Industries such as fruits and vegetables, dairy, chemical, and pharmaceuticals among others are critically dependent of the cold supply chain solutions. Refrigerated trucks ensure that the food is fresh by inhibiting the growth of bacteria while keeping the internal health standards. These trucks are used in the transportation of chilled food, seafood, vegetables and fruits. In addition, some refrigerated trucks also have a temperature control function, which allows to adjust the temperature according to the specific requirements of the commodity being transported in order to achieve the best fresh effect. These refrigerated trucks are also used to store and transport drugs and medicines as well as different chemical products since these need to be at a lower temperature to ensure their efficacy. These vehicles need to go through disinfection before they can be loaded with the good that needs to be transported in order to achieve the preservation of quality.
Rising purchasing power and living standards have boosted the demand for convenient food and beverage products. As the working population is growing rapidly, people are tend to consume packed food and beverage items that are easy to make and consume less time. As a result, food and beverage manufacturers are also continuously expanding their product portfolio to keep up with the intense competition in this industry. With globalization, global trade volume of perishable and temperature-sensitive food and beverage products is also booming at a tremendous rate which is constantly driving the growth of cold chain logistics sector. Thus, growing middle class population, combined with mushrooming global trade volume, is one of the prime drivers of global refrigerated truck market.
A flood of capital pouring into temperature-controlled logistics facilities have been witnessed in the past few years, with investors and buyers eager to snap up the facilities that support the food supply chain. Recent deals include:
With the booming popularity of online grocery shopping on account of proliferation of connected devices and increasing penetration of internet, customers are seeking same-day delivery of fresh food products which eventually escalates the demand for more and more cold-storage facilities and thus, more refrigerated trucks to transport these goods directly to consumers. The figure below shows the internet penetration as the percentage of population for the period 2012-2017:
Global Internet Penetration, Percentage of Population, 2012 to 2017
Source: The World Bank Group
Another major factor that is significantly driving these investments in cold chain logistics is the strict regulations and standards by governments and global organizations regarding the storage and transportation of perishable goods.There are also specific temperature requirements for certain categories of food products apply to food in order to eliminate the growth of pathogenic micro-organisms or the formation of toxins. Growing concerns regarding consumer health is pressurizing food and beverage companies to opt for efficient cold supply chain solutions and services. This, in turn, is positively impacting the global refrigerated truck market growth.
Global companies across chemical and pharmaceutical industries are investing heavily in the expansion of their R&D as well as production facilities so as to better serve their customers in different locations. In Germany, more than 60 per cent of chemical companies are involved in research activities, with R&D spending exceeds €11 billion each year. According to CEFIC, chemicals, including pharmaceuticals, became the second-largest industry in Spain in 2018, accounting for 13.4 per cent of manufacturing gross product of the country. Supportive government policies and measures to boost the domestic R&D scale is further contributing the market growth. The leading biopharmaceutical analytical and bioanalytical contract solutions provider, SGS, announced the investment of €3.5 million for a two-phase expansion project at its laboratory in Poitiers (France) in December 2018, implementing a 50 per cent increase in bioanalytical capabilities at the site by 2020. The UK government has also recently announced to increase its investment in R&D to £22 billion annually by 2024-25, almost doubling the £11.4 billion spent in 2020.
European Union (Eu-28) Trade-In Chemicals, Eur Billion, 2010-2018
The above figure depicts the trade value of EU-28 for the period 2010-2018 across the chemical sector. According to the EUROSTAT, the region was the largest exporter of chemical products in the world and the second largest importer after the United States in 2018. Also, the United States and Switzerland were the largest partners of the EU-28 for both imports and exports of chemicals in the same year. With ongoing rise in the chemical trade, the corresponding rise in the demand for safe and efficient refrigerated trucks will continue to bolster the overall market growth during the forecast period.
The recent global pandemic outbreak caused by the coronavirus has brought the global economy to a near standstill. As geographic borders has been closed, the cold chain logistics has also felt the hit. However, the increased production across chemical and pharmaceutical industries to deliver disinfectants and medicines in order to combat with this disease has somehow reduced the negative impact on the market growth. Moreover, a sudden rise in the growth of online grocery sales in order to curtail the transmission of COVID-19 has further brightened the market outlook for refrigerated trucks in both short and medium term.
ABOUT THE AUTHOR:
Anjali Joshi is a senior market research analyst at Knowledge Sourcing Intelligence. She oversees a team of analysts and is known for the quality of market intelligence she delivers to the clients which range from start-ups and Non-profit Organizations to Fortune 500 companies. Anjali’s keen understanding of international business and market dynamics, coupled with her years of experience working in this industry, allows her to analyse current and future trends across both global and clients’ target markets and help them in making informed decisions.