2016 Top Markets Report Cold Supply Chain
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2016 Top Markets Report Cold Supply Chain A Market Assessment Tool for U.S. Exporters May 2016 U.S. Department of Commerce | International Trade Administration | Industry & Analysis (I&A) Industry & Analysis’ (I&A) staff of industry, trade and economic analysts devise and implement international trade, investment, and export promotion strategies that strengthen the global competitiveness of U.S. industries. These initiatives unlock export, and investment opportunities for U.S. businesses by combining in-depth quantitative and qualitative analysis with ITA’s industry relationships. For more information, visit www.trade.gov/industry I&A is part of the International Trade Administration, whose mission is to create prosperity by strengthening the competitiveness of U.S. industry, promoting trade and investment, and ensuring fair trade and compliance with trade laws and agreements. John Miller, I&A’s Industry Specialist for Cold Chain and Distribution Services, served as the lead author for this report. Thank you to all cold chain industry representatives who have provided insight including: ITA’s Strategic Partners of The Global Cold Chain Alliance, APICS, FedEx, UPS, and the International Air Transport Association. Table of Contents Executive Summary ............................................................................................................................... 3 Overview and Key Findings ................................................................................................................ 5 Country Case Studies Australia .................................................................................................................................................. 19 Brazil ......................................................................................................................................................... 21 China ......................................................................................................................................................... 25 India .......................................................................................................................................................... 29 Indonesia ................................................................................................................................................. 33 Japan ......................................................................................................................................................... 37 Kenya ........................................................................................................................................................ 41 Malaysia ................................................................................................................................................... 45 Mexico ...................................................................................................................................................... 49 Singapore ................................................................................................................................................ 53 Vietnam .................................................................................................................................................... 57 Addendum: Resources for U.S. Exporters ................................................................................... 61 Appendices Appendix 1: Methodology ....................................................................................................... 63 Appendix 2: Scorecards ........................................................................................................... 65 Appendix 3: Citations ............................................................................................................... 68 2016 ITA Cold Chain Top Markets Report | 1 This Page Intentionally Left Blank 2016 ITA Cold Chain Top Markets Report | 2 Executive Summary The 2016 Cold Chain Top Markets Report is being launched during a time of increased interest in international trade. The completion of negotiations in the Trans Pacific Partnership, and hopes for its quick ratification, has sparked expectations of improved opportunities to expand trade within partner countries. The report also comes at a time when an increasing understanding of the global value chains that are the key drivers for the flow of trade in both goods and services is impacting the way that industries and government view trade in terms of investment and policy development. As a business function of distribution services, cold chain services are force multipliers that create a world of opportunities for related trade and exports of goods. A cold chain can most readily be defined as a series of warehousing and distribution activities that is designed to ensure ideal storage and transportation conditions for temperature-sensitive products. Cold chain services also have the added benefit of improving quality of life for billions of people around the world and are in high demand, especially in less developed economies that suffer from malnutrition, high rates of food spoilage and chronic disease. This year’s report uses World Economic Forum research as well as industry insight to assess 20 international markets for cold chain expansion. The case studies section of the report covers 11 countries that collectively represent more than $450 billion out of more than $1.8 trillion in total sales by U.S. majority owned foreign affiliates in distribution services. The countries also represent more than $800 billion in total U.S. goods and services exports. The expansion of foreign affiliates and their corresponding sales contributes to U.S. companies’ bottom lines and does not detract from U.S. jobs but rather increases the need for U.S. workforce to support business operations here in the United States. Ultimately, the report finds that cold chains grow in support of distribution services operation, primarily in the retail and franchise sectors. In developing markets, cold chains provide opportunities for small and medium-sized farmers and businesses to enter the supply chains of international markets, exporting their temperature-sensitive products to retailers around the world. In consumer markets, cold chains provide access to products previously unavailable locally, raising the quality of life through fresher, safer food, pharmaceuticals and biologics while increasing opportunities for retail and franchise sales growth. The biggest barriers to cold chain growth remain government protectionist measures and non-tariff barriers, often in related distribution services industries. The difficulties and delays of clearing customs or transporting products across borders is also a major impediment for services. Through policy development, commercial dialogues, participation in trade negotiations and managing Industry Advisory Committees, including the Advisory Committee on Supply Chain Competitiveness, the International Trade Administration (ITA) has been focused on reducing these barriers to trade and will continue to work with countries around the world to provide opportunities for distribution service providers to compete on a level playing field. 2016 ITA Cold Chain Top Markets Report | 3 This Page Intentionally Left Blank 2016 ITA Cold Chain Top Markets Report | 4 Overview and Key Findings Introduction established for decades. The development of cold chain systems, especially in terms of government policy, The development of cold chain systems is a force however, is a fairly new concept. Cold chain systems multiplier that can generate exports and open new can most aptly be viewed as a business function in a markets over multiple sectors over an extended period, global value chain rather than as an industry. As a rather than a one-off export transaction that can be business function, they encompass activities and quantified simply as an export success. U.S. businesses processes that span several industries and support the understand the need for viable and efficient cold chain exports and sales of numerous other industries. The systems; they spend hundreds of millions of dollars United States has a competitive advantage in cold chain each year to build and maintain both cold storage and systems derived from some of the most advanced transportation systems, which allow U.S. businesses to technologies and logistics management services in the flourish. Export promotion and trade policy agencies world. should focus on the development of international cold chains through improved regulatory environments, Key Findings: Top Markets and Methdology increased skill level of workforce and encouragement of infrastructure investment, thereby promoting the This report assesses the global market for U.S. benefits of U.S. services. manufacturers and service providers in refrigerated supply chains (cold chain). The focus is primarily for Cold chain systems are crucial to the growth of global U.S. government (USG) decision makers to develop trade in perishable products and to the worldwide sound policy as well as to assist U.S. companies availability of food and health supplies. Each year, searching for market opportunities. billions of tons of fresh food products and millions of dollars’ worth of U.S. exports are lost due to poor cold The report details the basis for understanding the chain systems in developing markets. The World market and developing industry and export promotion Economic Forum lists food