From Vaccines to Ice Cream: How Cold Chain Services Support the U.S. Economy
August 24, 2022
Francys Veras is an International Trade Specialist and Thibault Denamiel is an intern in the Office of Supply Chain, Professional and Business Services.
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Do you know how your fruits, meats, and vaccines are transported? The perishables in your local grocery store and the vaccines at the pharmacy all rely on cold chain services to get to you. Throughout the COVID-19 pandemic, the services provided by the cold chain logistics sector became particularly vital, as constant and verifiable temperature control during transportation and storage is required to maintain the potency and guarantee the efficacy of vaccines. In the United States alone, the cold chain sector has delivered over 750 million COVID-19 vaccine doses. Beyond vaccines, the cold chain sector has become increasingly vital to the global supply chain as a whole: it provides significant economic growth opportunities in both developed and developing nations. In the Commerce Department’s recently published Cold Chain Services Report, we provide an overview of the sector, present an update on the most prevalent cold chain challenges and developments, and highlight cold chain opportunities for U.S. businesses as they strive to refine their supply chain practices.
From Manufacturer to Consumer: The Cookies N’ Cream Journey
Before diving into the key findings of the report, let us first define cold chain logistics. The cold chain can be divided into three main categories: temperature-controlled storage, refrigerated transportation, and cold packaging methods. Let’s paint a picture: imagine a hot summer day – no AC and humidity is high. Buying an ice cream to cool down sounds like a good idea, but how did your favorite cookies n’ cream ice cream get to you? In order to maintain ice cream quality from the manufacturing plant to the consumer, the ice cream must be transported in a refrigerated truck – reefers – from the manufacturer to a refrigerated warehouse. From there, the ice cream will be delivered in reefers to retailers and finally stored in walk-in freezers before making it to the frozen aisle. Ice cream is but one product category that requires cold chain logistics. Now imagine all the other perishables and medicines that necessitate temperature-controlled services to move from start to finish – chilly!
Cold, Hard Facts: Recent Challenges and Developments
The report identifies several challenges facing the cold chain sector. Environmental sustainability issues, warehouse and labor shortages, and public health concerns all figure prominently. Despite technological advances, over 1 billion metric tons of global food waste are created per year, due primarily to a lack of proper facilities, inadequate food handling processes, and improper personnel training. In fact, it is estimated that each year the United States produces 170 million metric tons of carbon dioxide equivalent greenhouse gas (GHG) emissions as a result of food loss and waste. Increased investment in the cold chain industry, alongside more rigorous standards emphasized by the U.S. Food Safety Modernization Act, would help alleviate these losses and improve health and environmental outcomes.
Another significant sustainability issue concerning cold chain is the level of fossil fuels and refrigerant gases needed for cooling systems, which regulators in the United States and globally have been trying to address. For example, refrigerant gases are being phased down through international commitments like the Kigali Amendment to the Montreal Protocol and the recent passing of the American Innovation and Manufacturing Act (AIM), while the industry itself is updating outdated refrigeration equipment in order to become more energy efficient.
The strong growth of the cold chain has created challenges. An increase in demand for cold chain services since the pandemic’s start, spurred by the growth of e-commerce, coupled with shipping delays throughout the supply chain, has pushed warehouses to capacity. In addition, the shortage of labor has led to an increased shift to automation. The dry container market has seen highly profitable rates during the pandemic, with refrigerated containers at times used to ship dry cargo, causing a shortage of reefer containers.
Keeping it Cool: Looking Beyond the Pandemic
Growth opportunities for U.S. cold chain businesses exist, ranging from adopting sustainable supply chain practices to exporting cutting edge services that will strengthen international cold chain systems. As a fundamental component of a sustainable and economically viable global supply chain, the cold chain sector must work to reduce its carbon footprint. The industry can accomplish this by updating refrigeration systems, utilizing state-of-the-art technologies to improve transparency, and producing reusable packaging solutions. The pandemic highlighted the need for reliable cold chain networks internationally. U.S. cold chain services providers can explore top markets and prepare competitive market entry strategies with help from ITA trade and commercial specialists.
To learn more about the recent challenges and developments facing the U.S. cold chain sector and how we can help you export your cold chain services abroad, contact our team.