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THE PAIN -POINT AND BREAKDOWN OF COLD CHAIN IN FRUIT AND VEGETABLE INDUSTRY Click rate: Release time:2018-10-22 Information sources:Hangzhou Qiyao New Material Co.,Ltd.

Farm products are different from industrial consumer goods, freshness are most important, such as fruits, vegetables, sea foods and meats and so on. How to keep their freshness during transporting all over the world would be a pain-point, but correct packaging can solve this problem and be extremely effective in saving costs.

In 2016, China's fruit production have reached 283.51 million tons, and vegetable production accomplished 800.05 million tons, both ranking first in the world. However, more than 15% of the fruits and vegetables have spoiled or rotted during the link of circulation, which caused loss of more than RMB50.00 billion and also resulting in huge waste. 

In general, the fruit and vegetable products have the requirement of preservation temperature for  0-5 ° C. Because of the low added value and profit on fruit and vegetable industry. At present, the transportation mode of fruit and vegetable products in China mainly relies on social vehicles rather than professional cold-chain logistics enterprises, which leads to the problems of difficult management and circulation quality can’t be guaranteed. At the same time, the wholesale market, as the core of the current supply model of agricultural products has many levels of circulation links, which leads to the “break of the chain” of cold chain when the phenomenon of normal temperature transportation, dis-assembly and scattered selling often occurs, during the processing of fruit and vegetable products enter and leave the wholesale market.  

As high frequency consumer and rigid demand goods, the market demand is very strong for the fruit and vegetable products. Therefore, the only way is to further optimizing the construction of cold chain logistics in the fruit and vegetable industry, and make the two ends to match efficiency of the industry chain, and thus meet the both requirements of quantity and quality of products from consumers.  

 

DISCUSSION ON THE DIFFICULTY OF COLD CHAIN LOGISTICS IN FRUIT AND VEGETABLE INDUSTRY

Based on the above analysis of the pain-points of cold chain logistics in the fruit and vegetable industry, in order to meet the necessary circulation conditions and guarantee the quality of fruit and vegetable products, it needs to be cleared that the cost of infrastructure construction of cold chain is essential. So what are the effective solutions to other pain-points?

                               


  1. INTERGRATE THE RESOURCES OF COLD CHAIN TO ACHIEVE SCALE BENEFITS

    Aiming at the phenomenon of "small, disorderly, scattered" and resource non-concentrated of most enterprises in the cold chain industry at present. By integrating industrial resources and eliminating small enterprises with chaotic management in the market, standardized management is implemented for the source of the production end of the supply chain, so as to solve the issue of the wastage of supply chain and realize the scale benefit. 

    Referring to the mature cold chain logistics system in foreign developed countries and the development status of the fresh e-commerce in domestic, the following two approaches to connect the supply chain:

     

    HORIZONTAL PENETRATION- TAKE THE COLD CHAIN MARKET OF THE UNITED STATES AS AN EXAMPLE

    The division of labor is very clear in the cold chain of the US market. Most of the major cold chain logistics companies in the United States are mainly founding the warehousing, and which oriented to the global market. The top five cold storage operators in the United States account for 63.4% of the total storage capacity. This mode of horizontal integration can help enterprises to focus more on developing professional capacity, conduct professional investment, reduce the loss of products in each link through professional management and operation, guarantee the efficient coordination of production, processing, transportation, storage, distribution and other links, and form scale benefits.

     

    VERTICAL CONNECTION-RELYING ON THE RAPID DEVELOPMENT OF DOMESTIC FRESH E-COMMERCE

    With the rapid development of fresh e-commerce, some large domestic logistics enterprises and e-commerce enterprises have respectively step into cold chain industry, such as JINGDONG, SHUNFENG and ALI, etc. In addition to their strong economic strength, these large-scale logistics and e-commerce enterprises also tend to have the operation feature of "vertical integration". They get through all links of the supply chain reverse from the sales port, and also put forward higher requirements for the circulation quality of "the First kilometer" and "the Last kilometer" of the supply chain. The advantage of this vertical integration mode is to use the latest market information that mastered by e-commerce enterprises, to integrate resources of all links and make optimal scheduling, so as to reduce resource waste and save operation and management costs of cold chain.  

  2. INTEGRATE THE RESOURCES OF PRODUCTION PORT TO IMPROVE THE QUALITY OF THE “FIRST KILOMETER” OF THE COLD CHAIN

    The standardization and specialization of the operation on fruit and vegetable products which directly determines the quality of the "First kilometer" of the cold chain, especially in the link of disposing of the precooling and quality inspection on the products. Precooling treatment is one of the effective methods to reduce the loss of fruit and vegetable products in the production process, while quality inspection treatment can identify products with quality problems such as food safety and pesticide residues at the source. Based on there are most small-scale peasant model in China, their production process does not have the capital and ability to complete the above work. Therefore, it is necessary to integrate the resources of production port base on the centre of production area. Through the way of merger and cooperation, to establish strong organization and enterprises in the production port, build the cold storage, and joint the small producer at the upper, then help them to complete the professional work of pre-cooling, quality supervision, inspection and packing and so on. At the downstream, the method is to direct docking the sales side, strengthen their bargaining power, then large-scale decreases circulation of the intermediate links, thus creating standardized, high quality of direct sales model of fruit and vegetable products, improve the profit level of supply chain.

  3. ACCELERATE INFORMATIZATION CONSTRUCTION OF COLD CHAIN TO REDUCE COSTS OF SUPPLY CHAIN

    Firstly, in order to solve the current situation of improper operation of each operation link at cold chain logistics, and reduce the inefficiency loss and management cost, it is very necessary to build informatization management of the cold chain logistics. It should be emphasized that the informatization management of cold chain and also avoid "breaking chain", due to the informatization construction of "first kilometer" directly determines the circulation quality of products of the end of supply chain.

    When the product is still in the "field head", the electronic label technology is adopted to standardize the producing situation of the product, that unify the supervision and establish the trace-ability system of supply chain quality; The next period as the product is picked, the temperature sensing technology is used to ensure that the storage and processing of the product in the cold storage of producing area which meeting the storage requirements; Last period as all products are ready for circulation to enter the market, they can rely on global satellite positioning system (GPS), geographic information technology (GIS) and other methods to track and monitor the transportation of goods and refrigerated vehicles, and then reduce the invalid cost caused by wrong operation in the circulation process. Of course, these information technologies are also applicable to all aspects of cold chain logistics.

    In the next, informatization construction is also conducive to open up the information flow in the supply chain that can connect the production and marketing information with the scattered distribution network, realizing the integration and transparentizing management, and optimal dispatch of resources.

    Summarize

    In recent years, the domestic e-commerce market has been developing strongly with considerable profit margins. However, there are few enterprises to make profit despite the huge potential of fresh e-commerce market in china, which is closely related to the immaturity of cold chain logistics. To improve the overall profitability of the supply chain of fruit and vegetable, the "First mile" of the cold chain may be the key of breakthrough for the supply chain to reduce the overall cost and realize the ultimate profit.


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