Factors Driving the Growth of the Refrigerated Transport Market
Increasing International Trade of Perishable Commodities:
The growth of the refrigerated transport market is attributed to the increased trading of perishable commodities at a global level, owing to the lowering of tariffs, which enables ease of cross-border movement of these commodities. Apart from this, technological advancements in refrigerated systems, such as the production of technologies to reduce the environmental impact, are further expected to enable ease of operations for refrigerated transport service providers. The integration of multi-temperature systems is further expected to create growth opportunities for refrigerated transport service providers and frozen & chilled food product manufacturers. However, the market is marred by challenges such as difficulty in handling products during transportation, lack of infrastructure in emerging countries, and rising fuel costs.
The rising demand for chilled & frozen products, especially in the emerging Asia Pacific region, is expected to fuel the growth of the refrigerated transport market. Apart from this, local government expenditure in countries such as China and India for infrastructure development is further expected to boost the development of refrigerated transport services in this region. The market for refrigerated transport is estimated to be driven by the growth in population and urbanization. In other words, the growth of the refrigerated transport in a country is directly proportional to its growth in terms of population. Growth is estimated to be higher in developing countries such as India and China, where the number of refrigerated vehicles is lower than that in developed countries, based on requirement. Rising income levels in these countries have resulted in the growth of the organized retail sector, which requires refrigerated transport to source temperature-sensitive raw materials.
Technological Innovations and Advancements in Refrigerated Systems and Equipment:
Advancements in refrigerated transport technology have led to improved food safety; and reduced food waste, energy consumption, and environmental impact. The right combination of telecommunication, science, and information technology has enabled technological innovations in refrigerated systems and equipment.
The development of the refrigerated transport industry has resulted in the development of satellite and wireless technologies. Monitoring software, which evaluates temperature, humidity, oxygen, carbon dioxide, and ozone levels in a refrigerated container, is being developed by technology companies. The monitoring software provides real-time readings of each parameter through satellites or GSM and transmits the information to service providers. In refrigerated trailers and vans, wireless systems are being adopted to monitor the temperature. These systems focus on cellular technology. They feature a microprocessor and antennae along with a backup battery. By using these systems, the temperature for specific food types can be viewed in real-time during transit, with new readings available every five minutes along with recommendations for service providers on parameters such as temperature changes within each refrigerated unit. Such technological innovations can have a positive influence on the refrigerated transport market.
Commercial refrigeration is now suitable for many different environments; from supermarkets and convenience stores to cold storage warehouses, departmental stores, and hotels. These environments are equipped with advanced systems that reduce environmental footprint, commercial condensing units, and conveni-packs for medium and low-temperature refrigeration. For industrial refrigeration environments such as cold storage facilities, food processing plants, hypermarkets, and large supermarkets, solutions such as transportable low-temperature and medium-temperature deep freezers with fluctuating loads are available.
These advanced cold rooms help single-temperature trucks to maintain chillness even after several instances of door opening. These advanced cold rooms have a separate section for refrigerated containers where the opening area is sealed and attached to a tunnel-like structure where the temperature is maintained, and the food products can be loaded or unloaded without any hindrance caused by temperature fluctuations. The majority of new cold rooms constructed in developed countries such as the US, Japan, South Korea, and Europe are insulated with polyurethane. Multi-temperature trucks store different products at different temperatures using multiple-refrigeration systems. These trucks and trailers are segmented into flexibly sized compartments using curtain-like structures called skinny buns.
Multi-temperature compartments are similar to single-temperature compartments and use control and monitoring systems that assess the temperature of the refrigeration environment at regular intervals. Retailers using single-temperature trailers have to load multiple trucks to deliver multiple shipments. However, multi-temperature trucks combine these shipments in one load. This increases the carrying capacity by up to 60% depending on the design of the refrigerated unit and the materials used. The use of multi-temperature refrigerated trucks reduces emission and is economical. There is a positive growth trend in demand for these trucks, mainly in developed countries.
Regional Dynamics in the Refrigerated Transport Market:
Asia Pacific:
The Asia Pacific region is expected to dominate the refrigerated transport market. The region is backed by the rising trend in the consumption of chilled & frozen food products. Expansion of fast food chains such as KFC, McDonald's, and Domino's has increased the demand for both refrigerated transport service providers and chilled & frozen food manufacturers in the region. Apart from this, consumers are opting for ready-to-eat/cook food products due to their hectic lifestyles in this region. Additionally, factors such as an increase in the number of local refrigerated transport service providers and government initiatives promoting infrastructure development, further smooth en the refrigerated transport services in this region. For instance, the Chinese government made massive investments in the country’s transport infrastructure for 2018. These include increasing the volume of container ports by 15%. In the first 11 months of 2017, the country spent about $323 billion on this initiative according to the government data. Chinese transport ministry is also focusing on speeding up the construction of logistic hubs for enhancing transportation and storage functions in the country. These factors are expected to drive the refrigerated transport market in the region.
Frozen & chilled food products provide the option of convenience to consumers, along with maintaining their nutrition value; they are increasingly preferred by consumers in the emerging economies of Asia Pacific and South America, owing to urbanization and increased spending capacities of consumers. Multinational players such as Nestlé, Cargill, and Unilever have operations in South America. Meat products, dairy products, dehydrated & frozen products, and fish products are some of the largest segments in terms of sales. Developing countries such as India and Brazil are expected to create lucrative opportunities for the growth of frozen & chilled food manufacturers and service providers of refrigerated transport in coming years.
The usage of refrigerated transport is high in North America, as the region is backed by a well-established infrastructure along with high consumption of frozen & chilled food products in the region. Government initiatives to develop infrastructure facilities in the developing countries are expected to fuel the demand for refrigerated transport services in these countries.
The Americas:
The North American region is one of the key markets for LCVs, with robust infrastructure, distribution, and transportation systems driving the growth of light commercial vehicles in the region. There has been an upsurge in the cold chain industry in countries such as China and India, which has resulted in the increase in the sale of refrigerated LCVs in Asia Pacific. In Europe, there has been an increase in the demand for LCVs, which are not only light in weight but emit low levels of harmful emissions. The market for food services and food processing has grown, along with the increase in demand for ready-to-eat foods. The demand for refrigerated LCV is further fueled by the increase in the delivery of dairy products and pharmaceuticals by vans used for short-distance transportation. Moreover, easy finance options available for manufacturing fully built vehicles will contribute to the increase in the sales of refrigerated LCVs.
Advancements in transport infrastructure have created a window of opportunities for fast food chain giants such as McDonald’s to expand their presence at a global level. McDonald’s has over 400 outlets in India with a presence in over 40 cities. It has a partnership agreement with 2 companies; Vista Processed Foods (India) and McCain Foods India for offering chicken patties, French fries, and potato wedges; while fresh groceries are supplied by local growers and processors. These processed foods are then carried by a fleet of single-temperature and multi-temperature refrigerated trucks to the company’s distribution centers across the country.
Key Strategies Adopted by Major Players in the Refrigerated Transport Market:
Some of the major companies in the refrigerated transport market include United Technologies (US), Daikin Industries (Japan), Ingersoll-Rand (Ireland), CMA CGM Group (France), Hyundai Motor Company (South Korea), Schmitz Cargobull (Germany), Maersk Line (Denmark), Wabash National Corporation (US), Lamberet SAS (France), Utility Trailer Manufacturing Company (US), and Swift Transportation (US). These companies have been focusing on expansions & investments, acquisitions, agreements, and new product launches to increase their customer base in the market.
Tier-I suppliers such as Carrier Transicold (US), Thermo King Corporation (Ireland), and Daikin Industries Ltd. (Japan) have developed solutions for effective refrigerated transportation based on regulatory requirements and regional variances. These players have expanded their presence through partnerships, joint ventures, and expansions in high-growth regions. CIMC Group (China) is one of the market leaders in refrigerated containers, given its established presence and production capabilities. Utility Trailer Manufacturing Company (US), expanded its market presence by setting up a production & modification center for customized and complex trailers in Arkansas (US). Singamas Container Holdings (China), which manufactures refrigerated containers, also expanded its offshore container business by entering into a partnership agreement with Modex Group Ltd (Singapore).
Manufacturers in the refrigerated road transport category have been focusing on constant innovations for achieving optimal efficiency. Perishable commodities require cooling during transit, which, in turn, requires multiple electrical systems and lead to significant fuel and energy consumption. Therefore, cost-competitive alternatives for standard air-conditioning units are being developed by manufacturers, which will help them make better use of waste heat to cut emissions and costs.
Manufacturers in this market are also working on ways to design environment-friendly technologies. The application of hydrogen fuel cell instead of natural fossil fuels will significantly reduce carbon emissions and save energy in refrigerated trailers and trucks. Also, to reduce noise pollution, the refrigerated vehicle uses a belt-driven engine-mounted compressor, which is a quieter alternative to a diesel generator. In 2017, Carrier Transicold (France) showcased a new fleet of refrigeration units running entirely on hydroelectric power generated by a truck’s ultra-clean Euro 6 engine.
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