Changing times demand new measures and innovations to keep up with the challenge. With the advent of new commerce - the popularity of Direct to Consumer channels, the boom in eCommerce, and growth in demand for niche and exclusive products– there is an exciting opportunity for brands (large and small) and a fresh set of alternatives for customers. Thanks to eCommerce companies and players like Swiggy and Zomato, you no more need to be a brand with big marketing budgets and supply chains to reach your customer. However, these growth opportunities do not come without creating significant challenges for the operations and supply chain and therefore demand new solutions.
Cold supply chain infrastructure
One such area that has required significant fundamental thinking is the cold supply chain. Traditionally cold chain implied refrigerated trucks moving products from one point to the other. These refrigerated trucks pick up a minimum of 500 kg to 1 ton of product and deliver to various destinations across the city or country. The challenge with new commerce is typically the size of the package and the fact that it may be the only cold chain package amongst the many ambient packages being distributed. Therefore, the cold chain technology of reefer trucks does not work in these scenarios, and we need something that is:
Independent of the vehicle form (bike, three-wheeler, or a four-wheeler) and package size
Able to maintain temperature without a connection to a power source
Can maintain temperature from 1 hour (hyperlocal) till 48 hours (intercity courier)
Passive cooled logistics solutions
Solutions based on Phase Change Technology or “Thermal batteries” have become very popular in this context. These are engineered chemicals with specific freezing and melting points (ranging from +18 degreeC for chocolates to -25 degreeC for ice creams). Unlike the earlier used glycols, these materials are designed to be non-toxic, non-flammable – and therefore suitable to be packed along with food products. These are used inside a plastic pouch or a bottle (like a gel pack) and kept in a freezer for a few hours. Once frozen, these can be put inside an insulated bag or a box and they can maintain temperatures for the desired period.
Unlike the earlier gel packs and dry ice options, these solutions give a very accurate temperature control. They, therefore, are more effective than even a reefer truck for high-frequency distribution. Different temperatures can be maintained in the same box using different PCM packs or cartridges depending upon the product to be delivered. This provides flexibility in operations and a much higher asset utilization without being dependent on dedicated assets like reefer trucks.
These solutions, also called passive cooled logistics solutions, are almost maintenance-free. The box or the bag does not contain any moving parts, and therefore chances of damage and downtime are almost negligible. The units can range from 2 liters to 2000 liters giving size flexibility to users. From an economic perspective, the capex and opex are up to 50% lower than refrigerated trucks. Also, one incurs costs only for what one uses and not the whole vehicle. These factors give this solution an unparalleled economic advantage and ensure a cost-effective delivery every time to the customer.
In addition, these solutions eliminate the use of fossil fuels which have conventionally been driving the cold chain. Therefore, these are not only economically viable but also environmentally sustainable.
For such applications, both the infrastructure and the mindset need to be very different from conventional cold chain operations focused on warehousing and trucking. It is interesting to note that even after multiple efforts, most traditional cold chain logistics companies have not been able to adapt their operations to offering these services. At the same time, regular eCommerce vendors (EV) and last-mile delivery companies like Swiggy, Dunzo, Wefast and Porter – to name a few have come to their rescue. These solutions fit their models very well and give them an edge over the traditional cold chain players.
The opportunity is still in its nascent stage and eCommerce is not even 1% of the total retail industry. It is growing at almost 100% per annum as per market estimates. Technologies and business models are evolving and new players are entering the space looking at its potential. EVs are also looking to disrupt last-mile delivery by offering cleaner and more cost-effective vehicle options. However, as this space matures, it is clear that adaptation to new technologies and innovation will define the winners in the race.
Rajat Gupta, founder and chief executive officer, TESSOL