food from rural areas to urban consumption markets 1851s Mechanical refrigeration and Air-conditioning plant patented by Dr. John Gorrie 1867 The refrigerated railroad car was patented by J.B. Sutherland of Detroit 1870s Trade of food between colonial powers and their colonies France received mutton carcasses from South America Great Britain imported frozen beef from Australia, pork from New Zealand 1882 SS Dunedin, the first ship to complete transportation of frozen meat. 1910 600,000 tons of frozen meat was being brought into Great Britain alone. 1920’s Group of CFC’s - Freon used in refrigeration was developed. Source: http://people.hofstra.edu/geotrans/eng/ch5en/appl5en/ch5a5en.html
  13. 13. HISTORY & BREAKTHROUGHS1857 The first shipment of refrigerated beef was made from the Chicago stockyards to the East in an ordinary box car packed with ice.1866 Parker Earle of Illinois shipped strawberries in iced boxes by rail from southern Illinois to Chicago.1867 The first patent for a specialized refrigerator car (US Patent #71,423) was issued to JB Sutherland of Detroit, Michigan.1868 William Davis of Detroit developed a refrigerator car cooled by a frozen ice-salt mixture, and patented it in the USA. The patent was sold to George Hammond, a local meat packer who went on to amass a fortune in refrigerated shipping.1869 Henry Peyton Howard (1829-1913) of the United States transported a shipload of beef frozen in a salt-ice mixture from Indianola, Texas, to New Orleans and served it in hospitals, hotels and restaurants.1873 Timothy C. Eastman exported chilled beef by ship from America to London, and shortly thereafter built up his trade to an annual tonnage of around 10,000 t. The insulated cargo space was cooled by ice, which was loaded on departure. The success of this method was limited by distance and climate.1876- French engineer Charles Tellier and the steamship Frigorifique achieved the first overseas1877 shipment of meat under artificial refrigeration. Three methyl-ether refrigerating machines kept the cargo in a chilled state during the 12,000 km voyage from France to Argentina and the return trip. The preservation of the meat was less than perfect; full success would have to wait until the voyage of the Paraguay. Source: http://www33.brinkster.com/iiiii/inventions/reftranstimeline.asp
  14. 14. HISTORY & BREAKTHROUGHS1877- The French vessel Paraguay, equipped with refrigeration machinery by Ferdinand Carré,1878 traveled from France to Buenos Aires and back. 150 t of meat, kept at -27 to -30 deg C, arrived in Argentina in excellent condition after 50 days.1878 Gustavus F. Swift (1839-1903) of the United States put into operation a refrigerator car to ship fresh meats. The car body was well insulated and the interior cooled by ice. Fifteen years later the operation had expanded to 97 thousand units.1879 Henry Bell (1848-1931) and John Bell (1850-1929) of Scotland and Joseph James Coleman (1838-1888) of England completed the Bell-Coleman dense-air machine on the Anchor liner Circassia, which successfully brought a cargo of chilled beef from the USA to London.1879- The Strathleven, equipped with a Bell-Coleman air machine and loaded with beef, mutton,1880 butter and kegs, sailed from Melbourne to London and arrived with the frozen cargo in good condition after a 9-week voyage of about 24,000 km.1880 The first patent for a mechanically refrigerated railcar was issued in the USA (#230615, to Charles William Cooper).1881 Alfred Seale Haslam (1844-1927) of England equipped the liner Orient with Haslam refrigeration compressors. He bought the Bell-Coleman dense-air patents in 1878 and eventually equipped four hundred plants and ships with Bell-Coleman machines. Source: http://www33.brinkster.com/iiiii/inventions/reftranstimeline.asp
  15. 15. HISTORY & BREAKTHROUGHS1885 Berries from the Norfolk (Virginia) area were shipped by refrigerator car to New York.1887 Parker Earle joined F.A. Thomas of Chicago in the fruit shipping business. The company owned 60 ice-cooled railcars by 1888, and 600 by 1891.1888 An experimental Chicago-to-Florida shipment of beef from Armour and Company was made in a car cooled by ethyl chloride compression machinery.1888 Florida oranges reached New York under refrigeration for the first time.1889 The first cooled shipment of deciduous fruit from California entered the New York market.1890 In London, first mechanically refrigerated barge introduced.1890 After acquiring the patent rights of Franz Windhausens CO2-compression refrigeration system, J. & E. Hall installed the first marine CO2 machine on the Highland Chief.1898 Russia put its first refrigerator cars into service. Russia had 1900 such cars by 1908, 3000 by 1910, 5900 by 1916. The cars were employed mainly for transport of Siberian butter. The journey from Siberia to Baltic ports lasted about 12 days. Reicing stations were set up each 2000 km. Source: http://www33.brinkster.com/iiiii/inventions/reftranstimeline.asp
  16. 16. HISTORY & BREAKTHROUGHS1899 Refrigerated fruit traffic within the USA reached 90,000 t per year. Transport from California to NY averaged 12 days in 1900.1900 A worldwide survey found 356 refrigerated ships, 37% of which had air machines, 37% ammonia compressors and 25% CO2 compressors.1900 Refrigerator cars in the USA numbered about 50,000.1900 During the year, Great Britain imported 360,000 metric tons of refrigerated meat: 220,000 t from Argentina, 95,000 t from New Zealand, and 45,000 t from Australia.1901 The first refrigerated banana ship, the Port Morant, was equipped with a CO2 machine and carried 23,000 stems at controlled temperature from Jamaica to England.1901 Carl von Linde equipped a Russian train with a mobile mechanical refrigeration plant to distribute cooling to the cars carrying the goods. Similar systems continued to be used in Russia through at least 1975.1902 According to a study of Lloyds Register, 460 ships had refrigerating plants in 1902. The marine refrigeration industry at this time was dominated by the British.1904 US pomologist G. Harold Powell introduced the technique of precooling, or removing field heat from the crop as rapidly as possible before transport. Source: http://www33.brinkster.com/iiiii/inventions/reftranstimeline.asp
  17. 17. HISTORY & BREAKTHROUGHS1906 Pacific Fruit Express began operations with more than 6,000 refrigerated cars, transporting fruit and vegetables across the United States from Western producers to Eastern consumers.1907 US traffic in refrigerated fruit reached a yearly total of 600,000 t, up from 430,000 t in 1905.1910 Great Britain refrigerated meat imports rose to 760,000 t/year.1910 By this time British company J. & E. Hall had installed 1800 CO2 refrigeration machines in ships.1913 British fleet included 230 refrigerated ships with total cargo capacity of 440,000 t.1913 The number of thermally insulated railcars in the USA amounted to about 100,000. Most of these were cooled by ice.1923 London used 120 metal barges of 60 to 120 t, insulated or mechanically cooled, for transport of meat on inland waterways.1925 The Pacific Fruit Express had 34,000 refrigerator cars and the Fruit Growers Express 22,000.1925- Mechanically refrigerated road vehicles, especially for the delivery of milk and ice1930 cream, began to appear around this time. Source: http://www33.brinkster.com/iiiii/inventions/reftranstimeline.asp
  18. 18. HISTORY & BREAKTHROUGHS1931 The total volume of ice-cooled railcar cargo space in America was of the same order as that of public cold stores at the time (12.5 million m³, vs. 13 million m³).1931 The number of refrigerator cars in the USA reached a maximum of about 183,000.1935 Refrigerated imports into Britain in 1935 totaled 1 million metric tons of meat, 500,000 t of butter, 130,000 t of cheese, 430,000 t of apples and pears, and 20 million stems of bananas.1936 The Italian army used 150 refrigerated containers to transport frozen meat to its troops on the Ethiopian front. Great Britain and the Netherlands had also built prototype refrigerated containers by this time.1939 The USA had roughly 18,000 vehicles for refrigerated road transport, between 2000-2500 of which were mechanically cooled. Many of the rest were kept cold by solid carbon dioxide ("dry ice"), regular ice, or eutectic plates. The number of these vehicles, as well as the proportion that were mechanically refrigerated, steadily grew during the next few decades with the growth of the trucking industry and the development of superhighways. Source: http://www33.brinkster.com/iiiii/inventions/reftranstimeline.asp
  19. 19. HISTORY & BREAKTHROUGHS 1949 Refrigeration system made its way into the trucking industry by roof- mounted cooling device, patented by Fred Jones. 1950’s Temperature controlled movement of pharmaceuticals and medical supplies 1950’s In the United States, Food and Drug Administration restrictions over the stability of the cold chain incited many of these companies to rely on specialty couriers rather than completely overhauling their supply chain facilities. A specialized cold chain industry was bornAfter 1960’s* Blown air containers were replaced by self powered containers. 2010 Fed ex using GPS for tracking. Fedex Sense Aware Source: http://people.hofstra.edu/geotrans/eng/ch5en/appl5en/ch5a5en.html
  20. 20. HISTORY & BREAKTHROUGHS 1970, Tropicana orange juice was shipped in bulk via insulated boxcars in one weekly round-trip from Bradenton, Florida, to Kearny, New Jersey. By 1972, they were carrying around 1,000,000 US gallons (around 38,00,000 Litres )Illinois Central Railroad #14713,a ventilated fruit car dating from 1893 Unloading frozen pork fromA circa 1870 refrigerator car the Clan Line ship Clandesign. Hatches in the roof Top icing of bagged MacDougall in the mid-20thprovided access to the vegetables in a centuryice tanks at each end refrigerator car
  21. 21. BREAKTHROUGHS IN INDIAIn 2004, Safexpress Pvt Ltd first company in the Indian logisticsindustry to use the GPSMaersk India, had taken steps to facilitate research in theproduction, harvesting, warehousing, and packaging ofbananas. The company provided end-to-end cold chain logisticssupport, besides undertaking training of local banana exporters incold chain management.
  22. 22. BREAKTHROUGHS IN INDIASun logistics, FlexiTank in 2010
  23. 23. BREAKTHROUGHS IN INDIAKale Logistics India Develop UPLIFT with ICAAI ( Air Cargo Agents Association of India )
  24. 24. Global Cold Chain PlayersThe Global top cold chain companies includes PRW companies fromArgentina, Australia, Canada, China, Denmark, Finland, Germany, Italy, Japan, Mexico, Norway, Sweden, Vietnam and United States of America• Americold logistics LLC , Canada, USA $ 1.62 billion• Versacold Argentina, Australia, Canada, New Zealand $ 900 million• Millard refrigerated services, Canada, USA $ 230 million• Nichirei logistics group inc., Japan, Netherlands, Poland $ 95 million• MUK Logistics GmbH, Germany $ 60 million• Nordic cold storage LLC, USA $ 27 million• Swire cold storage, Australia, Vietnam $7.5 million• Gruppo Marconi Logistica Italy
  25. 25. Value ParametersProduct Safety – Physical / Chemical / MicrobiologicalNetwork (Geographical coverage)Transportation TimeTemperature Range Availability (Product Range Covered)End to End Solutions (Integrated approach)Temperature & Humidity ControlTracking methods - Temperature and LocationTrust and Reliability of service providerRegulatory CompliancesSecurity*Carbon FootprintCost
  26. 26. Value Parameters (Revised)Network (Geographical coverage)Temperature Range Availability (Product Range Covered)End to End Solutions (Integrated approach)Temperature & Humidity ControlTracking MethodsReal time information feedbackSecurityCostTrust /Reliability of service providerFlexibility of service providerAbility to meet Tech SpecsRegulatory CompliancesCarbon FootprintTransportation Time *
  27. 27. StakeholdersUser Industries InfrastructureFruit and Vegetable Businesses Warehouse / Cold Storage OwnersFood Processing Businesses Refrigeration and Cold Chain EquipmentHorticulture Technology suppliersLivestock Producers Refrigeration Solution ProvidersSeafood Companies Specialized Equipment ProvidersPharmaceutical companies ICD’s (Inland Containers Depots)Hotels and Restaurants Sea / Air PortsLarge format retailers and wholesalers Transport VehiclesSmall Retailers SecurityLaboratories/ Healthcare CentersMedical Equipment ManufacturersOil refineries and chemical industriesCRO’s ( Contract Research Organisations)Authorities and AssociationsGovernment Agencies (Planning commission, customs, etc.)DCGI (Drugs Controller General of India )CDSCO (Central Drug Standard Control Organization )IARW ( International association of refrigerated warehouses )Global Cold Chain AlliancesAcademic and Research InstitutionsGrowers Association of Fruits and Vegetables
  28. 28. StakeholdersStakeholdersIntermediariesLogistics Service ProviderCold Logistics players (Shipping lines, Transporters, Container Companies)Warehousing AgentsSupply Chain Solution ProvidersPackaging Service ProvidersBanks and Financial InstitutionConsultants from the relevant spheres who are interested in knowledge building.OthersPower / ElectricityShelf LifeTemperatureHumidityDistanceSeasonal ChangesRoads Connectivity
  29. 29. Cold Chain: IndiaIn India 30 per cent of the fruits and vegetables grown in India get wasted because oflack of cold storage facilities and energy infrastructure.Only 8% of the produce is processed in India Commodity wise Capacity Utilization, 2000• The total cold chain market in Commodity Cold chain capacity India is estimated at $3.2 billion (Percentage) in 2009 Potato 92.82*• Expected to touch $9 Billion by 2015 Multi purpose 7.63 Fruit & vegetable 1.07• Growing at 20-25 per cent CAGR Fish 0.73• Cold chain industry Cold storage 88 % Meat 0.15 Cold transport 12 % Dairy & milk 0.68• 100 % FDI allowed Others (Pharma, Life 0.36 sciences)Source: IBEF Source: Global AgriSystem Pvt. Ltd. Report
  30. 30. Cold Chain: IndiaFood Sector User Industry Food India Growth ( CAGR )Processed Food $ 17.8 Billion 13.5 %Agriculture $ 200 Billion 3.8 %Branded Frozen Food $ 212 Million 20-25 % Source: Ministry of state for Food Processing Industries, CCI ReportBio-Pharmaceutical SectorUser Industry India Growth ( CAGR )Pharmaceutical $12 Billion 10-11 %Clinical Research $ 2.2 Billion 23 %Generic Drugs $ 11 Billion 17 %Healthcare $ 36 Billion 15 % Sources : AIMA, BCG, CII
  31. 31. Current State: Cold Chain IndiaIndia has a total of roughly 5,400 cold storages with a capacity of24 million MT, over 90 per cent of which are suitable to storepotato products only and are fairly archaic.State wise Distribution of Cold ChainsCommodity wise Distribution Of Cold Storages Source: http://agmarknet.nic.in/coldstorage.htm
  32. 32. Cold Chain: Daily Consumption in India• 9000 trucks of fruit• 14000 trucks of vegetables• 4000 trucks of potatoes• 8000 trucks of onions• 13 Lakh Chickens Source: Ingersol Rand at ICE EXPO 2010
  33. 33. Top Players in India1) Snowman Frozen Foods 4) RK Foodland• A joint venture between Gateway • A 35 year old 3pl company with pan-India Distiparks, Mitsubishi Corp & Nichirei presence. Logistics Group. Nichirei of Japan is the • Clients include Domino’s, Abbott, GSK, fourth largest in this business in the world Cadbury. Income $10.2 million in 20102) Fresh and Healthy Enterprises 5) GATI RedSun• A subsidiary of the state-owned Container • A leading cold chain company for perishable Corporation of India (Concor), which deals goods and frozen items in transporting containers via rail • The Hyderabad-based Gati recently bought• India’s largest CA store with capacity of a majority stake in the company. Gati plans 12,000 MT at Rai in Sonepat, Haryana. to scale up operations in cold chain logistics3) Coldstar Logistics 6) Adani Agrifresh• Incubated by Tuscan Ventures, a $ 50 • A logistics venture formed by the Gujarat- million venture capital fund in 2010. based $ 6 Billion Adani Group• 3 existing and 9 WIP warehouses across • Has invested $ 40 Millions in setting up 3 India CA stores in HP. • Promotes FARMPIK Brand in North India
  34. 34. COLD CHAIN: TRENDS IN INDIABackward Integration by Retail companiesMany Ice factories have converted their factories into cold storagesFOOD SECTORIncrease in frozen food consumption, meat, fish, canned, instant food itemsAcceptance of frozen vegetables, changing mindsetIncrease in per capita income increases dairy, poultry consumptionBIO-PHARMA SECTORDevelopment of vaccines,Increase in clinical trials logisticsIncreased share of refrigerated drugsTECHNOLOGICAL TRENDSSome reefers are equipped with a water cooling system, which can be used if thereefer is stored below deck on a vessel without adequate ventilation to remove theheat generated.Water cooling systems are expensive, so modern vessels rely more on ventilation toremove heat from cargo holds, and the use of water cooling systems is declining.
  35. 35. Classification of cold chains• Negative temp. (Frozen Material) Cold Chain• Positive Temp. (Chilled Material) Cold Chain• Single Product Cold Chain• Multi Product Cold Chain• Supply Side Cold Chain• Distribution Side Cold Chain
  36. 36. Cold Chain: Front End• Industry Expos : • Advertisements ICE EXPO (India Cold Chain Expo) • Company Websites Food Tec India • Direct Sales Dairy and Food Tech EXPO Food And Bev Tech• Trade Magazines Log India TransREporter Logistics Times FoodAndBev• Consultants ACR Consulting Cross Tree Consultants Fresh Food Technologies
  37. 37. Advertisements• Integrated cold chain service provider• Typical ads listing various services and stats.• QR Code and helpline to guide customers towards further action
  38. 38. Advertisements3rd Party and Warehousingsolutions provider
  39. 39. Advertisements• Backend products provider• Product display• State wise contact details, QR Code, toll free no.
  40. 40. Ads of Equipment providers
  41. 41. Cold Chain: Backend• Refrigeration system• Insulated Wall Panels, Metal Roofing system• Material handling equipments• Pallet racking system• Dock equipments and special doors• Special cold storage doors• Contractors and Civil Engineers• Vehicle reefer units• Vehicle supply Fresh line Processing equipment• Process Grading and Sorting• Consultants – Food Service Distribution Centre concept design consultant – Local Indian Architectural & Structural Consultant: Stup Consultants – Integrated Building Management System : Tata Honeywell – Supply Chain Solution consultant : Keogh Consulting Primary Research – ICE EXPO 2011 Source:
  42. 42. Backend: Refrigeration ProvidersWAREHOUSES (Static Refrigeration) Voltas Carrier Kirloskar Ingersoll IBK Alfa Laval Neumatic Rand RefrigerationMajor Compressor Manufacturers:FREON: Danfoss (Major market share – 50%), Emerson, BitzerAMMONIA: Kirloskar Pneumatic Ltd (60% Market share), Frick(Indian Companies)TRANSPORT REFRIGERATION (Refrigeration on the move)Carrier, Thermoking, Blue Star – Total of 70 % Market share Source: Primary Research – Akhil Lutharia, Consultant
  43. 43. Insulation Experts• Owens corning• Lamiflux• Bayer Material Sciences
  44. 44. Material Handling Equipment – Forklifts• Voltas Limited• Godrej & Boyce
  45. 45. Pallet Racking and shelving systems• SSI- Schaefer• Godrej & Boyce
  46. 46. Doors and Docks• Metaflex• Dan Foss• Lloyd Insulations (India) Limited• Salco• HiCon• Rite-Hite
  47. 47. Backend: Role of Consultants• Refrigeration Equipment Investigate mechanical equipment (evaporators, compressors, condensers, humidifiers, etc.), Recommend and implement changes, if necessary, to improve functionality or reduce operating costs, or both.• Utility Audits Review of previous and current configuration, usage and billings.• Ripening/Precooling Technology Optimize results with existing equipment, and also show how investments in new equipment could improve the bottom line.• Project Design & Management Needs Analysis, Design, and Construction Management for additional capacity.
  48. 48. Transportation First Mile & Last MileReefer trucks Delivery
  49. 49. Sample Cold Room
  50. 50. Cold Chain Cost breakup Capital Expenditure CostsConstruction cost Rs. 300-350 per sq ft.Cooling Equipment Rs. 18,000-20,000 per MTPower Consumption 3.5 KW per MTDiesel Generator Rs. 50-80 lakhsForklifts Rs. 4-7 lakhsPallets Rs. 500Reefer Trucks Rs. 25-30 lakhs for 9-13 tonnes Source: Anderson Consulting Report on cold chain
  51. 51. Cold Chain Cost breakupOffice + Logistics CostsCommunication System Rs. 8-10 lakhs(VSAT Links)Office infrastructure Rs. 50-60 lakhsComputing Power Rs. 5 lakhsWebsite Design Rs. 1-2 LakhWorking capital Rs. 3 crores Blanket Costs Rs. 50,000-52,000 per MT + reefer( Excluding civil constr.) vehicles Source: Anderson Consulting Report on cold chain
  52. 52. Drivers• Growth in organized retail Reliance, future, bharti- walmart, etc.• Growth in processed food sector $ 70 bn in 2010. Projected growth to $ 150bn by 2015• Changing consumption pattern• Increase in consumption levels 22 million MT supply against 31 million MT demand• Government Initiatives Mega food parks, Subsidies
  53. 53. Challenges• Lack of Road Infrastructure• Continuity of the cold supply chain• Uneven distribution of cold chains• High capital investment -Rs.80-90/sq.ft.($ 1.6-2.0) against Rs.30/sq.ft. ($ 0.6) in west• Power supply -17-18% power deficit -30% of total expenses against 10% in west• Management of different temperatures• Awareness and Mindsets• Error Irreversibility -Highly temperature sensitive cargo
  54. 54. Government Policy & Initiatives1. All the relevant schemes pertaining to the Cold Chain Industry have beenoutlined and a separate compendium has been prepared containing allthese schemes.2. A Special Purpose Vehicle has been set up for the Cold Chain Logistics3. Setting up of National Centre for Cold Chain Development (NCCD).NCCD Activities are:• Training and Capacity Building• Research and Development• Building standards through International benchmarking• Interaction with National / International bodies for development of cold chain infrastructure and trade in perishable
  55. 55. Government IncentivesSome of these incentives are• Budget 2010-2011 proposed a concessional import duty of five per cent with full exemption from service tax to set up and expand cold chains. The proposal also included duty-free import of refrigeration unit, which is required to make refrigerated vans or trucks. It also exempted trailers and semi-trailers used in agriculture from excise duty• The Budget exempted air-conditioning equipment and refrigeration panels used in cold chain infrastructure, including conveyor belts, from excise duty. It also extended excise duty exemption to conveyor belts.• Budget 2009-2010, Government of India introduced tax benefits for companies making investments in setting up cold chain facilities• Other past incentives include access to external commercial borrowings, 100 per cent FDI and provision of up to 25 per cent project costs involved in setting up cold storage facilities provided by the Government under the Capital Investment Subsidy Scheme
  56. 56. Need GapsLack of knowhow and trained manpowerLack of backward & forward linkages to supplementcold chain (High VDC - Variable Distribution Cost)High cost of power: Agricultural sector is offeredsubsidized power tariffs by the Government of India,Cold chain industry is instead subjected to industrialpower tariffs.
  57. 57. Need Gaps104 million metric tonsPerishable produce is transported between cities eachyear.Only 4 million metric tonsmoves via reefer mode.Optimization in reefer transport• Lack of two-way cargo movement/ back haulage• delay timely deliveries and reduce the efficient utilization of fleets.
  58. 58. Need GapsInfrastructure: Coolers, warehouses, refrigeratedtrucks, carriers, shopping malls and others. Needs to study thepotential risks and the return on investment (RoI)Third-party logistics:• Manual- handling reduces the product quality and life.• Lack of end-to-end solutions. One can also adapt state-of-the- art techniques such as cross docking that will reduce the transit times and inventory.FP industry: The Central government allows 100% FDI in thissector.
  59. 59. Need Gaps• Reefer location tracking challenges (Technology effectiveness & penetration low)• Discontinuous Energy Supply for hours (Backup power is very expensive)• Lack of 3 Party solution providers for small players. Geographical and service range expanding on project basis from big players. Logistics providers with air conditioned trucks, automatic handling equipment and trained manpower will provide end-to-end support.• Education and awareness. Low acceptance due to high costs
  60. 60. Fruit and Vegetable Businesses 2 2 3 1 1 1 3 2 1 1 2 3 Chocolates 3 1 1 2 1 2 3 2 1 2 2 1 Diary 3 1 2 3 3 3 3 3 1 2 2 3 Seafood Companies 1 2 1 2 2 2 3 2 1 2 2 2 Livestock Producers 1 2 1 2 1 2 3 2 2 2 2 2 Hotels 1 3 2 1 1 3 2 2 3 2 2 3 Quick Service Restaurants 3 3 2 3 3 3 3 3 3 3 2 3Large Format Retailers and Wholesalers 3 3 3 3 3 2 3 2 3 2 2 3 Small Retailers 1 2 2 1 1 2 1 2 2 1 1 2 Network (Geographical coverage) Temperature Range Availability Temperature & Humidity Control Tracking Methods Real time information feedback Product Security Cost Trust /Reliability of service provider Flexibility of service provider Technical Standards Compliance Regulatory Compliances Transportation TimeSegmentation Matrix
  61. 61. Strategy Canvas 6 5 4 3 Snowman 2 RK Foodland 1 Fresh & Healthy 0 ColdStar GATI Redsun Adani Agrifresh ColdEx
  62. 62. TRENDSPPP model for supply chains• Indian cold chain business is fragmented in a big way.• Organised retailers can give a boost to the much needed supply chain logistics in the country.• More private sector investment is required in the areas of infrastructure especially in warehousing, technology, cold chain and logistics in order to harness the full potential of the Indian food processing sectorIncreased FDI in Multi-brand Retail on the anvilThis will boost the investments in the cold chain infrastructure.Backward Integration by Large Format RetailersThese companies are investing in developing their own cold-chains eg. Future Supply Chains
  63. 63. TRENDSCenter’s NCCDThe Central government has established the National Centre for ColdChain Development (NCCD) as an autonomous body.The NCCD has constituted the following committees:● Technical specification and Standards Committees● Project preparation, Appraisal and Project Certification Committee● Training and HRD Committee● R&D Committee● Test Laboratory and Product Certification Committee● Application of Non-conventional Energy Sources in Cold ChainInfrastructure.● The establishment of cold chain is being supported throughprogrammes of NHM, NHB, APEDA and Ministry of Food ProcessingIndustries.
  64. 64. Thank you
  65. 65. reefersShipping linesMaersk Line, Evergreen Line, HamburgSud, Hapag-Lloyd, K Line, MacAndrews, MISC, CSAV-Norasia, RickmersLine, Safmarine,Yang Ming Line, UASC and ZimLine. India’s state-owned shipping companyShipping Corp. of India, is also a member.Source:http://www.livemint.com/2007/09/18020040/Shipping-refrigerated-cargo-fr.html