Global IT Spending in Cold Chain Logistics to Grow More than 8 Percent

Technologies include smart refrigerator systems powered by the Internet of Things, analytics and cloud computing.

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Technavio analysts forecast the global IT spending in cold chain logistics market to grow at a compound annual growth rate (CAGR) surpassing 8 percent during the forecast period, according to its latest report.

The research study covers the present scenario and growth prospects of the global IT spending in cold chain logistics market for 2016 through 2020. Based on geography, Technavio analysts considered the following regions: Asia and Pacific (APAC), Europe, Middle East and Africa (EMEA), and the Americas. In 2015, the Americas accounted for almost half of the share of the market with 48.25 percent. EMEA accounted for 28.24 percent and APAC accounted for the 23.51 percent of the overall market.

Technavio research analysts highlight the following three factors that are contributing to the growth of the global IT spending in cold chain logistics market:

  • Effective management of temperature-sensitive products.
  • Stringent regulatory and compliance norms.
  • Need to enhance connectivity and reduce energy consumption.

Effective Management of Temperature-Sensitive Products

“The lack of efficient cold chain systems, especially in developing countries, is primarily responsible for the wastage of temperature-sensitive products, such as food, vaccines and other products. The majority of the cold chain storage networks lack adequate temperature management systems. They also do not follow the desired temperature levels prescribed by regulatory guidelines,” said Amit Sharma, a lead analyst at Technavio for research on IT spending.

According to the World Health Organization (WHO), between 5 and 50 percent of vaccines, depending upon their types, are wasted every year.

The food industry is also suffering from a high rate of food wastage problems. As per the Food and Agriculture Organization (FAO) U.N. report, it was found that 1.6 billion tons of primary food products are wasted annually.

“Organizations are spending on technologies to address such problems. These technologies include smart refrigerator systems powered by the Internet of Things (IoT), analytics and cloud computing solutions. The logistics for perishable products that are temperature sensitive are specifically designed to manage them in fluctuating climatic conditions,” added Sharma.

Stringent Regulatory and Compliance Norms

Cold chain management systems should strictly follow the regulatory guidelines framed by government organizations, such as the WHO, the U.S. Food and Drug Administration (FDA) and the European Union Regulation for food and drug safety. The regulatory guidelines were framed to preserve the quality of products that are being stored in cold chain systems. Technavio notes that cold chain-related laws and legislations continue to evolve, and governments are working to regulate the increased complexities to include industry-wide standards in cold chain management systems.

Cold storage solutions comply with regulatory guidelines and eliminate the cost of implementing separate IT systems. Vendors in the market are offering IT-enabled cold chain solutions that comply with the regulatory and compliance guidelines. Cold storage service providers are implementing IT solutions that were benchmarked to industry-benchmarked safety standards. This saves cost to a great extent and helps users avoid penalties.

Need to Enhance Connectivity and Reduce Energy Consumption

Connectivity and robust infrastructure are the central pillars of supply chain management systems. Communication systems enhance the performance of logistics services and reduce costs with the help of advanced technologies (such as sensors and RFID). Wireless connectivity is required to connect smart devices (that populate cold storage chains) in remote locations. Intelligent transportation systems and adoption of vehicle telematics in logistic services enhance the communication systems.

In addition, sensor technologies are widely being implemented in the supply chain management services to track and monitor variations in temperature. The sensor technologies are adopted by more than 58 percent of the supply chain organizations globally. Cold chain operators are investing in smart sensor technologies to construct intelligent, cold chain management systems. Consequently, the adoption of sensor technologies in cold chain organizations increased significantly (in terms of connecting cold chain operators with fleet management systems).