By Eamonn Ryan from the report
The cold chain sector is a vital component of Africa’s economy, enabling the transportation and storage of perishable goods and temperature-sensitive products, including pharmaceuticals, food and vaccines. This is Part 3 of a six-part series.
In line with the GCCA’s Call to Action: ‘Harnessing the power of the cold chain to deliver African prosperity, resilience and trade’, the report underscores the importance of the cold chain sector in promoting food security, public health and economic stability across Africa. The cold chain’s role in ensuring the integrity of temperature-sensitive goods cannot be overstated, especially in the context of Africa’s growing demand for pharmaceuticals, perishable goods, and vaccines.
By adopting the recommended policy reforms, technological innovations, and investments in renewable energy, Africa can not only bolster the resilience of its cold chain sector but also drive sustainable economic growth. Multi-sector collaboration, including partnerships between the public and private sectors, will be essential to overcome the challenges posed by loadshedding and ensure a robust, efficient and environmentally responsible cold chain infrastructure across the continent.
Since 2007, South Africa has faced persistent electricity shortages, leading to the implementation of loadshedding to prevent system-wide power failures. Eskom, the state-owned power utility, has been forced to reduce electricity supply across the country through staged blackouts. These power interruptions have severely impacted industries dependent on reliable electricity, especially the cold chain sector, which relies on stable refrigeration systems to preserve the quality of perishable goods.
Loadshedding disrupts the temperature-controlled environments in cold storage facilities, refrigerated transport and containers. Fluctuations in power cause temperature fluctuations, leading to spoilage, wastage and significant financial losses. The food manufacturing and pharmaceutical sectors are particularly vulnerable, as they rely on a consistent power supply to safeguard the safety of their products. The impact on these industries has been devastating, compounding the existing challenges of an already strained cold chain system.
In 2022, South Africa witnessed a sharp escalation in loadshedding, with Stage 4 blackouts implemented to manage power shortages. Stage 4 involves a 4 000 MW cut in supply, significantly affecting the stability of the electricity grid. By mid-2023, South Africa had surpassed the total number of loadshedding days recorded in previous years, with blackouts occurring on more than 200 days. These disruptions, particularly during Stage 6 or even Stage 8 blackouts, created energy shortfalls, leaving entire regions without power for up to 12 hours a day, causing substantial damage to the cold chain sector.
While South Africa experienced a brief period of uninterrupted power from March 2024 onwards, the underlying challenges of ageing infrastructure and Eskom’s management inefficiencies remain a significant threat to the long-term stability of the country’s power supply. The cold chain sector must remain vigilant and proactive in addressing these challenges, as the continued reliability of the electricity grid is crucial for maintaining the integrity of temperature-sensitive products.
Financial impact of loadshedding on cold chain operators
The financial burden of loadshedding on the cold chain sector has been severe, with many businesses incurring skyrocketing costs to maintain the temperature integrity of their products. According to the GCCA’s survey, respondents reported that the costs of keeping refrigeration systems operational during power outages ranged from less than R50 000 to over R1 000 000 per month. This reflects the significant financial strain placed on companies, which are forced to rely on backup power solutions such as diesel generators and solar power systems to ensure that their refrigeration systems continue to function.
The operational costs associated with running backup power solutions, particularly diesel generators, have significantly increased due to rising fuel prices. The financial pressure has led businesses to pass these costs onto consumers, contributing to a rise in the price of food and other perishable goods. This price increase disproportionately affects lower-income households, as they spend a larger portion of their income on food, exacerbating food insecurity and increasing social inequality.
In 2023, loadshedding contributed to a 0.5 percentage point increase in inflation, according to the South African Reserve Bank. The higher cost of food, combined with increased operational expenses for businesses, further escalates the challenges faced by consumers, particularly those in vulnerable socio-economic groups.