Growth in Vietnam’s cold chain industry has substantial potential according to the Vietnam Cold Chain Market - Outlook to 2021 study released by the Indian-based Ken Research on October 24.

The industry is estimated to register a CAGR of 10.4 per cent during 2016-2021. The growing number of supermarkets, the launch of new cold chain projects, the surge in manufacturing, and the demand for meat and seafood will propel demand for cold storage in the years to come.

There are 20 professionally-managed cold storage providers and many other small independent cold storages in the country, but the latter are generally not trusted by end-users. As leasing costs among cold storage providers don’t differ to any great degree, the quality of storage facilities is key for customers. The number of cold storage providers is anticipated to increase in the years to come, backed by a surge in demand for better quality services among local and international establishments.

The report predicts that Konoike Vina, Swire Cold Storage, Lotte Logistics, CLK Logistics, Hung Vuong Corporation, Mekong Logistics, Kuehne Legal, and Preferred Freezer Services will continue to lead the market.

Vietnam’s domestic agriculture production is lagging behind its neighbors Laos and Cambodia in terms of supply chain development, with regular damage of 25-30 per cent to fruit and vegetable yields due to a lack of refrigerated transport and storage.

Vietnam is expected to have about 1,200-1,300 supermarkets, 180 shopping centers, and 157 department stores by 2020. Distribution centers, including cold storage, will also increase in number and capacity to fulfill demand.

The market is expected to be more competitive, with new cold storage investment projects developed by both local and foreign investors. The biggest new move is the 50,000-pallet cold storage facility at the Song Hau Industrial Zone in the Mekong Delta province of Hau Giang.

The project is in the initial phase of construction and being developed by Minh Phu and the Gemadept Corporation with total investment of $46.1 million. Once completed it will be the largest cold storage facility in the Mekong Delta.

Demand for chilled and frozen food is expected to surge across the country. The rise in the demand for cold chain services will be led by the expansion of cold chain companies to other cities in the country, such as the Mekong Logistics Company, which has plans to expand in markets of potential including Can Tho, Da Nang, Quy Nhon, Binh Phuoc, Hanoi, and Hai Phong.

The pharmaceuticals industry, meanwhile, is anticipated to grow at a five-year CAGR of 13.4 per cent during 2016-2021, which will also boost demand for cold storage and transport facilities, as some pharmaceutical products require a temperature-controlled environment.

Over the next few years, Vietnam’s logistics market will improve as companies and investors eye the cold chain, with their concern will no longer being on immediate cost but on improving quality in storage and transport.

Vietnam Economic Times