How the COVID-induced lockdown was a ‘Moment Of Truth’ for the cold chain industry

The past five months of lockdown in India has caused a paradigm shift in the operations of businesses. The attempt to flatten the curve of COVID has coerced the shops and retail markets to remain closed. India is majorly an agrarian economy and is the largest producer of perishable produce where cold chain storage plays a pivotal role for the QSR (Quick Service Restaurants), wholesalers, and organized retailers who are the key users of cold chain services with a share of 70-75% and 10-15% respectively. With lockdown restrictions in place and irregularities in the opening of mandis, below are some factors which impacted the cold chain due to COVID:

Acceleration of e-commerce buying

With the lockdown imposed, people have been making a beeline for the e-commerce route to fulfill their consumption needs. It has led the food delivery apps like Zomato and Swiggy and other social commerce firms like Meesho, No Broker App, and Paytm to supply regular food essentials.

The pandemic has witnessed an uptick in demand for poultry and meat buying that has transitioned from local butchers to online. Fresh meat online startups like Licious, Zappfresh, and Fresh to Home are coming up with disruptive business models to supply fresh meat and poultry to homes.

The concept of farm to fork business model requires an efficient cold chain system since the perishable products are in transit from a farm that has to be delivered fresh to customers. That has driven the need for cold chain storage during Covid-19. According to the IMARC report, the frozen food market is expected to grow at 17% annually in the period to 2024. 

Impact from QSR and cloud kitchens

60% of the quick service restaurants are in malls, which are closed due to the lockdown. Quick-service restaurants and Cloud kitchens have seen a slump of 2-6% and in sales in the first quarter of 2020. The raw foods like jalapenos, olives, and bread which need to be stored in temperature-controlled environment couldn’t be supplied, causing a huge accumulation. Due to lack of cold chain warehouses, these raw food materials for QSR and cloud kitchens went to waste. 

Increase in storage of perishable inventory from agriculture produce

Due to hiccups in the movement of goods and closure of the market, the stock of rabi crop was supposed to flow into the market for sale but irregularities in the opening of mandis have impacted mostly on the surplus of rabi produce as the farmers cannot hold it for a longer time in cold chain containers. 

Government initiatives to strengthen cold chain infrastructure

The COVID-induced lockdown has brought restrictions in the export of agriculture and aquaculture products that has led to an excess stockpile of perishables where the current cold chain system is not adequate to store the surplus. Under Aatmanirbhar Bharat Abhiyan, the Government of India has announced an Agri-infrastructure fund worth INR 1 lakh to bolster the critical infrastructure of cold chains to store fisheries and shrimp produce, dairy products, and post-harvest management systems adjoining the farm gates.

With the outbreak of Coronavirus, the above factors have increased the reliance on cold chain supply that is attracting attention to strengthen the cold chain supply, that is to date partly organized. Developing a robust cold supply chain can counter the wastage of perishables hence, adding to food security during a crisis.  

This article has been authored by Mr Gopi G, Regional Business Manager South, Snowman Logistics Ltd. All views expressed are of the author’s own.

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