The Cold Chain Revolution: Expanding Logistics Markets (Part 1)

What are the benefits of "cold"?

While temperature-controlled delivery is commonplace in Japan, the concept of 'cold delivery' is revolutionizing logistics and opening up huge markets globally. However, the situation in the world is different. The emergence of cold chain logistics is revolutionary and is opening up vast new markets. In this issue, we will introduce the new market that the cold chain is bringing to Africa and the technologies that are making it possible.

The implementation of a cold chain significantly impacts a region's standard of living and economic development. The main benefits of establishing a cold chain can be divided into four main categories.

1. maintaining food quality and safety. Establishing a cold chain ensures the quality and safety of goods such as food and pharmaceuticals. Proper temperature control prevents food spoilage and microbial growth, thereby maintaining product freshness and quality.

2. Stable supply of food products. The use of a cold chain makes it less susceptible to seasonal and climatic influences. This ensures a stable supply of food products and reduces the risk of hunger and food shortages.

3. Extended shelf life. The cold chain can be used to extend the shelf life of commodities such as food and pharmaceuticals. Proper temperature and humidity control reduces deterioration and alteration of goods and minimizes inventory losses.

4. Expand global market access. Establishing a cold chain allows goods such as food and pharmaceuticals to be transported to more distant regions and countries. This allows fresh products such as agricultural and marine products to reach markets around the world and meet demand.

These aspects make a huge difference in quality of life and economic wealth. Establishing a cold chain is particularly challenging in regions where infrastructure such as water, electricity, gas, internet, and paved roads are not yet fully developed. However, waiting for these infrastructures to be established will slow down the economic development of the region, so various companies, from large corporations to start-ups, are trying to establish a cold chain network in a way that is not bound by existing practices. Let us first introduce some of these developments, particularly in Africa.

African case studies

In Kenya, Vegpro Group has pioneered the use of refrigeration technology for exporting fresh produce, including flowers, fruits, and vegetables, to international markets in Europe and the Middle East. The company has been contributing to the modernization of agriculture and creating jobs on Kenyan soil for over 30 years. The company produces, harvests, sorts, processes, packages, and transports its own export produce according to each customer's requirements.

Freightwings Ltd, a freight forwarding subsidiary of Vegpro Group, has a large temperature-controlled warehouse on the grounds of Kenya's Jomo Kenyatta International Airport and exports approximately 550 tons of produce weekly to Europe and the Middle East. By establishing a system to deliver agricultural products in good condition that meet the standards required by Europe and the Middle East, the company has been able to earn stable foreign currency and contribute to the Kenyan economy. In 1990, the country's agricultural and fisheries GDP was US$77 million, which doubled to US$155 million by 2020. Not all of this can be attributed to Vegpro Group, but there is no doubt that the company's establishment of a cold chain in Kenya and its ability to improve and standardize the quality of food exports has contributed significantly to the development of the primary industry.

In countries such as Morocco and Senegal, investment in refrigeration infrastructure has led to the growth of the fishing industry. Japan is one of the countries that have benefited from this, and for example, 20-30% of the octopus imported to Japan comes from Morocco. With the introduction of refrigeration technology, these countries have succeeded in exporting high quality seafood to international markets, with the value of seafood exports growing from US$16 million in 2015 to US$28 million in 2022. Companies such as Comanav and Comarit purchase freshly landed fish from Moroccan markets, transport it refrigerated within the country, process it in processing, refrigeration, and freezing facilities built in coastal cities such as Agadir and Casablanca, and then transport it to European destinations in their own temperature-controlled ocean carriers. The company is expanding these markets by processing, refrigerating, and freezing its products in processing, refrigeration, and freezing facilities built in coastal cities such as Agadir and Casablanca, and then transporting and selling them throughout Europe by its own temperature-controlled ocean carriers. However, the fishing industry accounts for only 1.5% of Morocco's GDP, and 53% of this is still canned products, so there is still room for growth.

According to a report published by the Japan International Cooperation Agency (JICA) in 2020, access to refrigerated and frozen storage facilities is limited to a few companies, and the lack of a cold chain means that even today 40% of fish are discarded in the distribution process. The market is expected to expand through further expansion of the cold chain, taking advantage of its geographical accessibility to European and Middle Eastern countries with high demand for fresh fish, as well as to the eastern United States.

Other countries such as Uganda, Tanzania, and Rwanda have also seen growth in the dairy sector through the introduction of refrigeration technology, and the East Africa Dairy Development Project, led by Heifer International, has introduced refrigeration facilities and refrigerated transport systems to support the growth of the local dairy industry. The project is supporting the growth of the dairy industry in the region. Many of these countries have small dairy farms, and it has been difficult for individual farmers to afford large-scale cooling and quality control facilities. However, we have introduced a one-stop system that collects raw milk from individual farmers, checks quality, performs sterilization and cooling, and transports the milk to the destination in temperature-controlled vehicles. By achieving this, they were able to secure stable quality and quantity of raw milk, and as a group, have the ability to negotiate prices with major dairy companies.

The establishment of cold storage facilities in urban areas also facilitated the growth of food retail and distribution businesses. In Nigeria, for example, companies such as ColdHubs have deployed solar-powered refrigeration units in the country, enabling small farmers to efficiently store and sell fresh produce. This has created employment opportunities, reduced post-harvest losses, and improved food security. Without cold storage, 45% of post-harvest produce was discarded due to spoilage, costing farmers about 25% of their annual income.

And the cold chain revolution is enabling the safe and rapid transport of vaccines and blood products throughout Africa. Zipline is using its proprietary drones to deliver medicines from the sky in countries such as Ghana and Rwanda. The transportation of these temperature-controlled medicines is extremely difficult in countries with inadequate road infrastructure. Zipline stores temperature-controlled medicines in its own warehouses and delivers them immediately upon request from doctors, in the quantities needed. Zipline operates in Ghana, Rwanda, Kenya, Nigeria, and the Ivory Coast, serving more than 15 million people at over 10,000 medical facilities. Zipline is able to deliver by air in just 15 minutes, instead of 4.5 hours by land.

According to a study funded by the Bill & Melinda Gates Foundation, since becoming operational in 2019, Zipline has reduced vaccine stock-outs by 60% in Ghana and reduced lost access to vaccines by 42% for patients in need. It has also reduced the number of days of critical medical supply shortages by 21% and increased the types of drugs and other inventory at those facilities by 10%. Similarly, in Rwanda, we reduced blood product disposal rates by 67% and maternal mortality due to postpartum hemorrhage by 51%.

Japanese companies are also taking notice of these projects. Toyota Tsusho Corporation is developing a wide range of businesses in Africa, and in June 2018, it made an equity investment in Zipline in a Series C financing round and at the same time entered into a business alliance with Zipline to import and distribute pharmaceuticals handled by Gokals-Laborex Zipline has established a system for the delivery of pharmaceuticals handled by Gokals-Laborex Limited, a pharmaceutical import and distribution company of the Toyota Tsusho Group, to medical institutions in Ghana.

In addition, the company plans to use Zipline's technology to deploy a speedy cold chain using air routes not only to African countries with low population density and some areas in the United States, but also to remote islands and underpopulated cities in Japan in the future. There are several types of Zipline drones, but the Platform 2 model has a landing accuracy of 2 feet (60.96 cm) and is expected to be deployed as a means of transporting temperature-controlled goods to various locations, including urban areas. The Platform 2 model has a landing accuracy of 2 feet (60.96 cm).

Last but not least

We have explored various examples of how cold chain technology is driving economic development across Africa. The impact of "cold transportation" is a revolution that can save people from diseases, enrich their diets, and enrich their economies. As some of the projects and regions are still in the midst of their aspirations, we look forward to further business expansion in the future. However, the example of building a cold chain network using drone transportation, instead of transportation methods that require huge infrastructure costs and time, such as roads, fueling stations, and airport facilities, is an example of a project that will further develop in the African region. This example of building a cold chain network by drone transportation, rather than by roads, fuel stations, and airport facilities, which require huge infrastructure costs and time, has great potential not only for further business development in Africa, but also for use as an alternative to the last-mile transportation methods that have emerged in other countries.

We will continue to keep a close eye on the development of the cold chain business in African countries, as well as the development of new drone-based transportation. We hope that this article will be of interest to those who are considering business in the region and the establishment of cold chains.

References

• The world bank data_Kenya
• Vegpro Group Freightwings
• Morocco Exports By Category
• Moroccan Seafood Exports Hit New Record of $2.5 Billion in 2021
• World Bank Report Outlines Approach to Improve Morocco’s Fisheries
• Morocco aims to double value of seafood exports by 2020 | SeafoodSource.
• Morocco to review its fisheries partnership with EU | Reuters
• モロッコで日本の水産品鮮度保持技術が注目を集める | 事例・参考情報
• モロッコ王国 高度冷蔵保存技術導入による水産品の高度付加価値化に向けた普及・実証事業 業務完了報告書
• CMA CGM | Refrigerated Cargo
• East Africa Dairy Development Project | Heifer International
• ColdHubs
• アフリカで医薬品をドローン配送 日本では豊田通商に技術提供 Zipline – TECHBLITZ
• Zipline drones deliver one million COVID vaccinations in Ghana
• Technology | Zipline Drone Delivery & Logistics
• 日本市場でのZipline International Inc.との戦略業務提携～ドローン物流サービスの社会実装に向けて～ | 豊田通商株式会社
• 豊田通商によってジップラインのドローンが本格参入