Containerization, Cold Chains and the Flexibility of Supply Chains

Globalization and more reliable cold chains are starting to have significant impacts on commodity chains, by expanding the options available for each sequence of the supply chain, which results in an increase in the quality of products available on markets as well as lower costs. The above example is a good illustration how commodity chains can become more flexible with cold chains. Conventionally, langoustines were fished off the coast of Scotland, brought to a nearby processing plant where they were mechanically pealed. After a maturation period of about three weeks in cold storage, the langoustine meat was then processed (e.g. cooked and breaded), packed and then distributed to the main United Kingdom market.

By using the cold chain technology at the global level, it becomes possible to relocate part of the process to a lower cost location and at the same time improve the quality of the product. In the above case, after freezing the langoustines are placed in ISO reefers and shipped by containership to Thailand, which takes about three weeks. Such a change in the supply chain appears to be counterintuitive from a distance perspective as it increases to amount of energy used. However, a few nuances must be brought forward. Since the containerized trade between Europe and Asia is very imbalanced, the cold chain benefits of a significant discount on the UK - Thailand transport chain, in the range of 50%. The cargo is carried on containerships, offering economies of scale and the most environmentally efficient mode per unit carried. In Thailand, the Langoustines are manually peeled, which improves the quality of the product. Then, the peeled langoustines are shipped back to the UK. Since the maturation process takes about three weeks, the reefer acts at the same time as a transport unit as well as a maturation warehouse, conferring additional economies since no more warehousing space is required for that process (reduced land take). The final stages, processing and packaging are taking place in the UK market.