The Philippines’ Cold Chain Industry

Published by Miguel Enzo Elisan on

How the Philippine's Cold Chain Expansion is being managed?

Philippines’ Cold Chain

The cold chain is the process of managing the temperature of products from production until it reaches the consumer. The system helps maintain the quality and safety of perishable products. The cold chain process should be handled with precision to prevent temperature excursions that risk degrading the quality of the products. The Philippines’ Cold Chain Industry has surged since 2013. The industry was forced to expand as consumer demand increased. There has been a consistent expansion of new facilities and warehouses while expanding the capacity of existing facilities. The government also made adjustments to accommodate the growing market of the cold chain in the Philippines.

The Importance of Cold Chain Storage

It is a huge factor in making sure that the quality of the perishable products is in good shape from their point of origin up until it reaches the consumer. In the advent of the COVID-19 pandemic, the cold chain industry has become an even more critical player in logistics, with several of the vaccines requiring ultra cold storage.

Cold Chain Process
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How is the Cold Chain in the Philippines?

While a lot of sectors are struggling because of the COVID-19 pandemic it seems to be the opposite case for cold storage facilities.

There is a demand for cold storage in healthcare for the use of in distribution of pharmaceutical products and the clinical trials for possible drugs and vaccines. Secretary Carlito Galvez, the Philippine’s vaccine czar, stated during the ceremonial signing for the 14 million doses from British firm AstraZeneca, that “We will make sure that all the vaccines, whether 2 to 8, negative 20 or negative 70 (degrees Celsius) will be taken care of”. The need for cold storage for vaccines is now more than ever.

Ceferino Rodolfo, Trade undersecretary, and Philippine Board of Investments (BOI) managing head stated that by 2023, the Philippines’ cold chain industry revenue is expected to reach PHP 20 billion. This does not include the import of the COVID-19 vaccines in the next three to five years. He further stated that the industry plays an integral role in the value chain necessary to make the whole food supply chain of the Philippines stronger, adding that during the COVID-19 pandemic, the importance of the industry has been further highlighted.

According to a report by JLL Philippines, titled The Evolution of Philippine Logistics: A Case for Better Quality Logistics that “it has become an emerging sector as the COVID-19 crisis propels the rise in particular of cold storage demand and the growth of e-commerce presenting opportunities for the industry”. The logistics sector in the report sees it as “the evolving asset class in the Philippines”.

According to the report, it requires that there is a need to have more available refrigerated facilities amid a “potential outward shift on demand for food logistics due to e-commerce grocery as an integral part of the ‘new normal”.

There is a call from the Department of Agriculture (DOA) through partnerships with the Cold Chain Association of the Philippines for more cold storage facilities to help reduce post-harvest losses and improve the farming income.

A New Industry Roadmap

Back on December 14, 2020, the BOI launched a “Cold Chain Industry Roadmap”. In cooperation with several industry stakeholders such as the Cold Chain Association of the Philippines and the DOA, the roadmap intends to target the industry growth projections as well as investment policy and regulatory actions over the next two to five years. The roadmap aims to benefit various industries with increasing needs.

The Philippines’ cold chain industry currently has a storage capacity of 400,000 metric tons (or rather 500,000 pallets) according to the roadmap. Warehouses are being used only for cold storage or for cold and dry storage. Among other services integrate with the logistics and distribution system. If it’s in the matter of industry distribution, warehouses for general warehousing hold 65% while the ones that are for dedicated or exclusive warehousing hold 45%.

From 2020 to 2022, the roadmap has outlined some milestones to achieve that include five investments and new cold storage facilities to distribute in the three main regions of the Philippines. The Philippine region of Luzon has two, the Visayas has one, and Mindanao also has two.

In these times, the demand is probably at its greatest for the pharmaceutical side of the cold chain industry, due to the coronavirus disease since as stated earlier, the need for the new COVID-19 vaccines to help combat the spread.

Cold chain facility
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Prospect of Growth

According to Florence Mojica-Sevilla, the University of Asia and the Pacific Senior Agribusiness Specialist and Consultant on the roadmap stated in a presentation that given on Facebook Live back on December 13, 2020, that “in the short term, the coaching industry is targeting an annual increase of 10-15%, equal to 50,000 pallets per year.

She stated as well in a presentation that over the years, there has been a greater demand for the cold chain industry during the years of 2010 to 2019, with records showing that there have been growths of both imports and exports of key products during those years. She noted that the roadmap is a stakeholder-driven, inclusive, and market-oriented plan to guide the industry in the coming years and help it adapt to the “new normal”.

In addition to what she stated, growth prospects come from many factors like vaccines or other drugs that need strict temperature regulation and e-commerce, and online grocery shopping. It also comes from other factors such as services from food delivery, takeaway meals from convenience stores, and the local food production that requires cold chain logistics services. Adding to the list of driving demand are the country’s continued dependence on food imports, an oversupply of some cash crops of the “Plant Plant Plant” Program by the Department of Agriculture (DOA), the trend for integrated end-to-end supply chain logistics, and people’s preference for just-in-time delivery.

Challenges Ahead

Despite all this, there are still some challenges to come over. According to JLL Philippines, the Cold Chain Association of the Philippines (CCAP) has projected that there is a possible chance of shortage in cold storage supply with the delay in the construction of pipeline projects amid the pandemic. With increasing population and sales of frozen produce from supermarkets and e-commerce platforms, the Cold Chain Association of the Philippines expects annual growth of 9% in the cold chain industry. Furthermore, there aren’t enough facilities to help cater to increasing local production and imports, especially perishable goods.

Also, there’s still a misconception about frozen products and that food safety still faces some limited awareness. Also in some areas, there is still a low demand for cold chain logistics. A lack of local government unit (LGU) support and regulation also poses a barrier for cold chain investment. Other challenges are the limited infrastructure/road network support; traffic; and the production of meat affected by the African Swine Fever in the country since last year.

That’s not all that the industry will have to struggle with. The country still has to face other many weak spots especially outside of Metro Manila with inadequate cold storage capacity and limited information on cold storage services. Other struggles include high energy/power costs, weak internet connectivity, high investment need, shortage of trained workers, difficulty complying with accreditation that requires documentation, and the lack of coordination in shipments that involve government agencies.

In conclusion

The Philippines’ cold chain industry will still grow if we continue to play our cards right. While there are a lot of factors and reasons that the cold chain industry will continue to expand, it still does need to be very careful. Vaccines normally can not thrive if it doesn’t have the temperature needed to sustain for future use. The protocol with maintaining the right temperatures for vaccines is very critical, not to mention the logistics of transporting these to areas that need it the most. Perhaps we need the cold chain industry more than ever to continue to rise so that it can help with the process and regulations for storing not only the vaccines but in anything pharmaceutical by monitoring and protecting drugs to help treat anything medically, especially during a pandemic. The quality (and quantity) of these vaccines and drugs must be properly maintained and managed from the moment they are produced up until they are administered. If managed well, the Philippines’ cold chain industry will continue to expand with little to no problem in this pandemic.



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