Briefing Note Integration of Cold Chain into Inland Waterway Transportation in West Bengal Market Forecast The development of the cold chain sector is one of provides economic benefits but also consumes less the key focus areas of the government of West energy and releases lower GHG emissions per Bengal and the private sector since robust cold tonne-km of transportation, as compared to roads. chains will not only help in reducing food loss and In 2016, the Indian Government notified 111 inland ensure food security but will also help in improve waterways as National Waterways of India under farmers’ income by providing necessary market the National Waterways Act, 2016. To support the linkages. The cold chain demand for food is poised GoWB in actualizing the economic and logistics to grow with the projected growth in production, potential of KMA, the World Bank appointed KPMG changing consumer patterns, higher thrust for IIR consortium to undertake a study to undertake a exports. However, the growing Temperature market analysis to support the ongoing West Controlled Logistics (TCL) demand will also lead to Bengal Inland Water Transport, Logistics, and higher Greenhouse Gas (GHG) emissions and higher Spatial Development Project (WBIWTLSDP). use of energy. This highlights the need of To identify the relevant perishable commodities for developing the cold chain sector sustainably the study, in the Baseline Assessment the KPMG IIR through the use of modern and energy-efficient consortium studied the key features of the technologies and low Global Warming Potential commodities in terms of the temperature and (GWP) refrigerants in the cold chain sector. As per storage requirements, shelf life and improvement India’s Cooling Action Plan (ICAP), the cooling with TCL, post-harvest losses, production, and demand is projected to grow by 2.2 to 3 times by consumption patterns, etc. In addition, the current the next decade. The ICAP provides a long-term adoption of cold chains in different value chains vision towards promoting sustainable cooling (Domestic-Fresh, Domestic- Cold storage, EXIM) of solutions across sectors which are expected to these commodities was also assessed to reduce 12% of refrigerant usage and around 8-12% understand the maturity levels (Nascent, Emerging, of associated energy consumption by 2030. Consolidating, Mature). The shortlisted In line with its vision of improving cross-sectoral commodities included: fruits (banana, apples, energy efficiency and reduction in GHG emissions, oranges, grapes) and vegetables (potato, tomato, the Indian Government, apart from launching the carrot), fisheries and milk. The Market Forecast ICAP and ratifying the Kigali amendment, has also report provides the estimation of the market been focusing on developing its inland waterway potential for TCL demand in the short term (FY transportation (IW) capabilities to promote an 2026) and long term (FY 2035). alternate mode of transport which not only Demand drivers & enablers Based on the Baseline Assessment, the key demand drivers and enablers which are expected to drive the TCL demand in the KMA hinterland for the shortlisted commodities were identified, and are illustrated in the figure below: TCL demand projections in Business-As-Usual scenario A. Fruits and vegetables The growth in TCL demand for fruits and vegetables is largely driven by factors such as increased commodity production, changing consumption patterns, growing frozen food industry, and cold chain infrastructure creation targets under the ICAP. Total cold chain demand for fruits and vegetables (including potato and frozen F&V) is expected to grow from 2.5 million tonnes in FY 2026 to 4.2 million tonnes in Figure 2: TCL FY 2035 in the KMA hinterland in the demand for F&V - BAU scenario. The total TCL demand for BAU scenario F&V is expected to grow at a steady rate of 5.23% till FY 2026 and slightly increase to grow at a CAGR of 5.82% in the long term (FY 2035). The cold chain demand Figure 1: TCL for potato is expected to grow from the demand for frozen existing 1.6 million MT to 3.5 million MT F&V – BAU scenario in FY 2035. The frozen food demand is expected to grow at 18% over the short term and 5% in the long term. B. Fisheries The pack house infrastructure demand will be driven by the production growth and demand for processing units/cold storage and reefer transport will be driven by the growth in per capita consumption of fish. Demand for domestic fish processing will be driven by industry growth estimates. As the majority of the fish is consumed in the fresh state, the key component for TCL demand is post-harvesting (ice flakes in insulated boxes). TCL demand for cold storage/processing units and reefer Figure 3: TCL demand for fisheries - BAU Scenario transportation (primary, secondary) is driven by processed domestic and export fish only, which have lesser volume in the hinterland. Total cold chain demand of 1.7 million tonnes in FY 2026 and 2.7 million tonnes in FY 2035 is estimated from fisheries in the KMA hinterland in the BAU scenario. C. Milk It is expected that the growth in TCL demand for milk will be driven by the growth of per capita milk consumption. It is also anticipated that Tetra Pak milk consumption will also grow in the coming years driven by the growth of Tetra Pak manufacturing units in the state (for example, Keventers, Amul, ITC). Total cold chain demand of 4 million tonnes in FY 2026 and 7 million tonnes in FY 2035 is estimated from milk in the KMA hinterland in the BAU scenario. Figure 4: TCL demand for milk - BAU Scenario Integrating Inland Water Transport with existing commodity cold chains The increasing need for temperature control to prevent food losses, growth in production of perishable commodities, increase in international trade, along with the rising demand for packaged food and its long storage amidst the pandemic is driving the growth of the cold chain market. The potential corridors shortlisted for IW integration during baseline assessment have been taken up for Total Logistics Cost (TLC) assessment to identify the potential for conversion from current road transport to IW . The key components of the road-based movement vis-à-vis IW and Ro-Ro based IW transportation used for Total Logistics Cost comparison are depicted in the figure below: Figure 5: TCL components of road transportation The integration of IW can be distributed in the longer distance IW movements (primarily break bulk or containerized) and Ro-Ro movements on shorter and strategic distances (river crossing, difficult terrain etc) based on various parameters such as distance between terminals and origin/destination clusters, commodity type, packaging type and vehicle type. ‘To-be’ scenario for integration with IW movement on longer distances shall consider the movement of cargo through NW-1 or IBP Route and first and last mile connectivity by road. In this scenario, entry and exit IW terminals were identified based on the terminal located nearest to the origin/destination of the cargo. The key elements of the movement and relevant TLC elements have been depicted in the figure below: Figure 6:TCL components of IW transportation To-be’ scenario for Ro-Ro based IW movements shall consider the movement of cargo through existing or to- be proposed Ro-Ro terminals in addition to first and last mile connectivity by road. In this scenario, Ro-Ro terminals were identified based on optimum crossing of river from west to east, while considering lowest possible distance to the origin/destination of the cargo. The impact of economic cost savings in terms of reduced energy consumption per ton km have also been estimated and considered while carrying out the TLC comparison for road vis-à-vis IW transport. In FY 2020, there is a saving of INR 1.9/ tonne-km of energy costs when IW is used instead of road transport. This saving might increase to INR 2.9/tonne-km by 2035 which will lead to huge savings in terms of energy consumption. TCL demand forecasting in Desired State scenario A. Fruits and vegetables Figure 8:Post Harvesting TCL demand for Figure 7: Reefer Transport and Cold Storage/Processing unit F&V (excluding potato) As the current adoption of cold chains is low in the KMA hinterland, the development of packhouses would propel the TCL demand in the long term. The total cold chain demand of F&V is expected to grow manifold to reach 24 million tonnes by FY 2035 in the desired state scenario from the existing 0.2 million tonnes. Under the desired state, with the introduction of packhouses for post-harvest handling of F&V, the demand is expected to grow for packhouses and the remaining components in the cold chain will have a minimal contribution. Potato FY 2035 3.950 The cold chain demand for potatoes is primarily cold storage. The cold chain demand for potato is FY 2026 2.374 expected to grow from the existing 1.6 million FY 2020 1.565 tonnes to approx. 4.0 million tonnes by FY 2035 in the Desired state scenario. Figure 9: TCL demand for potato-Desired State B. Fisheries Cold storage processing units are the major component of TCL demand for fisheries. The demand for integrated processing units is expected to increase from the current 0.8 million MT to 1.5 million MT by FY 2035. Figure 10:TCL demand for fish - Desired State scenario C. Milk Additional or modified TCL infrastructure is not recommended to develop the desired state of milk, since there are no losses in the value chain of milk (<1%). The desired state TCL demand is expected to remain the same as that in the BAU scenario. Total TCL demand in the KMA hinterland for F&V, potato, fish, and milk is expected to grow from 6.31 million tonnes in FY 2020 to 13.61 million tonnes in FY 2026 and 37.48 million tonnes in FY 2035 in the desired state. The demand is projected to grow at a CAGR of 5% in the BAU scenario and 13% in Desired state scenario. Infrastructure needed to address TCL demand in KMA It is noted that there is a significant gap in the TCL demand and supply of packhouses in the desired state scenario. However, it is to be noted that the development of infrastructure will be aligned to the demand. In order to develop modern packhouses, farmers need to collaborate and coordinate so that the facilities can be efficiently utilized. It is also proposed that these packhouses may be developed by the FPOs or farmer associations post detailed assessment of the crops in the region and volume that can be shifted. In order to bridge the overall cold chain gap, necessary interventions need to be undertaken by relevant stakeholders including central government, state government, and private parties to develop sustainable TCL infrastructure, using efficient technology and low GWP refrigerants. Table 1: TCL Demand-Supply gap: Desired state TCL Supply Targets TCL Demand in KMA Sr. Cold Chain Shortfall/Surplus Units in KMA as per ICAP – Desired State No Infrastructure FY 2026 FY 2035 FY 2026 FY 2035 FY 2026 FY 2035 1 Packhouses Nos. 16 71 909 3,578 (893) (3,507) Ripening 2 Nos. 38 79 11 15 27 64 chambers Reefer vehicles No. of 3 NA NA 13,904 38,754 - - (PT+ST) trips Million 4 Cold Storage 2.29 3.82 2.92 4.86 (0.63) (1.04) MT Source: (a) APEDA (b) MPEDA (c) ICAP, 2018 (d) Stakeholder Interactions (e) KPMG IIR Consortium Analysis Key Recommendations Although most horticultural products for local The use of alternatives to diesel-driven vehicles and consumption are transported unrefrigerated in diesel-driven refrigeration systems is also possible. diesel-powered trucks there is a potential for these To use electric vehicles there would need to create to be moved onto IW /Ro-Ro through fast ferries. an efficient charging infrastructure. Ideally, This would lead to an overall reduction in emissions renewable power sources should be used to charge and lesser road congestion in the KMA. For new the vehicles which would also require energy equipment, the most efficient transport for local storage. Although other low emission vehicles are deliveries would be to use consolidated loads on being developed (e.g., solar-powered refrigeration 13.6 m trailers and to transport these trailers on systems on vehicles) these are still in the testing fast fuel-efficient ferries. A 40’ mariner container or and development stages and are not available on equivalent-sized truck can carry 20 ISO pallets the market. However, such systems should be kept whilst a 13.6 m trailer can carry 26 pallets. This under review as once they become available there represents a reduction of around 25% of emissions may be great potential for them in India. as the fuel consumption of a truck or trailer is There is also a need to inform operators and end- roughly equivalent despite the additional cargo. users of the benefits in terms of saving energy and Further consolidation onto IW would represent applying low GWP refrigerants. Therefore, training further emission savings as the fuel consumption of and skills across the whole cold chain are essential the ferry would be less than the combined for the uptake of low GHG emissions cold chain consumption of 12 trucks. Refrigerated marine technologies. The detailed technology containers which are principally used for the export interventions for energy-efficient technologies, use market could be moved onto barges provided there of low GWP refrigerants, and technologies for was sufficient infrastructure installed. integration with IW /Ro-Ro have been discussed in the Module 3 report. West Bengal has the potential to become a cold • Setting up definitive targets in line with the chain logistics hub and attract private investment national targets set in the ICAP like provided key market failures are addressed through reduction in cooling energy demand by policy reforms. These include: (a) bridging the 30% from refrigerants by FY 2035 infrastructure and connectivity gaps; (b) enabling logistics policy and institutions for private sector • Promoting the use of energy-efficient engagement; (c) supporting land-use policies, and refrigerant-based cooling technologies as (d) access to finance. With the recognition that well as not-in-kind technologies to reduce efficient logistics systems are and increasingly will food loss become of paramount importance for the competitiveness of West Bengal’s economy. • Policy interventions for market transformation, including public The ICAP has considered the interdependencies procurement of proposed futuristic cold among policy interventions and strives to chain technologies at each stage of the harmonize energy efficiency with the HCFC phase- supply chain out and high-GWP HFC phase-down schedules. It also re-emphasizes the principles enshrined in the • Include energy-efficient technology Country Programme of India for the phase-out of training and certification of technicians Ozone Depleting Substances (ODS) - to minimize through adequate skill development economic dislocation and obsolescence cost and among the state’s youth including training maximize indigenous production for combined of energy auditors of cold chain operations environmental and economic gains. to balance the transition to energy- efficient, low-GWP refrigerants There is an inherent need to formulate targeted policies for the greening of the state’s cold chain. • Additionally, the state can also focus on The State of West Bengal can implement a the development of energy-efficient and wholesome Logistics Policy or can implement a renewable energy-based cold chains and specific Cold Chain Policy for the State which can increase R&D efforts to foster an include policy options to drive sustainability in cold innovative ecosystem to support the chain operations in KMA like the following: development and deployment of low-GWP refrigerant alternatives. Reference Document Baseline Assessment Report (KPMG & IIR, 2022a) Review of Cold Chain Technologies, Challenges and Potential (KPMG & IIR, 2022b) Market Forecast Analysis (KPMG & IIR, 2022c) DISCLAIMER This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. All questions and queries relating to this brief may be addressed to [Name] [Email] The World Bank, 1818 H Street NW, Washington DC 20433, USA;