Cold supply chain or cold chain is a common concept in developed countries. It may be interpreted as a supply chain capable of controlling and maintaining suitable temperatures to preserve goods with various temperature requirements, in order to extend shelf life of goods that are sensitive to high temperatures such as agricultural products, aquatic products, frozen-processed products, cut flowers and pharmaceutical products, especially vaccine.
In terms of structure, cold chains consist of two basic logistics systems: (1) The refrigerated warehouse network which is well-controlled in temperature to preserve sensitive and perishable items. (2) The refrigerated transport system including various means of transport such as trucks, refrigerated containers, equipment specialized for transport and forwarding operations, maintaining the required temperature.
Depending on product types and specific requirements for time and distance as well as the intended use of goods in the supply chain, the cold chain will provide suitable temperature ranges for the product throughout the supplying process with the following common temperature standards: Deep Frozen level, from -28 to -30°C, the coldest level for transporting seafood. Frozen level, from -16 to -20°C, mainly used for transporting meat. Chiller level, from 2 to 4°C, the standard temperature in the refrigerator and often used for transporting fruits and vegetables for optimal shelf life. In addition, the range from 2 to 8°C is suitable for preserving conventional pharmaceutical products. The temperature range from 12 to 14°C is suitable for the banana supply chain, one of the world's most productive and transportable fruits.
In high-quality cold chains, equipment for monitoring and controlling temperature are top priorities as they allow precise conditions for the preservation of products. The cold chain pay close attention not only to the temperature and humidity conditions facilitated to products, but also to the time factor, therefore ensuring the supply speed. In order to create these advantages, the organization of cold chains is usually focused on three main components: Furnish equipment for safe, consistent storage and transport of goods in a controlled climate. Train managers and staff with adequate expertise in managing, operating, and maintaining specialized equipment. Establish procedures to manage operational processes, control procedures, and optimize use of equipment.
By creating appropriate temperature and humidity conditions for goods during the fresh cycle adaption period of perishable products, the cold supply chain brings practical benefits in reducing manufacturing and sales costs, increasing efficiency, reducing loss for the supply chain of perishable products.
Increase value of perishable products by maintaining and extending the shelf life of products in a safe condition. Studies in India and China show that their agricultural products have very low added value, in India (7%), China (23%), while the figure in developed countries is 100%. Use of cold chain will extend the use date of fruits and vegetables from 2-3 days to 7 days when storing them at home, as well as increase the shelf life at the store from 3 to 7 days and reduces the loss rate by 60-70%.
Increase customer satisfaction through meeting requirements of protecting health and the environment. Enhance life quality and contribute to promoting the economy towards a sustainable level.
Through good storage and preservation from the cold chain, the quality of goods is maintained, the freshness is guaranteed, the quantity of lost goods is reduced, leading to the increased quantity of goods supplied to the on-site market, thus better satisfying demand for local and domestic consumption. Having less loss means higher product volume, so perishable items such as agricultural products, aquatic products, fruits, etc. may be exported to many countries in the world. In spite of great distance, the quality is maintained for a long time thanks to the conditions facilitated by the cold chain.
The Cold Chain Interaction System also allows for a well-coordinated information system between logistic activities in the chain. Therefore, the cold chain not only optimizes time and cost, but also improves efficiency and power of the product in the market. Cold supply systems may also become an integral part of the product branding strategy, promoting greater customer satisfaction, greater market share, higher profit, and less risk.
Developing cold supply chains also contributes to supporting the State in managing food safety and hygiene for domestic and export goods. It may also satisfy objectives of improving life quality of citizens, ecological protection and sustainable economic growth.
THE GLOBAL GROWTH TREND OF COLD SUPPLY CHAIN
The need to develop cold supply chains starts from developed countries and is based on a number of key factors. The first one is the increasing trend of globalization. It allows smooth movement of agricultural products among countries in the world, leading to an increase in global trade of perishable goods such as vegetables, aquatic products, and fresh flowers in recent years. Up next is the consuming trend of high quality, healthy and safe products, leading to an increase in consumers’ interests, generating social pressure, and promoting regulatory protection of food safety and hygiene as well as health-related issues in developed countries. Finally, the professional capability and efficiency of the logistics industry in developed countries enables them to apply cold supply chains at an optimum temperature with proactive control, improving efficiency and the speed to bring products to the market.
According to statistics, in the last two decades, countries with the fastest cold chain growth rates are France, Germany, Finland, Spain and Brazil. Those countries also have the fastest growing, most sustainable economies, or top agriculture export. India and China, the world’s two most populous countries and the leading agricultural exporters, have also seen rapid growth in cold supply chains in recent years.
India is the second largest producer of fruits and vegetables in the world, with annual yields of 46 million tons of fruits and 91 million tons of vegetables, totaling 25 billion USD, contributing nearly 10% and 13% of the world's output. However, this country has a higher waste rate than consuming rate of fruits and vegetables. About 30% of the fruits and vegetables grown in India (40 million tons, worth about 3 billion USD) are wasted annually. India is also the world's largest dairy producer, producing nearly 100 million tons, accounting for nearly 17% of global milk production. However, more than 10% of this milk volume is damaged due to storage and preservation conditions. A farmer's product has been initially sold for 1 USD, but when the product reached the consumer, the price was raised to 1.6 USD for dairy product, 2.2 USD for fish and 3.5 USD for fruit and vegetable. This shows that the cost of these perishable products in the distribution process is not so small and the damage from agricultural products in the process is indeed a serious problem. In addition to the losses caused by post-harvest processing of 30%; 65% was due to defects in the cold chain such as poor infrastructure, insufficient capacity of cold warehouse, lack of cold warehouse near the farms, poor traffic infrastructure. Of which, storage and transport disadvantages account for 30% each, lack of knowledge about maintenance techniques accounts for more than 5%. By applying refrigerated containers in transporting fresh fruits and vegetables, and minimizing the distance in the cold chain, they may reduce losses by 30-35%, and for every 1% of reduction in fruit and vegetable waste, they will be able to save 0.13 billion USD /year.
China is the world’s most populous country. And it is the largest importer of goods from Vietnam (23%). The country also started to plan for development of cold chain logistics for farming products in 2010. China’s provinces and cities have formed a five-year plan (2011-2015) for cold chain logistics. For example, Beijing has planned to increase the rate of cold chain fruits & vegetables, aquatic products and meat products, from 10%, 30% and 50% to 20%, 45% and 70% respectively for the 2011-2015 period. Chongqing has planned to improve the cold chain rate of fruits & vegetables, meat products and aquatic products 20%, 30% and 37% or higher; raise freight charges of cold chain products by about 46%, 52% and 65%; and reduce the loss of products to 15%, 8.5%, 10% or lower by the end of 2015.