Australian and New Zealand Cold Chain Sector - The Road Ahead
The ANZ Cold Chain sector, which refers to the transportation and storage of temperature-sensitive goods, such as fresh produce, dairy, and pharmaceuticals, is an integral part of the region’s food and pharma Supply Chain. It plays a critical role in feeding the population and supporting broader responses to health initiatives, like vaccine roll outs, by ensuring that perishable goods are transported and stored at the appropriate temperature from the source through to the consumer.
In 2023, the sector is likely to face several challenges, but the opportunities for those willing to innovate and thrive are many. Here are a few key challenges and opportunities that we see as critical for the sector to engage with as we enter 2023.
Challenges
Labour Shortages
The ANZ cold chain sector relies heavily on manual labour, so with the NZ Government describing labour shortages as “the biggest issue facing New Zealand businesses”, and an unemployment rate of only 3.5% in Australia, we are likely to see a continued shortage of workers in 2023 impacting the sector. This could lead to increased labour costs and difficulty in finding and retaining employees. However, there may also be opportunities to use automation and other technological solutions to improve efficiency and reduce the reliance on labour. TMX recently supported our valued client Teys Australia in designing and managing the delivery of a 12,340sqm fully automated cold storage facility at the Port of Brisbane which included the installation of a high-bay automated storage and retrieval system (ASRS) and a multi-shuttle system.
Fuel Costs
As the cost of diesel continues to rise, the sector will need to find ways to reduce its reliance on fossil fuels and adopt alternative energy sources. Additionally, the cost of refrigerants, which are essential for maintaining the temperature of goods during transportation, has been increasing in recent years due to stricter regulations on their use.
Climate Change
Australia is already experiencing the impacts of a changing climate with every decade since 1950 being warmer than the one before it and our average temperature already up by around 1.44 degrees Celsius since records began in 1910¹. The story is similar in New Zealand where extreme weather events have occurred 4 to 5 times more frequently in the last decade. Indeed, 2022 was the warmest year on record in NZ, overtaking 2021 which broke former records². We live the reality of this through more frequent and severe heatwaves, bushfires, floods, and droughts and we have seen a range of these impact our Supply Chains in recent months and years. These events can disrupt the cold chain by damaging infrastructure, reducing the availability of refrigerated transport, and increasing the demand for cooling services. Now, more than ever, there is a concerted push from investors and consumers for the sector to adopt more eco-friendly practices and technologies; the smartest organisations are responding.
Longer Shelf Life Product
With the rise of e-commerce and the growing trend of online grocery shopping, there is a need for longer shelf-life products that can withstand the rigors of transportation and storage. Covid accelerated the growth of online grocery shopping beyond any former predictions. Indeed the market size of Online Grocery Sales in Australia grew 32.5% per year on average between 2018 and 2022³. In New Zealand, forecasts show that the share of online shoppers could surge to 83% by 2026⁴. It is estimated that up to one third of all food produced globally is lost or wasted. In Australia, this is due to a variety of factors such as overproduction, inadequate storage and transport, and consumer waste. Part of the solution requires industry to drive innovative packaging and storage solutions, as well as the adoption of advanced temperature-controlled logistics systems.
Throughout 2022, many of our clients made significant investments in renewable energy sources to power their new cold storage facilities, improved insulation in warehouse design, and implemented more efficient packaging and transportation methods.
Opportunities
Online Grocery Shopping and Home Delivery
It is anticipated that we will continue to see growth in this sector in 2023 leading to an increased need for cold chain logistics to support the transportation and storage of perishable goods.
Trade and Export
As the world’s population continues to grow, there is a growing demand for high-quality food products, and Australia is well-positioned to meet this demand with its abundance of natural resources and strong reputation for producing high-quality food products. Throughout 2022 we have seen significant growth opportunities for the Australian cold chain sector to tap into emerging markets, such as Asia and the Middle East, which are experiencing rapid economic.
Technological Innovation
To improve efficiency and reduce costs, many of our clients are now implementing sensors and data analytics to monitor temperature and humidity during transportation and storage. This allows them to reduce waste and ensure that goods are maintained at optimal conditions.
Locally Produced and Sourced Food Products
As consumers become more concerned about the environmental impact of their food choices, there is a growing preference for locally grown and produced products. This presents an opportunity for the cold chain sector to support and facilitate the distribution of locally sourced products.
The ANZ cold chain sector will continue to face challenges and opportunities in 2023, including the need to address sustainability concerns, the increasing demand for locally produced and sourced food products, and the potential for growth in exports.
To meet these challenges and seize the opportunities, it will be important for the sector to adopt innovative technologies and practices and work closely with stakeholders across the food industry to continue to play a vital role in the country’s supply chain and support the growth of these economies.