The significance of cold chain for a national economy

The cold chain is one main artery of the global, intermodal supply chain. Its impact on national economies is significant, making regional products available worldwide. This post discusses New Zealand as an example of the impact of the global and regional cold chain.

Due to its geographic isolation, New Zealand industries and exporters have been forced to experiment and innovate, with the result that many technologies and practices developed in New Zealand have been pioneering. At the beginning of the 20th century, most efforts tended to focus around improving reliability and energy efficiency in meat refrigeration.

Today, approximately 45% of all exports from New Zealand are food products or by-products, and an estimated 60% of these are exported in the refrigerated state. The leading food sectors in terms of volume and income are the dairy industry, the red meat industry, the horticultural industry and the seafood industry.

New Zealand food exports form part of some of the longest cold chains in the world. Responsibility for temperature integrity in the cold chain is placed on the processors and exporters and is overseen by the Ministry for Primary Industry of the Government of New Zealand. Currently, the major research theme related to the cold chain in New Zealand is focused on optimising chilling and freezing processes for a shelf-life extension.

Beef and lamb products dominate red meat exports, with the United States, the United Kingdom and China being the three largest export markets. Most of the meat is exported frozen, but approximately 5% of beef and 15-20% of lamb products are exported chilled.

Cheese and butter are the major dairy exports that require refrigeration (although milk powder is the largest dairy export product by volume). Butter is commonly stored frozen to reduce the rate of lipid oxidation that causes spoilage.

The New Zealand fruit industry, with the exception of unrefrigerated wine, is dominated by the export of whole fresh products. Kiwifruit, apple, and avocado represent the bulk of the products, while other export markets, such as blueberry and cherry, are emerging.

Due to the relatively low volumetric efficiency (kg/m3) of packing that is a constraint of fresh produce, the volume of maritime cool-chain equipment used is substantial. In 2016, 68 chartered, refrigerated ships and a further 10,500 refrigerated containers were required to export New Zealand kiwifruit to 58 countries.

Due to the success of New Zealand export activity and the rise in online grocery and food delivery volumes mirroring international trends, cold storage-related property has been identified as one of the leading growth sectors in the industrial property market. The secure and safe storage of COVID-19 vaccines is also contributing to the ongoing high demand in the cold storage sector in New Zealand.

The broader cold chain – including refrigerated containers, blast freezers and chillers, cold rooms, dedicated cold storage warehouses and refrigerated transport – is vital to New Zealand’s economy, founded on the primary sector.

Because of the downstream effect of pandemic-restricted trade and disrupted supply chain movements throughout 2020, cold storage became somehow scarce, and prices for cold storage space in New Zealand increased. Due to the specialised nature of the sector, developing purpose-built cold storage facilities requires deep pockets – particularly as energy efficiencies are sought – and the ongoing maintenance costs over a facility’s lifespan are also significant. As a result, supermarkets are investing heavily to create more resilient supply chains and ramping up their e-commerce capabilities to reduce travel and delivery times.

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