The market for cold chain logistics in the Asia-Pacific region is anticipated to grow at a CAGR of more than 11% during the forecast period (2020-2025). Recent years have seen robust demand for high quality industrial and logistics assets in the Asia-Pacific on the back of strong domestic consumption, eCommerce industry expansion and the development of modern logistics facilities. Asia-Pacific region, given the rising disposable income and ageing population, gives a huge consumer base for the healthcare supplies. The shift in dietary patterns is increasing the demand for premium produce including meat, dairy, seafood, etc that are temperature sensitive and need to be stored and transported at controlled temperatures.

Despite robust leasing demand for cold storage facilities in the Asia-Pacific, cold storage capacity in the region is limited compared to that in developed western markets. The cold storage facilities command higher rental premiums than dry warehouses. For Asia-Pacific to reach the same cold storage capacity per urban capita as the U.S., it would require the new supply of almost the figure double of the existing stock.

Key Market Trends

Pharmaceutical sector growth in Japan

Japan is one of the largest pharmaceutical markets in the world, especially due to its ageing population. It is also among the major producers and importers of advanced medical facilities backed by the active government initiatives for the promotion of generic drugs.

The country’s native biologics sector has now gained the second position after the USA. Coupled with the government’s focus on supporting lower-cost copycat products, this entails a huge opportunity for bio-similars. While innovative drugmakers have long benefited from generous exclusivity periods in Japan, the country is catching up with other mature markets in terms of generics penetration, with a rapidly increasing share of the market held by copycats. The confidence of the system is reflected by the fact that domestic drugmakers are increasingly going global with their products, with the share of overseas sales of the top Japanese companies rising steadily increasing the demand for cold chain storage and transportation facilities.

Growing Consumption and Omnichannel Distribution of Groceries

Asia caters a growing middle-class population, generating a robust demand for high-quality groceries. The Asia-Pacific grocery imports were valued at USD 373 billion in 2018 by the International Trade Centre, with imports of high-value items growing especially rapidly. This growing consumption is being facilitated by the expansion of omnichannel distribution. The rapid improvement in delivery speed, especially in countries like Korea and China with major online grocery platforms such as JD.com offering same-day or under 24 hour delivery in top tier cities.

In China, Japan and Korea, omnichannel grocery distribution has been rapidly expanding, while players in Australia, India and Southeast Asia are also penetrating this field. Recent examples of major expansions in the region include HKTV mall (Hong Kong), Coupang (Korea), BigBasket (India) and JD.com (China). Alongside, the traditional supermarkets are also setting up stores in consumer-centric areas in response to the demand for convenience and changes in the population structure. These facilities all require extensive cold storage infrastructure not only to keep the perishable stock fresh but also be able to transport it easily without any food loss, wastage and quality concerns.

Competitive Landscape

The Asia-Pacific cold chain market is highly fragmented with a large number of global and local players in the market to cater to the growing demand. UPS, OOCL Logistics and JWD are some of the major players in the market. Key challenges faced by the cold chain industry is in terms of large energy and space consumptions along with huge setup and modification costs. Lack of standardisation related to storage temperature and operating procedures are a few more significant challenges to the industry, where the quality and flexibility of available cold warehousing space is a major concern.

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