China’s cold chain logistics industry, which now enjoys special status under the Chinese government’s macro economic control policy, will continue to strengthen and improve, while maintaining rapid operational growth. The industry was chosen as a favored industry because of its importance in maintaining public health and food security. At the same time, disposable incomes in China are rising, and food safety is becoming more of a concern for individual consumers.
Snapshot.
According to recent studies conducted by the International Cold Storage Association, only 15% of products requiring temperature control were handled correctly in China, and only 10% of vehicles that are used for perishable products are equipped with cold storage equipment, not just ice cubes or ice bricks. Most of the logistics systems do not have any temperature control at all. As a result, more than 30% of the agricultural products produced in China are wasted during transportation. Due to lack of proper handling, product quality of the remaining 70% is in question. Food safety is becoming more of a concern for consumers and a complete system for cold chain logistics is in demand.
In 2015, meat production in China exceeded 80 million tons, vegetable 700 million tons, fruit 260 million tons, dairy products 27 million tons and seafood 60 million tons. Besides, large amounts of meat and frozen food are produced every year in China too. Temperature fluctuation in cold storage and transport is one of the main reasons for food quality decline. To ensure those perishable foods' freshness and quality, cold chain logistics is needed.
At the end of 2014, China had a freezer capacity of about 120 million cubic meters and less than 60, 00 refrigerator vehicles, lagging far behind developed countries in per capital terms.
Outlook
As a high-end sub-industry of logistics, cold chain logistics will become the focus of many investors in the next few years. As e-business develops in China, e-business enterprises operating fresh food are springing up and the supporting cold chain infrastructure. Many e-business companies in China have got into the field of fresh food, for example, large e-business enterprises like Tmall and JD have published their own fresh food strategy. Besides, logistics enterprises like SF Best of SF Express are conducting e-business and a bunch of professional fresh food e-business enterprises like Too Too Organic Farm are developing fast too. According to CRI's estimation, the market size of fresh food e-business was about CNY 100-120 billion and CAGR during the period of 2016-2020 will exceed 50%.
Currently fresh food e-busines companies hardly invest in cold chain equipment but they indirectly force the construction of cold chain distribution networks. Enterprises such as JD and Tmall are still weak in cold chain warehouse, logistics delivery system and door to door delivery where they mainly cooperate with a third party cold chain logistics companies.
The cold chain logistics network can be divided into two parts: cold chain home delivery and cold chain artery, the former belonging to express and less-than-carload logistics while the latter involving supply chain management and third party logistics. Cold chain logistics is a sub-industry of logistics, with the largest potential market despite its complex operation and high barrier to entry. Cold chain logistics will be one of the fastes growing sub-industries of logistics in China in the next few years.
With sustained consumer growth, a fast increase in demand for food, drugs and cosmetics: the cold chain logistics industry in China will undergo a transformation enableling investment opportunities in China for cold chain equipment manufacturers and cold chain logistics enterprises.
Companies.
47 qualified companies currently vie in the competition for refrigerated trucks. Among the top players including CIMC (Shandong), Zhengzhou Hongyu, Henan Bingxiong, Henan Frestec, Zhenjiang Speed Auto and KF Mobile, CIMC (Shandong) occupies the Shandong market, and seizes market share in Guangdong, Zhejiang, Hubei and other places; Henan Bingxiong performs outstandingly in Northeast China, Shanxi and Inner Mongolia; Zhenjiang Speed Auto and KF Mobile focus on East China and dominate the East refrigerated truck market. Zhengzhou Hongyu not only takes a favorable position via giants such as Shuanghui, Yurun, Topin, Sanquan and Synear in Henan, but also makes some achievements in Beijing, Hebei, Ningxia, Jiangsu and other markets.