Cold Chain Logistics India perspective - Sector Analysis

1. Sector Analysis
By
Zubin Poonawalla
10-11-2012
Cold Chain
Logistics

2. Cold Chain Logistics
Sector Analysis
by
Zubin Poonawalla
zubinpoonawalla@gmail.com
10-11-2012
2nd May, 2013
2

3. • What is Logistics ?
• Introduction to Cold Chain Logistics
• History and Breakthroughs
• Global Scenario
• Indian Ice Age
• Value Parameters
• Users
3

4. Logistics is the management
of the flow of goods from
origin to destination to
meet customer requirements
Right Time, Right Place
@ Minimum Cost
Started as a business
concept in 1950’s
What is Logistics ?
Logistics
Transportation
Inventory
Warehousing
Information
Management
Packaging
Security
Source: Global Agri System Pvt. Ltd. Report4

5. What is Cold Chain Logistics?
Major Sectors : Food and Beverages, Bio-Pharmaceutical
The Cold chain logistics infrastructure
Supply
Procurement
•Precooling System
•Farms (Rural
Markets)
•Manufacturers
Transport
•Refrigerated
Trucks
•Refrigerated
Railway Wagons
•Refrigerated Cargo
Containers
Storage
•Cold Storage
•Warehouses
Transport
•Refrigerated
Trucks
•Refrigerated
Railway Wagons
•Refrigerated Cargo
Containers
End Customer
•Retail, Terminal,
Markets, Factory,
Ports, Airport
LOGISTICS
TEMPERATURE
CONTROL
(REFRIGERATION)
COLD CHAIN
LOGISTICS
5

6. Global Cold Chain Facts: Food Sector
Fruits &
Vegetables
Meat Fish & Seafood Dairy Products Beverages
In European and American developed countries, the rate of
refrigerated 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
6

7. Cold chain in Food Sector
Industry Temperature Standards
Banana
13°C
Chill
2°C
Frozen
-18°C
Deep Frozen
-29°C7

8. Temperature
&
Shelf Life
Product
Refrigerated Shelf Life
(Days)
Optimum
Temperature (Celcius)
Apple 90-240 0
Bananas 7-28 13.5
Bell Peppers 21-35 7
Cabbage 14-20 1
Eggs 180 1.1
Onions 30-180 1
Lettuce 12-14 0.6
Fresh Meat (beef,
lamb, pork, poultry)
14-65 -2
Oranges 21-90 7
Pears 120-180 -0.6
Potatoes 30-50 10
Seafood (shrimp,
lobster, crab)
120-360 -17.8
Strawberries 5-10 0.6
Tomatoes 7-14 12
8

9. Global Cold Chain Facts: Bio-Pharmaceutical
Pharmaceutical Biotech Vaccines Blood Products Clinical Trials
source: www.coldchainpharm.com/
Global Bio-Pharma Cold-chain market
FY12 : $5.1 billion FY13 : $6.6 billion
FY14 : 7 of the top 10 global pharma products in will require cold-chain handling
Vaccines growing on average 8% per year for the next five years
Source: www.fiercebiotech.com/press-releases/
9

10. Cold chain in Pharmaceutical Sector
10

11. Global Cold Chain- Pharmaceutical Sector
Sources: http://www.aircargoinsights.com/news/cold-chain-pharmaceuticals-worth-billions/
http://www.aircargoinsights.com/more-market/global-biopharma-demand-on-the-rise/
Bio-pharma logistics spending growth
Cold chain shipment growth by region
Cold chain logistics spending
expanded from $5.1 billion in FY08
to $6.6 billion in FY11
11

12. HISTORY & BREAKTHROUGHS
British fishermen used natural ice to preserve their fish stock piles1797
Movement of food from rural areas to urban consumption marketsLate 1820’s
Mechanical refrigeration and Air-conditioning plant patented by Dr. John
Gorrie
1851s
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
1870s
The refrigerated railroad car was patented by J.B. Sutherland of Detroit1867
600,000 tons of frozen meat was being brought into Great Britain alone.1910
Source: http://people.hofstra.edu/geotrans/eng/ch5en/appl5en/ch5a5en.html
Group of CFC’s - Freon used in refrigeration was developed.1920’s
1882 SS Dunedin, the first ship to complete transportation of frozen meat.
12

13. 1857 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-
1877
French engineer Charles Tellier and the steamship Frigorifique achieved the first overseas
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.
HISTORY & BREAKTHROUGHS
Source:
http://www33.brinkster.com/iiiii/inventions/reftranstimeline.asp13

14. 1877-
1878
The French vessel Paraguay, equipped with refrigeration machinery by Ferdinand Carré,
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-
1880
The Strathleven, equipped with a Bell-Coleman air machine and loaded with beef, mutton,
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.
HISTORY & BREAKTHROUGHS
Source:
http://www33.brinkster.com/iiiii/inventions/reftranstimeline.asp14

15. 1885 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 Windhausen's 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
HISTORY & BREAKTHROUGHS
15

16. 1899 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 Lloyd's 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
HISTORY & BREAKTHROUGHS
16

17. 1906 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-
1930
Mechanically refrigerated road vehicles, especially for the delivery of milk and ice
cream, began to appear around this time.
Source:
http://www33.brinkster.com/iiiii/inventions/reftranstimeline.asp
HISTORY & BREAKTHROUGHS
17

18. 1931 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 totalled 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
HISTORY & BREAKTHROUGHS
18

19. HISTORY & BREAKTHROUGHS
Temperature controlled movement of pharmaceuticals & medical supplies1950’s
Refrigeration system made its way into the trucking industry by roof-
mounted cooling device, patented by Fred Jones.
1949
In the United States, Food & 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 born
1950’s
Blown air containers were replaced by self powered containers.After 1960’s*
Fed ex using GPS for tracking. Fedex Sense Aware2010
Source: http://people.hofstra.edu/geotrans/eng/ch5en/appl5en/ch5a5en.html19

20. FY70, Tropicana orange juice was shipped in
bulk via insulated boxcars in one weekly
round-trip from Bradenton, Florida, to
Kearny, New Jersey.
By FY72, they were carrying around
1,000,000 US gallons (around 38,00,000
Litres )
HISTORY & BREAKTHROUGHS
Illinois Central Railroad #14713,
a ventilated fruit car dating from 1893
A circa 1870 refrigerator car
design. Hatches in the roof
provided access to the
ice tanks at each end
Top icing of bagged
vegetables in a
refrigerator car
Unloading frozen pork from
the Clan Line ship Clan
MacDougall in the mid-20th
century
20

21. BREAKTHROUGHS IN INDIA
In FY04, Safexpress Pvt Ltd first company in the Indian logistics
industry to use the GPS
Maersk India, had taken steps to facilitate research in the
production, harvesting, warehousing, & packaging of bananas. The
company provided end-to-end cold chain logistics support, besides
undertaking training of local banana exporters in cold chain
management.
21

22. BREAKTHROUGHS IN INDIA
Sun logistics, FlexiTank in FY10
22

23. Kale Logistics India Develop UPLIFT with ICAAI ( Air Cargo Agents Association of India )
BREAKTHROUGHS IN INDIA
23

24. Global Cold Chain Players
• 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
The Global top cold chain companies includes PRW companies from Argentina,
Australia, Canada, China, Denmark, Finland, Germany, Italy, Japan, Mexico, Norway,
Sweden, Vietnam and United States of America
25

25. Value Parameters
Product Safety – Physical / Chemical / Microbiological
Network (Geographical coverage)
Transportation Time
Temperature Range Availability (Product Range Covered)
End to End Solutions (Integrated approach)
Temperature & Humidity Control
Tracking methods - Temperature and Location
Trust and Reliability of service provider
Regulatory Compliances
Security
*Carbon Footprint
Cost
26

26. Value Parameters (Revised)
Network (Geographical coverage)
Temperature Range Availability (Product Range Covered)
End to End Solutions (Integrated approach)
Temperature & Humidity Control
Tracking Methods
Real time information feedback
Security
Cost
Trust /Reliability of service provider
Flexibility of service provider
Ability to meet Tech Specs
Regulatory Compliances
Carbon Footprint
Transportation Time *
27

27. StakeholdersUser Industries
Fruit and Vegetable Businesses
Food Processing Businesses
Horticulture
Livestock Producers
Seafood Companies
Pharmaceutical companies
Hotels and Restaurants
Large format retailers and wholesalers
Small Retailers
Laboratories/ Healthcare Centers
Medical Equipment Manufacturers
Oil refineries and chemical industries
CRO’s ( Contract Research Organisations)
Infrastructure
Warehouse / Cold Storage Owners
Refrigeration and Cold Chain Equipment
Technology suppliers
Refrigeration Solution Providers
Specialized Equipment Providers
ICD’s (Inland Containers Depots)
Sea / Air Ports
Transport Vehicles
Security
Authorities and Associations
Government 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 Alliances
Academic and Research Institutions
Growers Association of Fruits and Vegetables 28

28. StakeholdersIntermediaries
Logistics Service Provider
Cold Logistics players (Shipping lines, Transporters, Container Companies)
Warehousing Agents
Supply Chain Solution Providers
Packaging Service Providers
Banks and Financial Institution
Consultants from the relevant spheres who are interested in knowledge building.
Others
Power / Electricity
Shelf Life
Temperature
Humidity
Distance
Seasonal Changes
Roads Connectivity
Stakeholders
29

29. In India 30 per cent of the fruits & vegetables grown in India get wasted because of
lack of cold storage facilities & energy infrastructure.
Only 8% of the produce is processed in India
• The total cold chain market in
India is estimated at $3.2 billion
in FY09
• Expected to touch $9 Billion by
FY15
• Growing at 20-25% CAGR
• Cold chain industry
Cold storage 88 %
Cold transport 12 %
• 100 % FDI allowed
Source: IBEF
Commodity Cold chain capacity
(Percentage)
Potato 92.82*
Multi purpose 7.63
Fruit & vegetable 1.07
Fish 0.73
Meat 0.15
Dairy & milk 0.68
Others (Pharma, Life
sciences)
0.36
Cold Chain: India
Commodity wise Capacity Utilization, 2000
Source: Global AgriSystem Pvt. Ltd. Report30

30. Source: Ministry of state for Food Processing Industries, CCI Report
Cold Chain: India
User 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
Bio-Pharmaceutical 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 %
Food Sector
31

31. Current State: Cold Chain India
India has a total of roughly 5,400 cold storages with a capacity of
24 million MT, over 90% of which are suitable to store potato
products only & are fairly archaic.
State wise Distribution of Cold Chains
Commodity wise Distribution Of Cold Storages
Source: http://agmarknet.nic.in/coldstorage.htm32

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 201033

33. Top Major Players in India
1) Snowman Frozen Foods
• A joint venture between Gateway
Distiparks, Mitsubishi Corp & Nichirei
Logistics Group. Nichirei of Japan is the
fourth largest in this business in the world
Income $10.2 million in FY10
2) Fresh & Healthy Enterprises
• A subsidiary of the state-owned Container
Corporation of India (Concor), which deals
in transporting containers via rail
• India’s largest CA store with capacity of
12,000 MT at Rai in Sonepat, Haryana.
3) Coldstar Logistics
• Incubated by Tuscan Ventures, a $ 50
million venture capital fund in 2010.
• 3 existing & 9 WIP warehouses across
India
4) RK Foodland
• A 35 year old 3pl company with pan-India
presence.
• Clients include Domino’s, Abbott, GSK,
Cadbury.
5) GATI RedSun
• A leading cold chain company for perishable
goods & frozen items
• The Hyderabad-based Gati recently bought
a majority stake in the company. Gati plans
to scale up operations in cold chain logistics
6) Adani Agrifresh
• A logistics venture formed by the Gujarat-
based $ 6 Billion Adani Group
• Has invested $ 40 Millions in setting up 3
CA stores in HP.
• Promotes FARMPIK Brand in North India
34

34. COLD CHAIN: TRENDS IN INDIA
Backward Integration by Retail companies
Many Ice factories have converted their factories into cold storages
FOOD SECTOR
Increase in frozen food consumption, meat, fish, canned, instant food items
Acceptance of frozen vegetables, changing mindset
Increase in per capita income increases dairy, poultry consumption
BIO-PHARMA SECTOR
Development of vaccines,
Increase in clinical trials logistics
Increased share of refrigerated drugs
TECHNOLOGICAL TRENDS
Some reefers are equipped with a water cooling system, which can be used if the
reefer is stored below deck on a vessel without adequate ventilation to remove the
heat generated.
Water cooling systems are expensive, so modern vessels rely more on ventilation to
remove 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 :
ICE EXPO (India Cold Chain Expo)
Food Tec India
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
• Advertisements
• Company Websites
• Direct Sales
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. Advertisements
3rd Party and Warehousing
solutions 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 equipment's
• Pallet racking system
• Dock equipment's 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 ConsultingSource: Primary Research – ICE EXPO 201142

42. Backend: Refrigeration Providers
WAREHOUSES (Static Refrigeration)
Major Compressor Manufacturers:
FREON: Danfoss (Major market share – 50%), Emerson, Bitzer
AMMONIA: Kirloskar Pneumatic Ltd (60% Market share), Frick
(Indian Companies)
TRANSPORT REFRIGERATION (Refrigeration on the move)
Carrier, Thermoking, Blue Star – Total of 70 % Market share
Voltas Carrier Kirloskar
Neumatic
Ingersoll
Rand
IBK
Refrigeration
Alfa Laval
Source: Primary Research – Akhil Lutharia, Consultant43

43. Insulation Experts
• Owens corning
• Lamiflux
• Bayer Material Sciences
44

44. Material Handling Equipment – Forklifts
• Voltas Limited
• Godrej & Boyce
45

45. Pallet Racking & shelving systems
• SSI- Schaefer
• Godrej & Boyce
46

46. Doors & 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 & implement changes, if necessary, to
improve functionality or reduce operating costs, or both.
• Utility Audits
Review of previous & current configuration, usage & billings.
• Ripening/Precooling Technology
Optimize results with existing equipment, & also show how investments in
new equipment could improve the bottom line.
• Project Design & Management
Needs Analysis, Design, & Construction Management for additional
capacity.
48

48. Transportation
First Mile & Last Mile
DeliveryReefer trucks
49

49. Sample Cold Room
50

50. Cold Chain Cost breakup
Capital Expenditure Costs
Construction cost Rs. 300-350 per sq ft.
Cooling Equipment Rs. 18,000-20,000 per MT
Power Consumption 3.5 KW per MT
Diesel Generator Rs. 50-80 lakhs
Forklifts Rs. 4-7 lakhs
Pallets Rs. 500
Reefer Trucks Rs. 25-30 lakhs for 9-13 tonnes
Source: Anderson Consulting Report on cold chain 51

51. Cold Chain Cost breakup
Office + Logistics Costs
Communication System
(VSAT Links)
Rs. 8-10 lakhs
Office infrastructure Rs. 50-60 lakhs
Computing Power Rs. 5 lakhs
Website Design Rs. 1-2 Lakh
Working capital Rs. 3 crores
Blanket Costs
( Excluding civil constr.)
Rs. 50,000-52,000 per MT + reefer
vehicles
Source: Anderson Consulting Report on cold chain52

52. • Growth in organized retail
Reliance, Future Group, Bharti Group, Walmart, etc.
• Growth in processed food sector
$ 70 bn in FY10. Projected growth to $ 150bn by FY15
• Changing consumption pattern
• Increase in consumption levels
22 million MT supply against 31 million MT demand
• Government Initiatives
Mega food parks, Subsidies
Drivers
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 & Mindsets
• Error Irreversibility
-Highly temperature sensitive cargo
54

54. Government Policy & Initiatives
1. All the relevant schemes pertaining to the Cold Chain Industry have been
outlined & a separate compendium has been prepared containing all these
schemes.
2. A Special Purpose Vehicle has been set up for the Cold Chain Logistics
3. Setting up of National Centre for Cold Chain Development (NCCD).
NCCD Activities are:
• Training & Capacity Building
• Research & Development
• Building standards through International benchmarking
• Interaction with National / International bodies for development of cold
chain infrastructure & trade in perishable
55

55. Government Incentives
Some of these incentives are
• Budget FY10-FY11 proposed a concessional import duty of 5% with full
exemption from service tax to set up & 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 & semi-trailers
used in agriculture from excise duty
• The Budget exempted air-conditioning equipment & refrigeration panels
used in cold chain infrastructure, including conveyor belts, from excise
duty. It also extended excise duty exemption to conveyor belts.
• Budget FY09-FY10, GOI introduced tax benefits for companies making
investments in setting up cold chain facilities
• Other past incentives include access to external commercial borrowings,
100% FDI & provision of up to 25% project costs involved in setting up cold
storage facilities provided by the Government under the Capital
Investment Subsidy Scheme
56

56. Need Gaps
Lack of knowhow & trained manpower
Lack of backward & forward linkages to supplement
cold chain (High VDC - Variable Distribution Cost)
High cost of power: Agricultural sector is offered
subsidized power tariffs by the GOI
Cold chain industry is instead subjected to industrial
power tariffs.
57

57. Need Gaps
104 million metric tons
Perishable produce is transported between cities each
year.
Only 4 million metric tons
moves 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 Gaps
Infrastructure: Coolers, warehouses, refrigerated trucks,
carriers, shopping malls and others. Needs to study the
potential 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 this
sector.
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 Businesses2 2 3 1 1 1 3 2 1 1 2 3
Chocolates3 1 1 2 1 2 3 2 1 2 2 1
Diary3 1 2 3 3 3 3 3 1 2 2 3
Seafood Companies1 2 1 2 2 2 3 2 1 2 2 2
Livestock Producers1 2 1 2 1 2 3 2 2 2 2 2
Hotels1 3 2 1 1 3 2 2 3 2 2 3
Quick Service Restaurants3 3 2 3 3 3 3 3 3 3 2 3
Large Format Retailers and Wholesalers
3 3 3 3 3 2 3 2 3 2 2 3
Small Retailers1 2 2 1 1 2 1 2 2 1 1 2
Segmentation Matrix
Network(Geographicalcoverage)
TemperatureRangeAvailability
Temperature&HumidityControl
TrackingMethods
Realtimeinformationfeedback
ProductSecurity
Cost
Trust/Reliabilityofserviceprovider
Flexibilityofserviceprovider
TechnicalStandardsCompliance
RegulatoryCompliances
TransportationTime
61

61. Strategy Canvas
0
1
2
3
4
5
6
Snowman
RK Foodland
Fresh & Healthy
ColdStar
GATI Redsun
Adani Agrifresh
ColdEx
62

62. TRENDS
PPP 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 sector
Increased FDI in Multi-brand Retail on the anvil
This will boost the investments in the cold chain infrastructure.
Backward Integration by Large Format Retailers
These companies are investing in developing their own cold-
chains eg. Future Supply Chains
63

63. Center’s NCCD
The Central government has established the National Centre for Cold
Chain 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 Chain
Infrastructure.
● The establishment of cold chain is being supported through
programmes of NHM, NHB, APEDA and Ministry of Food Processing
Industries.
TRENDS
64

64. Thank you
65

65. reefers
Shipping lines
Maersk Line, Evergreen Line, Hamburg Sud,
Hapag-Lloyd, K Line, Mac Andrews, MISC,
CSAV-Norasia, Rickmers Line, Safmarine,Yang
Ming Line, UASC and Zim Line. India’s state-
owned shipping company Shipping Corp. of
India, is also a member.
Source:
http://www.livemint.com/2007/09/18020040/
Shipping-refrigerated-cargo-fr.html 66