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Global Cold Chain Trends

A growing number of countries today are adopting temperature-controlled shipping for food products and pharmaceuticals. This is because consumer demand is rising for cold chain as it ensures food safety and fresh tastes. In the first of this two-part series of white papers, we're going to look at the overview and trends of cold chain. In the second, we'll examine countries with an advanced cold chain system in place as well as countries expected to have strong demand for cold chain in coming years.

1. Introduction

Cold Chain for Temperature-Controlled Supply Chain

Today, there is a heightened interest in cold chain across the food and retail industry. As households become prosper economically, people have started to adopt different life styles, having a particularly big impact on the way people enjoy food. As a result, we’re seeing an increasing number of businesses springing up and studies being conducted to diversify food products and improve their quality. Since cold chain, in particular, keeps the flavor and quality of food products unchanged and ensures safe supply chain and longer shelf life, demand for cold chain is growing.

Cold chain, a system that helps maintain a desired low- temperature range during transport or storage, is essential in the food business. In recent years, demand for cold chain is growing in the pharmaceutical and biotechnology industry as well.

In this white paper, we’re going to look at the latest global cold chain trends and key things to know about cold chain logistics. In the second of this two-part series of white papers, we’ll be looking at countries with an advanced cold chain system and countries that are expected to have more demand for cold chain in coming years.

2.  Cold Chain Management

Terminology in Cold Chain Logistics

It hasn’t been long since people started to use the term “cold chain logistics.” In other related business areas, people use terms like “temperature-controlled”, “low-temperature”, “fresh”, or “chilled/frozen” logistics. People in the U.S. also frequently use “refrigerated” to refer to both chilled (or cool) and cold (or frozen). Instead of logistics, supply chain or supply chain management (SCM) is also used to emphasize the process of delivering goods to end users.

To be more accurate, cold chain logistics refers to the storage or transport of goods in a low temperature-controlled environment. In fact, the term low-temperature logistics was widely used in some academic journals ten years ago. However, since low temperature isn’t adequate to deliver the meaning of both chilled (above 0°C) and frozen (e.g. meat & poultry products that need frozen storage for a long time), cold chain has become commonly used today. However, in practice, some still use chilled/frozen. In Japan, chilled even includes frozen.

In Korea, as a way to keep food product quality intact, the Food Product Rule Book defines 0°C to 10°C as the ideal temperature range for chilled products and -18°C or below as the standard temperature range for frozen food. In terms of food hygiene and safety, bacteria grow rapidly in the range of temperature between 5°C and 60°C and food starts to perish after a certain window of time. At temperatures below -9.5°C, food products are safe from being spoiled. While the Ministry of Food and Safety in Korea has designated temperatures for chilled products at between 0°C and 10°C, the range designated by the U.S. Department of Agriculture is from 0°C (32°F) to 4.4°C (40°F). In fact, Korea and Japan are the only countries in the world that have the 0°C to 10°C range for chilled food.

You can often find retail stores in Korea that keep chilled produce at above 4°C like 6°C. Because different chilled food products have different temperature requirements, Japan, a country known for being sensitive about food storage temperatures, has three temperature ranges which are then divided further. Korea mostly follows Japan’s temperature ranges with a few exceptions where they stick to customer requests. While details vary country by country, agricultural products (e.g. spinach, Napa cabbage, carrots, etc.) are generally kept at between 0°C and 1°C. The range is 7°C-10°C for potatoes, 13.5°C for bananas, and 15°C for sweet potatoes and tomatoes.

Cold chain logistics handles goods that require a temperature-controlled environment and temperature-sensitive ingredients or products. In general, there are two types of products that need cold chain transport—food products and pharmaceuticals. Food products can be divided into four categories—agricultural, fish, meat & poultry, and processed—and each requires different temperature ranges. Pharmaceuticals including biotech products are typically stored and transported at controlled temperatures of 2°C to 8°C. Because pharmaceuticals are linked directly to one’s life, they require a strict management, and temperature control is the first and foremost important factor.

[Figure 1] English Names Used in Europe for Cold Chain Temperatures

In the U.S. and Europe, chilled food products are mostly kept at about 4°C on shelves and in storage rooms. In Korea too, the HACCP in Food Product Rule Book requires food products to be stored at 5°C or lower. Today, experts say that storage temperatures closer to those in advanced countries are more effective in keeping food products clean and safe.

[Figure 2] Fruits & Vegetables on Whole Foods Market Shelves (4°C on Thermometer)

식품 콜드체인 시장

Since the largest countries by area or countries in a large economic bloc are well aware of the need for cold chain, they have a more advanced cold chain system in place. If a country is large by area and has a less advanced logistics environment, you cannot guarantee the quality of its food products since it takes a long time to transport temperature-sensitive products or perishables from producers to end users.

Although transport lead time has been reduced with the advance in transportation, popular goods like food products still require temperature control during transport. Therefore, countries with an advanced cold chain system are those with a large continent like the U.S. or China or those with a multinational economic bloc such as the EU. However, a large land size is not automatically translated into an advanced cold chain market. Countries also need an economic power that is as strong as an advanced nation in order to make investments in things like chilled/frozen equipment, construction of special warehouses, temperature-controlled vehicles, or temperature monitoring.

The cold chain logistics market can be defined as a market involving the transport and storage of temperature-sensitive products (TSPs) and the relevant IoT device market. Global free trade, efforts by governments around the world to reduce food waste, and a growing number of retailers trying to maintain controlled temperatures for food products are also boosting demand in the cold chain market.

The U.S. and European countries impose less import taxes on TSPs via free trade agreements as a way to promote the growth of the cold chain market.

In emerging countries, consumers, those in China in particular, have developed different tastes in diets like low-carb diets. With the technological advances in warehousing and transport, cold chain is forecast to continue to grow further. Following the trend, the Chinese government is supporting the sector to come up with innovative ideas and solutions.

The recent rise of e-commerce is also driving the growth of the cold chain market. Consumers’ growing preference for early morning delivery for fresh food has prompted people to buy groceries more online than offline. At the same time, freshness has become a decisive factor in one’s purchase. Now, this preference towards fresh food products has changed purchasing patterns from bulk buying of items with long expiry dates into buying in small quantities of items that need to be delivered quickly. As a result, the number of purchases has increased, and this, in turn, is boosting an exponential growth of the cold chain market.

In food supply chains, warehouse rent and transport fees are the primary revenue of cold chain logistics businesses. Today, cold chain logistics sales is growing at double digits due largely to China’s emergence as a big importer of food products, a growing popularity of fresh food in Europe, and an increase in e-Commerce purchases. In Southeast Asia too, cold chain sales is on the rise as exports of seafood products and tropical fruits continue to increase.

According to a report from Grand View Research, the global cold chain market size was valued at $168 billion in 2018 and is projected to reach $447.5 billion by 2025, growing at a CAGR of 15.1%. Global top companies in the cold chain market includes Americold Logistics LLC (U.S.); Al Rai Logistica K.S.C (Kuwait); Burris Logistics, Inc. (U.S.); Lineage Logistics (U.S.); Agro Merchants Group LLC (Netherlands); Swire Group (U.K.); Berlinger & Co. AG (Switzerland); and Henningsen Cold Chain Company (U.S.). 

Biopharma Cold Chain Market

Biopharma products, in particular, need temperature-controlled storage/transport and are subject to the pre/post-control of the Ministry of Food and Drug Safety as they’re directly linked to people’s lives. Korea’s pharmaceutical market is estimated to be 20 trillion won in size. Antibody containing products have to be stored at 2°C-8°C.

A further growth is also expected in the market related to GDP , the minimum standards a wholesale distributor must meet to ensure that the quality and integrity of medicines is maintained throughout the supply chain. The global pharmaceutical market is forecast to grow at a CAGR of more than 6% to reach about $1 trillion, 18% of which is accounted for by cold chain. Since 2017, global sales of biotech drugs has exceeded $300 billion in value. Pharmaceutical Commerce estimates that the global biopharma industry spent $15.7 billion in 2018 and $11 billion of them were spent in transport.

Transport of biopharmaceuticals requires strict standards and management as they have a direct impact on public health and safety. To be specific, pharmaceutical products should be kept at low temperatures (2°C to 8°C) under one’s strict liability. Therefore, their transport can be handled only by authorized logistics companies with GDP Certification for Pharmaceutical Industry.

Food Waste and Cold Chain

The Food and Agriculture Organization (FAO) of the United Nations estimates that 30% to 40% of the world’s total output of fruits and vegetables is discarded during storage or transport. This is why it’s important to keep temperatures low at warehouses and use adequate packaging materials to ensure fruits and vegetables don’t perish. In addition, according to a UN report, one-third (13 tons) of the world’s food produced for human consumption is wasted every year.

This is equivalent to half (approx. 2.3 billion tons) of the world’s grain production. The food, although it’s enough to feed people in poor countries, is just being discarded. In developing countries with poor infrastructure, there are also many cases in which food is thrown away because they’ve been perished during storage. Given that we can prevent hunger-related deaths by reducing food waste by one third, cold chain management plays an important role.

[Figure 3] Food Waste by Global Region

Cold Chain Packaging

Advanced packaging enables goods to be shipped via cold chain for a longer period of time. Thus, it leads to more purchases of goods that weren’t suitable for shipping such as meat, fish or seafood products. The advance in packaging can be a particularly great advantage for 3PLs as they can find new items to transport.

There are two parts in cold chain packaging—packaging unit and packaging materials. Packaging units are insulated containers for long-distance shipping, insulated boxes, ice packs, temperature-controlled pallets, etc. Cold chain packaging materials include polystyrene, low temperature tanks, expanded polystyrene (EPS), vacuum insulation panels, polyurethane, etc.  

Cold Chain Warehousing Capacity – Calculations & Statistics

Units of measure and calculation methods of cold chain warehousing capacity vary country by country. In Korea, people use the unit “py” of a temperature-controlled warehouse typically and its square meters officially. Square meters indicate the horizontal area of a warehouse. These days, however, as distribution centers are getting larger with more than two racks, a unit of volume should be used. Tonnage might not be quite accurate due to factors like racks, storage methods, etc.

From a point of warehouse owners, tonnage of shipments stored in the warehouse would be accurate. In China, people use cubic meters including the number of rack layers and convert them into tonnage. China reported in 2017 that its cold chain warehousing capacity (chilled) was 36 million tons. The country compares cold chain warehouse tonnage of each province and sets a target number every year to increase its capacity.  

In Korea, there is no official warehouse data yet on either warehouse size or tonnage. There’s only some data in square meters. Korea adopted warehousing approval system in 1970 but it was later replaced with warehousing business registration in 1991 which was abolished in 2000. For this reason, there was no available accurate data on the number/size of warehouses or refrigerated warehouses. However, with the revision of the Act on Logistics Facilities in 2011, warehousing business registration began to take effect in 2012 and some figures on warehousing started to be collected.

Yet, because warehouses for chilled and frozen storage are separately indicated and different acts use different standards, there are still no clear numbers on warehouses for chilled/frozen products. According to the National Logistics Information Center, as of 2019, Korea has a total of 1,586 cold storages (both chilled and frozen) whose capacity is estimated to be 13,490 km2. These are the sum of all chilled/frozen warehouses recognized under Act on Logistics Facilities, Food Sanitation Act, Meat and Poultry Sanitation Act, and Food Industry Promotion Act.  

3. Global Cold Chain Trends


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