The Portugal Cold Chain industry is currently growing well due to higher demand from food and pharma sector, especially in recent years: Ken Research

In conversation with Mr Miguel Fançony, Field Sales Executive, DHL Express Portugal, we tried to understand the Cold Chain Industry in Portugal. We also discussed the effect of pandemic and the future going forward.

"The Portugal Cold Chain industry is currently growing well due to higher demand from food and pharma sector, especially in recent years. The rise of ecommerce has also led to the growth of cold transportation and storage in Portugal due to the need of quicker deliveries."

What do you think is the current cold chain industry outlook in Portugal?

The cold chain industry has been witnessing a period of high growth in the last couple of years, owing to the higher demands from the food and pharma sector. It is currently growing approximately at 5-8% while during the pandemic period, the CAGR was around 12-15%. Earlier, majority cold warehouses were located in Spain and goods were directly transported to Portugal, but in recent years, we have seen development of new cold warehouses in Portugal as well.

What is the distribution between cold storage and cold chain transportation?

In recent years, the number of cold storage warehouses in Portugal has gone up mainly due to the rise of e-commerce and the pandemic. While earlier, 80% of the industry consisted of cold transportation and 20% cold storage, the distribution is now at 60-40. In the future, the ration might change to 55-45.

Furthermore, what is the split between the different modes of transportation used in the cold chain industry?

Land & Road transportation occupies the maximum share at around 60%, followed by Sea (32%) and Air transportation is in single digits (8%). However, we do see a higher growth rate in Air transportation because of climate changes, faster deliveries and rise of ecommerce. Also, air transportation was also used in import of vaccines which has resulted in improved technical knowhow for cold transportation using air.

Cold chain caters to various industries, so which industry demands the highest for the cold chain?

The food sector is the biggest customer of the cold-chain industry in Portugal having 50% share with pharma being second at 30% share. In the food sector, cold chains are majorly used for fruits and vegetables followed by seafood and lastly meat and related products. Portugal has abundant agriculture and a large coastline which leads to ample supply of fish, sardines, tuna etc. The agro produce and seafood require cold storage and transportation for domestic consumption and export.

The cold-chain demand from the pharma sector has seen tremendous rise in recent years due to the pandemic and ecommerce delivering medicines to the doorstep. A surprise addition to customers of the cold-chain industry is the floral industry which involves production and transportation of flowers. It is a small segment but a high growth one in current times.

Can you elaborate on the temperature ranges that are followed in Portugal's cold chain industry?

The temperature ranges followed by Portugal are in line with other European nations. The temperature ranges for pharma products are governed by the laws and for food products, they are influenced by a variety of factors like shelf life.

For any queries or feedback, reach out at namit@kenresearch.com

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