Research Report on Cold Chain Logistics Industry in China, 2017-2021
Cold chain logistics is an uninterrupted series of refrigerated collection, processing, packaging, storage, transportation and distribution activities and associated equipment which maintains a given low-temperature range to preserve and extend the life of products and to ensure the quality of perishable products.
The concept of cold chain logistics was introduced to China in 2008. In 2010, National Development and Reform Commission of China published Development Plan for Cold Chain Logistics of Agricultural Products. Later, some local governments also issued supportive policies, promoting the development of the cold chain logistics industry. Since the new Food Safety Law was issued in 2015, regulations on upstream and downstream food safety have been intensified, and therefore cold chain logistics further developed. Modifications to Food Safety Law and the publishing of Guidelines for Cold Chain Logistics Management of Medical Devices indicated more rigorous regulations on food safety of food and pharmaceuticals, promoting the development of the cold chain logistics industry. Cold chain logistics was also one of the priorities in the Thirteenth Five-year Plan (2016-2020). In terms of tax policies, in June 2016, Ministry of Finance and Ministry of Commerce jointly issued Notice on Central Finance's Support for the Development of Cold Chain Logistics. In the Notice, 10 regions, including Shandong, Henan and Chongqing, were among the demonstration regions which received financial support for cold chain projects. Overall, the Chinese government supports the development of cold chain logistics.
In terms of application, fresh food e-commerce took off in recent years. Many e-commerce companies have entered the fresh food home delivery market, stimulating investment in cold chain logistics. In the capital market, Square Cold Chain Equipment was listed in the first half of 2016 and Zhejiang Dong Ri incorporated cold chain business, significantly leveling up the awareness of cold chain logistics.
CRI estimates that in 2016 in China, over 130 million tons of goods were transported and distributed via cold chain logistics and the market size was over CNY 130 billion. Projected CAGR of the cold chain logistics market for 2017-2021 will be over 15%.
CRI market research shows that there is huge room for cold chain to grow in China. In 2016, only 20% of fresh products were circulated through cold chain logistics, far below the 95% in developed countries such as Europe, America and Japan. About 20-30% of vegetables and fruit perished during circulation due to lack of cold chain, incurring over CNY 100 billion losses per year. Too many vegetables, fruits and other fresh products perish during transportation and storage, increasing the operational costs of fresh food retailers such as supermarkets and stores. The promotion of cold chain systems could reduce losses by 30%-50% for fresh food retailers, thereby increasing profits.
The perishing of food is the major cause of potential food safety dangers and resources waste. In 2016, China produced over 80 million tons of meat, over 700 million tons of vegetables, over 200 million tons of fruit, over 20 million tons of dairy products and over 60 million tons of aquatic products. In addition, China also produces a lot of meat products and frozen food. Temperature fluctuation in refrigerated transport is one of the major reasons for the decline in food quality. These products are all perishable food which can be kept fresh by cold chain logistics.
According to CRI analysis, by the end of 2016, the total capacity of cold storage in China was about 115 million m3. The reserve of refrigerator truck is less than 100,000 and is concentrated in developed regions. China's cold storage ownership per capita lags way behind developed countries and even developing countries such as India.
In the coming years, cold chain logistics, a high-end sub-industry of the logistics industry, will be the target of many investors. E-commerce enterprises of fresh food spring up as e-commerce develops in China, which pushes the development of cold chain logistics to its high time. A number of e-commerce companies have already been engaged in the fresh food business. These include large e-commerce companies, such as Tmall and JD.com, logistics companies in the e-commerce business, such as SFbest and specialized fresh food e-commerce businesses. CRI estimated that in 2016, the market size of China's fresh food e-commerce market exceeded CNY 100 billion and CAGR from 2017 to 2021 will be over 50%.
Growing Chinese economy, residents' increasing income and improving urbanization make people pay more attention to food safety and willing to pay more for food delivered by cold chain, promoting the development of cold chain logistics in the food sector. The pharmaceutical sector and home care products sector also need cold chain logistics. For enterprises in cold chain equipment manufacturing and cold chain logistics, there are a lot of opportunities in the Chinese market.
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