Significant investment in cold supply chains needed to provide for China's growing demand for fresh food
With China's demand for fresh food rapidly growing, a new report from Rabobank states that Europe will need to make significant investment in cold supply chains throughout the main rail route if Europe is going to be able to tap into this burgeoning market.  It is expected that there will be a 17% increase in demand for imported meat, dairy, fruit and vegetables to China between 2015 and 2025

The joint report, Freight Trains and Cold Chains, examined the expected 17% increase in demand for imported meat, dairy, fruit and vegetables to China between 2015 and 2025. “The country’s growing demand for fresh food offers huge opportunities for imports from Europe’s well-reputed food industry,”​ the report stated.

The Yu’Xin’Ou railway, connecting Chongqing and Rotterdam by rail, provides an exciting new route to market for European exporters as it reduces transport times by over 30 days compared to shipping. The route has been dubbed the new silk road. However improvements in the cold chain are needed in order to successfully transport higher volumes of fresh food in this way, the report stated.

“China’s demand for fresh, safe and high-quality food is outstripping its capacity to produce and deliver domestically. Europe is able to address this need,”​ said Paul Bosch, food and agribusiness supply chains analyst at Rabobank. “However, the growth in consumption of perishable food in China will only continue if supply chains deliver on quality and safety. To a large extent this depends on the proper cooling of products during storage handling and transport.”​

Increasing consumption in China is being driven by continued economic growth and urbanisation. China’s economy is expected to grow by 6-7% annually in the coming years, pushing a further 38 million households into the upper middle class. Fresh or perishable food is increasingly reaching Chinese consumers through modern distribution channels, including supermarkets, hypermarkets and online. Food safety is one of the driving forces pushing shoppers away from traditional wet markets and it is expected to remain one of the biggest concerns for the Chinese population.

The demand for fresh safe food, bought through convenient modern channels is driving the country’s investment in cold chain infrastructure. Over the past five years, storage capacity has grown from 12 million cubic meters in 2007 to roughly 100 million cubic meters in 2015, the report stated.

“However, China’s cold chain sector is still lagging and needs to improve in terms of both quality and capacity. The associated investments are huge: an estimated $85 billion is needed in the next 10 years. The country’s cold chain sector will be able to improve once cold chain companies start adapting their business models into higher-value strategies in response to the higher service needs of their clients.”​