China has set a new target of forming a properly arranged, smoothly operated and extensive infrastructure for cold supply logistics by 2020, according to an opinion paper released by the General Office of State Council on this 13 April, as part of a wider program targeting food safety management reform and consumption upgrade.
The development of cold supply logistics in China lags far behind the growth of its’ fresh agricultural markets. The issues are magnified by other problems such as inadequate regulatory standard, poor infrastructure and technical issues.
The opinion paper calibrated the guiding principles of the new reforms based on a number of imminent challenges facing cold chain logistics on regulatory, industry and technical fronts, sparking speculation over a potential wave of innovation and re-distribution of market management resources as well as a consequential eradication of grey channels.
Fortified regulatory system
The reform on cold chain logistic will require sweeping legal changes, with an emphasis on formulating and implementing a wide spectrum of technical and temperature control standards which can comprehensively strengthen the legal framework covering the entire cold supply chain. The new standards should also reference the food safety law, agricultural product quality safety law and law of standardization. It will be an effort that relies on referencing international frameworks while encouraging industry association and industry leaders to participate in order to facilitate the development of those standards, reflecting a shift in the government’s legislative strategy that increasingly 3rd party aid, market forces and global trends.
Fresh meat, aquatic products, dairy products and frozen food are among the first to be addressed, with corresponding mandatory standards said to arrive soon which will be subject to a dynamic revision scheme that uses recent/ongoing investigative and research results to guide further amendment. Temperature monitoring device in refrigerated truck is another primary concern of the opinion paper. The formation of a related temperature logging institution that monitors and records temperature during the whole cold supply chain is also being developed.
In a bid to improve information transparency that is severely lacking in current supervision and inspection of cold chain logistics, all relevant governing bodies involved have been urged to establish a credibility assessment system in collaboration with industry association, third party institutes of credit investigation and all kinds of public information platforms.
Internally, a series of institutional barriers to the healthy development and upgrade of the industry will be gradually removed, including overcomplicated license registration procedure, inconsistency of regulatory measures between different regions and procedural obstacle in custom clearance. It is largely viewed as a necessary step to realize the market potential and should incentivize investment and precipitate a much needed injection of private sector capital. Detailed adjustments in a host of practical application scenarios will also be made to safeguard the interests of business owners investing in sustainable technologies and eco-friendly logistics, which will include preferential tariffs on water, gas and electricity, land use, label management etc.
An infrastructure overhaul
The transformation of cold chain logistics infrastructure envisioned in the opinion paper is pervasive, ground-breaking and technically orientated. In the next few years, the network of cold supply chain will stretch from major manufacturing/production bases to major consumption areas in an innovative plan called “the first kilometer and the last kilometer”. This plan aligns with China’s most recent five-year plan which calls for the optimization of convenience facilities to reassure consumers who are growing more and more wary of supply chain vulnerability. This is a massive undertaking that prioritizes application of advanced supply chain equipment at production sites. To increase the inspection efficiency, new supply chain logistic hubs will be developed at all main stages along the cold supply chain, putting in place a potent screening mechanism before market entry.
In light of industry development, the government policy on cold supply logistics tend to encourage companies with recognized technical strength to work closely with producers towards the ultimate goal of improving logistic services. This will be supported by a coordinated scheme which aims to integrate air, water and road transportation.
“Internet +” is explicitly noted in the opinion paper, leading to an IT-based technical reform that centers on adoption of advanced information technology such as satellite positioning, mobile network and “Internet of things”, in addition to data- and information-sharing between different regions, governments and companies.
Investment and incentive programs that prioritize scientific research on the stability, hygiene and microbial safety of fresh agricultural products and perishable food during transportation/storage will be significantly enhanced. Companies will also be encourage to use eco-friendly materials, safe and energy-saving refrigerant, develop new cool-storage materials and adopt advanced energy saving and storing equipment. To this end, third-party certification and testing services are largely welcomed to aid in the assessment of cold supply logistic service providers.
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