Compiled by Eamonn Ryan from the presentation
At the 2024 GCCA Africa Cold Chain Conference held on in Cape Town Evans Chinembiri, an economic researcher with Tutwa Consulting Group, delivered a presentation on the findings of the ‘GCCA Energy Load Shedding Study’, highlighted the significant challenges posed by electricity disruptions to the cold chain sector.
Chinembiri shares key insights from a comprehensive study examining the impact of load shedding on food security and cold chain logistics. As South Africa was at the time experiencing increasingly frequent power outages, the sector’s resilience is under severe strain.
“The cold chain is vital for food security, and we’ve seen how vulnerable it becomes during power disruptions. Extended periods of loadshedding have exposed significant weaknesses in this sector, which are felt across the entire supply chain,” Chinembiri says.
Despite the recent respite from power outages, the researcher stresses that the threat of future disruptions remains real, and the lessons learned from last year’s energy crisis are still relevant.
The study sought to understand the operational challenges faced by businesses in the cold chain, focusing on the reliability of equipment, continuity of operations and the broader economic impacts. The researcher emphasises the importance of addressing these vulnerabilities, especially as the sector plays a central role in ensuring that food products reach consumers in a safe and timely manner.
Tutwa’s team employed a multi-pronged approach to assess the local impact of load shedding. The research involves reviewing existing literature on the subject, particularly looking at countries that have dealt with power disruptions for a longer period. By studying global best practices, the researchers hoped to identify strategies that could be applied locally to build resilience in South Africa’s cold chain infrastructure.
“Other countries have had to grapple with these challenges for much longer than we have, and there’s much we can learn from their experiences,” says Chinembiri.
Key findings and recommendations
The study reveals several critical findings regarding the cold chain’s vulnerabilities. Loadshedding not only disrupts daily business operations but also threatens equipment reliability and the overall continuity of cold storage and transportation. Prolonged power outages lead to significant losses in perishable goods, affecting everything from food supply to pharmaceutical distribution.
To address these challenges, the study identifies six key policy interventions (see below) aimed at strengthening the cold chain. These recommendations focus on improving infrastructure, enhancing collaboration between public and private sectors, and creating strategic partnerships to support businesses facing power interruptions.
Among the policy suggestions were calls for more widespread investment in backup power solutions, such as generators and battery systems, as well as the establishment of specialised cold chain hubs in key locations. Additionally, fostering alliances with energy providers and industry stakeholders could provide better bargaining power to secure more reliable energy solutions for critical sectors.
Chinembiri emphasises the importance of not allowing the recent reprieve from load shedding to lull the sector into complacency. “The threat is still there, and we need to be prepared for the possibility of future disruptions. It’s essential that we start thinking long-term about building resilience in the cold chain now, before the next crisis hits.”
The study serves as a crucial call to action for policymakers, industry players, and stakeholders to take proactive measures in securing the cold chain and ensuring that South Africa’s food and pharmaceutical sectors are better equipped to withstand future power disruptions.
“We spoke to about 15 sectors and industry experts, and while some of the challenges were already known, there were several unexpected insights that emerged, which are critical for moving forward,” says Chinembiri.
The study uncovered several major impacts of loadshedding on the cold chain, with one of the most significant being its direct effect on food inflation. According to the research, loadshedding contributed to an estimated 0.5% increase in food prices, a substantial burden for lower-income households that allocate a large portion of their income to food.
From an operational standpoint, businesses in the cold chain sector faced severe disruptions. These included reduced staff productivity, increased equipment breakdowns and a rise in maintenance costs—all of which added significant financial pressure. Many businesses responded by investing in alternative energy solutions, such as solar panels and diesel generators. However, these solutions came at a high cost, with some businesses reporting upfront capital expenditures ranging from R500 000 to R1 million for solar and battery installations, and operational costs for diesel generators running between R50 000 and R100 000 annually.
Despite the financial strain, the study also highlighted some positive outcomes. In response to the challenges posed by loadshedding, many businesses sought to optimise their operations. This included identifying inefficiencies and streamlining processes, which not only helped businesses survive but also had a positive environmental impact by reducing energy waste.
Based on these findings, Chinembiri outlines six key recommendations aimed at strengthening the cold chain and ensuring its resilience in the face of ongoing power disruptions:
- Incentivise renewable energy investments: The study calls for more meaningful incentives for businesses to invest in renewable energy solutions, such as solar power and battery storage. While some incentives already exist, there is room for improvement to make them more impactful and accessible to cold chain operators.
- Suspension of duties on solar and battery components: A bold recommendation is the suspension of import duties and VAT on solar components and batteries for a year, which would lower the upfront costs of renewable energy solutions for businesses in the cold chain sector.
- Support for technology solutions: The study advocates for investment in technology that enables real-time tracking and monitoring of cold chain logistics. This could enhance efficiency and reliability, especially for exporters dealing with perishable goods. Public-private partnerships could help drive down the cost of such technologies, making them more accessible to businesses across the sector.
- Streamline trade facilitation: Another recommendation is to improve trade facilitation within the African Continental Free Trade Area (AfCFTA), particularly at border posts. Reducing waiting times, such as at the notorious Beitbridge border, would help cold chain operators move goods more efficiently and reduce the risks associated with extended transit times.
- Use the cold chain as an energy storage resource: Chinembiri suggested exploring the potential of the cold chain sector as an energy storage solution through demand-side management. This would require extensive coordination among all stakeholders but could provide a valuable resource in balancing the national energy grid.
- Reduce downtime from equipment failures: Finally, the study recommends efforts to reduce downtime caused by equipment failures linked to power disruptions. This could involve investing in more reliable equipment and improving maintenance protocols to ensure that cold chain operations continue running smoothly even during load shedding.
Chinembiri concludes by stressing the importance of collaboration between government, industry players and other stakeholders in addressing the challenges posed by loadshedding. “We need to bring together all the relevant parties to take action, not just talk about it. It’s time to move from vision to action,” the researcher says.
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