Report from Global Cold Chain Alliance outlines pandemic’s impact

The growth rate of e-commerce and direct-to-consumer delivery of chilled and/or frozen products was judged to be rapidly expanding before the advent of COVID-19. But now that the pandemic has hit full force the trend is explosive.

A recently-published survey conducted by The Global Cold Chain Alliance (GCCA) finds that even stronger demand for data and predictive analytics is expected in the future, and respondents are optimistic that the growth rate of the industry as a whole will be even more significant because of the pandemic.

“Conversely, 73% of respondents believe that global trade opportunities will either decrease or remain the same relative to pre-COVID expectations,” says Jason Troendle, Director of Market Intelligence and Research at the Global Cold Chain Alliance and author of the report, 2020 COVID-19 Cold Chain Business Impact Survey Summary.

Domestic Focus

Near shoring and onshoring will gain traction, say researchers. But they also note that the most frequently-selected challenge was supply chain disruptions (e.g. keeping up with demand surge, slowdowns in food service, production/manufacturing challenges) and selected by slightly over 50% of all respondents.

Furthermore, the top COVID-19 response was to take extra measures to protect the workforce (e.g. staggered shifts, social distancing, remote working). The next-highest issues were maintaining overall business continuity and workforce morale.

Comparing actual Q1/Q2 revenue vs. Q1/Q2 pre-crisis revenue expectations, 54% of all respondents reported some type of a decrease, 11% saw no change, and 35% reported an increase in revenue. Respondents believe the next six months may look very similar to the past few months.

Approximately 80% of respondents indicated an increase in costs, with the most common uptick between 1-5% increase. And respondents indicated access to PPE and cleaning as the top priorities they would like to see governments focused on, followed closely by financial support for employees as well as employers in the cold chain industry.

Finally, measures taken to reduce person-to-person contact to slow the spread of the virus caused operational changes across the cold chain. While these measures were done out of necessity, the changes also provided an opportunity to adjust or try new processes or controls that if effective and efficient may remain in place after the pandemic from COVID-19 is over. 53% of respondents believe the percent of employees working remotely will increase. Pre-pandemic work-from-home rates averaged 4.5% of their workforce.

That has increased to 19.8% of the workforce during the pandemic, and there is an expectation that about 10.6% of the workforce will continue to work remotely. This could lead to an increase of 6.1% of the workforce working remotely moving forward.

Surprising Findings

Among the surprises revealed in this research were that food services did not feel a significant impact in relation of other market segments. Although, about 55% indicated at least some revenue loss due to COVID.

“Across revenue for distribution/retail, food service, and food processing warehouse respondents, we would have anticipated food service members being more significantly impacted, but only observed them as slightly more impacted than other market segments,” says Troendle. “Our members were very optimistic about the future of the industry with 57% believing the pandemic will increase the expected growth rate of the cold chain industry compared to only 6% believing it would decrease the rate of growth.

Although researchers did not specifically ask about technological solutions for COVID, the number one priority in terms of a response to COVID was workforce protection such as staggered shifts, social/physical distancing, and remote working.

“This was reinforced by the fact that many members identified as one of the top three options access to personal protective equipment and cleaning supplies,” says Troendle. “We have also heard across some additional call that touchless timecard systems, temperature or self-check screening has been utilized.”

On another positive note, Troendle notes that shippers are constantly finding ways to increase value to their end consumers and a market disruption provides the opportunity for them to continue to demonstrate that they are a critical role in the food supply chain.

“Seventy-four percent predict an increase in e-commerce/direct to consumer delivery of temperature-controlled product,” he says, “and thirty-three percent of respondents stated that they believe they will see an increased diversity within their customer base in the future as a result of pandemic.  Only 3 percent indicated that customer diversity will decrease post-pandemic.”

The main takeaway for the GCCA is this: Twenty-seven percent of respondents reported that they see an opportunity to increase the range of value-added services to their customers, while only 3 percent expect the range of value-added services to decrease.