Cold chain industry sees 10% annual growth since 2020

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  • The cold chain industry sustained an annual growth of 10% since the Philippine Cold Chain Industry Roadmap was launched in late 2020, according to the Cold Chain Association of the Philippines
  • Industry capacity is at around 600,000 metric tons (MT) from 400,000 MT in 2020
  • The industry’s outlook remains positive
  • Growth opportunities depend largely on economic recovery and agribusiness development strategies of government

The cold chain industry sustained an annual growth rate of 10% since 2020, or when the Philippine Cold Chain Industry Roadmap was launched, statistics from the Cold Chain Association of the Philippines (CCAP) show.

The growth rate is roughly in line with the roadmap target to increase cold storage capacity by 10-15% or 50,000 pallets annually.

RELATED READ: PH cold chain roadmap eyes up to 15% annual capacity growth

CCAP president Anthony Dizon said the growth confirms “the high importance that Filipinos put on food sufficiency despite adverse circumstances.” CCAP is vice chair of the National Cold Chain Committee created under the roadmap.

“This also signals the evolution of consumer preference to e-commerce sourcing methodologies which necessarily use cold chain technology,” he told PortCalls in an email.

Currently, industry capacity is estimated at 600,000 metric tons (MT), with 450,000 MT servicing meat and poultry, 100,000 MT fruits and vegetables (primarily onions and bananas), and 50,000 MT fisheries and other products.

The current capacity is 50% more than the 2020 estimated capacity of 400,000 MT.

The Board of Investments in December 2022 launched the Philippine Cold Chain Industry Roadmap, which aims to provide a stakeholder-driven, inclusive and market-oriented roadmap to guide the industry in the coming years and adapt to the “new normal.”

Dizon said the industry has “benefited greatly from the policies and strategies enunciated in the National Cold Chain Industry Roadmap.”

In particular, he mentioned provisions of the Corporate Recovery and Tax Incentives for Enterprises Act and the amendments to the Public Service Act, which he said “sparked serious interest among local conglomerates and foreign entities in becoming industry stakeholders.”

Dizon said they hope the supply chain planning parameters that the cold chain industry is subject to “allow us to maintain an average capacity utilization of 80-85% for the year.”

International developments worth watching

He added: “While we recognize there are seasonalities that affect our operations, we are more watchful of the international circumstances that may affect our supply chain and bring back a recurrence of the overflow situation in [the second semester] of 2022.”

Dizon said the meat and poultry “is a bit sensitive at this point essentially because we are still observing the developments with respect to ASF [African swine fever] and AI [aviation influenza].

“If these phenomena persist, our capacity utilization will be determined by the influx of import volumes which are dependent on supply chain circumstances over which we have no control.”

Plus there is the onion shortage, “where it was clearly pointed out that there is insufficient capacity relative to production output at harvest time.”

Dizon said this scenario can only be addressed “via a wholistic government approach rather than the patchwork solutions that are currently being employed.”

He noted: “As we make progress in our advocacy for food safety which is further embellished by existing climatic conditions which obviously works against wet market food distribution practice, we expect that awareness of the benefits of cold chain practice will create natural growth for the industry,” adding this is why the outlook for the industry continues to be positive.

“Further, if the agri development programs of this government take root, and with the support of technology, agricultural productivity should also augur well for industry development.”

Dizon reiterated, however, that opportunities for growth depend largely on economic recovery and agribusiness development strategies of government.

“We are only one of the components of the food supply chain,” he pointed out.

Dizon said the power supply situation and the cost of power will continue to be a major concern for operations this year, adding “We have made the necessary adjustments to avail of renewable power sources but understandably that only addresses a portion of our requirements.”

In the meantime, he said cold storage operators “vigilantly assure” themselves of backup power with the availability of our generator sets in case of emergencies. – Roumina Pablo

RELATED READ: PH cold chain database to be launched in 2023