Cold chain pie to nearly double in five years

CRISIL Research expects three key segments – meat, seafood and bio-pharmaceuticals – to buoy growth of the cold chain industry in the next five years. These segments cater mainly to the export markets, where organised players are preferred due to stringent quality requirements and regulations. The agency expects the cold-chain industry to log a compound annual growth rate of 13-15 per cent in the five fiscals through 2022, compared with 11-13 per cent in the previous five. This will swell the industry to Rs 47,200 crore in fiscal 2022 from Rs 24,800 crore in fiscal 2017.

The bio-pharmaceuticals segment is heavily dependent on cold chains. This is particularly so because stringent US FDA regulations necessitate that products such as vaccines, serums, and blood plasma be monitored critically. Biopharma exports are expected to log a compound annual growth rate (CAGR) of 18-20 per cent in value terms between fiscals 2017 and 2022. That would lift the share of exports in the segment to ~55 per cent, from 45 per cent as of fiscal 2017.

The report states thatw hile most reefer rentals players operate in multiple segments for better margins and diversification, a few target only the pharmaceutical and biopharmaceutical segments where margins are higher due to the sensitivity and quality to be maintained. The fragmented nature of the industry also contributes to lower rentals, while unavailability of return load leads to inefficient utilisation of reefer vehicles.

Says Binaifer Jehani, Director, CRISIL Research, "Investment in cold chains and reefers suffers due to lack of first and last mile connectivity. Besides, stiff competition and low preference of end-user industries to transport via reefers (as it increases costs) restricts private players from investing in the segment. We therefore believe greater adoption of the integrated cold chain model will help improve utilisation, and thereby draw investments."

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