A cold chain is a temperature-controlled supply chain that includes refrigerated facilities manufacturing, cold storage, and cold chain transportation facilities via air, across waterways, and rail lines to maintain the requisite low-temperature range at all times. With the rise in food consumption, increasing tourist base in the country, and growing demand for frozen & ready-to-eat food, the demand for cold chains is expected to foresee robust growth in the forthcoming years.
The UAE Cold Chain Market is projected to grow at a 6.9% CAGR during the forecast period, 2022-27, as the country relies heavily on foreign markets for its food security. Cold chain systems are becoming increasingly crucial in the UAE's food goods market as consumers seek better and more nutritious products with more variety. The increasing trade in perishable products, government investments in infrastructure to enhance pharmaceutical exports, and continuous investments in modern logistics to maintain the temperature of products such as fresh agricultural products & manufactured foods has driven the market growth.
|Study Period||Historical Data: 2017-20|
|Base Year: 2021|
|Forecast Period: 2022-27|
|Key Companies Profiled||Gulf Agency Company, Al-Futtaim Logistics, Hellman Worldwide Logistics, Global Shipping & Logistics LLC, RHS Logistics, CEVA Logistics, Mohebi Logistics, Agility Logistics, Panalpina-DSV, Kuehne- Nagel, RSA Cold Chain, DB Schenker|
|Unit Denominations||USD Million/Billion|
Moreover, the growing government inclination to boost the local production has encouraged the global pharmaceutical players to set up their manufacturing bases in the country. Thus, this has further augmented the need for cold chain logistics in the region. In 2019, Pharmax Pharmaceuticals (Pharmax) inaugurated its first pharmaceutical manufacturing plant in the Dubai Science Park. The company aims to shorten the supply chain for generic medications for chronic conditions in the Middle East countries.
Key Trends in the Market
Temperature changes can cause heavy losses to perishable products stacked in cold storage facilities, necessitating the employment of advanced technologies such as artificial intelligence, the internet of things, and blockchain technology in the cold chain. As a result, the companies have been introducing advanced technology solutions for cold storage to deal with the rising issue of food wastage due to temperature fluctuations, which could lead to microbial development & discoloration of food goods. Thus, this would create a trend in the market for the deployment of advanced technologies in the cold chain facilities during the forecast period.
Impact of Covid-19 on the UAE Cold Chain Market
In the UAE, the COVID-19 epidemic had a favorable impact on the cold chain business. The increase in demand for cold chain facilities such as storage & transportation, particularly for pharmaceutical products, has driven the market's expansion. During the pandemic, the demand for cold chain services for the transportation of temperature-sensitive products such as vaccines & pharmaceutical drugs has heightened across the country for the distribution of vaccines. Thus, this has led to a developing partnership among corporations to distribute vaccines both domestically & globally, necessitating the use of cold transportation. For instance,
Based on Type:
Among the two, Cold Storage holds a considerable market share in the UAE Cold Chain market, owing to the country's hot climate, which necessitates the use of cold storage. The launch of energy-neutral cold store facilities to reduce carbon footprint, growth in the food & beverage logistics, and the introduction of logistics centers by the companies have promulgated the growth of the cold storage in the country. For instance:
Furthermore, Cold Transportation is also projected to witness robust growth in the near future. The increase in demand for domestic & local drug manufacturing, the increasing investment in the road infrastructure, and the burgeoning inclination towards the export of pharmaceuticals products are further, projected to boost the revenue growth of cold chain transportation in the country.
Based on End User:
Of them all, the Food & Beverage end-user has seen tremendous expansion in recent years, owing to the country's reliance on imports of food commodities from other countries & rapidly rising population. The growing demand for frozen food among consumers along with the opening up of hotels & restaurants to meet the changing requirements & demands of travelers has proliferated the need for cold storage. As a result, to achieve a longer shelf life, the food & beverage sectors need an industrial cold storage solution to keep the product fresh & maintain its quality. Besides, the government's focus on upgrading cold storage & infrastructure to protect food quality, particularly when shipping frozen food, has prompted the companies to establish their facilities.
Furthermore, the need for the cold chain for pharmaceutical items has also soared at a substantial rate, owing to rising imports of medicines, generic drugs, and other pharma products in the country. In 2018, according to UAE Federal Customs Authority, the country had imported pharmaceutical products (HS 30) worth around USD4.06 billion.
Recent Developments by Leading Companies
Key Drivers: Increasing Investment in Cold Storage
Due to limited fertile land for farming & the adverse weather conditions, 90 percent of the UAE's food requirements are met by the import of food products from countries such as the US, the UK, France, and Brazil. With the growing demand from the restaurant & food-service supply chains due to pent-up demand for eating out & the increasing flow of tourists in the coming years, as Dubai hosts Expo 2020. Thus, to meet the growing market demand, the industry is expanding its existing cold storage facility and establishing a new one to meet the growing demand in the local market. For instance:
Furthermore, with the outbreak of COVID-19, the need for frozen cold storage has flourished rapidly for the storage & distribution of vaccines, which require storage at -80°C. The growing strategic partnership among the companies to the cold storage facility for the vaccine has augmented the market growth.
Growth Restraints: High Initial Investment for Set-up
The primary market hurdle is the substantial initial investment required to develop a cold chain service due to extremely high temperatures & humidity levels. The importance of maintaining proper temperatures during storage & transportation cannot be overstated. Besides, maintenance, repair, and energy costs make it difficult for small businesses to enter and compete in the market with established players.
Key Questions Answered in the Market Research Report:
Frequently Asked Questions
A. The UAE Cold Chain Market is projected to grow at around 6.9% CAGR during 2022-27.
A. The Cold Storage Segment is anticipated to emerge as an opportunity area for the leading players in the market during the forecast period.
A. The increasing government inclination to boost the number of tourist arrival in the country along with burgeoning investment towards transport infrastructure to connect to the port are some of the growth opportunities driving the UAE Cold Chain Market.