Mr. Jan Frank Country Director of Arctic Wolf Global, talks about Vietnam Cold Chain industry is growing rapidly due to higher demand from food and pharma sector, especially in the recent years: Ken Research

In conversation with Mr. Jan Frank, Country Director, Arctic Wolf Global, Vietnam, we tried to understand the Cold Chain Industry in Vietnam. We also discussed the challenges faced and factors driving the industry growth.

"The number of participants and investment trends in cold supply chains are driving the rapid growth of the Vietnam cold chain sector; however, variable electrical voltage and expensive cold store set up costs are the industry's key obstacles."

Q1. How would you like to describe the Cold chain industry in Vietnam?

The industry is constantly growing, which is mainly fuelled by a large number of players. There are some big players like Lineage, Transimex, ITL, and Lotte logistics. Additionally, the burgeoning middle class's rising income opens up additional opportunities for customers to buy high-quality, fresh organic goods. As a result, there is a rise in the need for cold storage, which drives up investment patterns in cold supply chains and opens up new business opportunities.

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Q2. Can you tell us about the challenges faced by the cold chain companies in Vietnam?

Longer construction times than for other types of logistics buildings present a barrier for the cold storage sector. Additionally, the cost of building might be up to two or three times higher than that of a typical warehouse. Due to the high cost, starting a large-scale cold storage project requires a significant financial commitment; therefore, a sustainable cold storage requires a minimum investment of 10,000 pallets and lack of stable voltage presents another significant operational challenge, making it difficult to maintain a steady temperature in particularly big warehouses.

Q3. Which are main hubs of cold storage warehouses in Vietnam?

Vietnam's key economic regions in the Southern provinces, especially around HCM and Hanoi account for majority of the cold storages. The northern region has adequate supply of cold warehouses to fulfil the demand of the end users. The Foreign enterprises are the potential investors in the cold storage market by owning the professional team and modern equipment.

Q4. What effects has the COVID 19 outbreak had on the Vietnamese Cold Chain Industry?

During the lockdown, as people' purchasing patterns changed from purchasing fresh goods from neighbourhood wet markets to turning to internet grocery retailers, the pandemic also highlighted the critical role of the cold chain. The increase in demand is forcing players to develop extra cold storage space in order to manage the unpredictable nature of imports that have been disrupted over the past two years, which has caused a construction boom in the nation.

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Q5. Where do you think would are the major developments for cold storage industry in the country?

Since the northern region has adequate cold storages to cater to the current demand, additional cold storage warehouses are expected to open in other regions of the country to reduce the demand supply gap. Majority of the new cold storages are being built in the Southern region (including HCM and Mekong delta) owing to the increase in industrial developments by the Vietnamese government in the area.

Q6. Who are the major end users of the cold chain services in Vietnam?

Currently, cold preservation systems are mainly applied for seafood, while other agricultural products only see a very low application level of these systems in Vietnam. Since Vietnam is one of the largest exporters of seafood, meat and seafood account for more than 60% of the total cold chain market also the market for processed meat will grow by an average of 11.8% between 2021 and 2025, which will further increase demand and ensure that the Meat and Seafood continues to dominate the Vietnam cold Chain market.

Q7. What are some of the new technology trends which are followed by the cold chain players in Vietnam.

One of the main problems with Vietnam's tech advancement is the high cost of choosing automation in cold storage.  However, the cold chain market in Vietnam is experiencing significant technological advancements, and players are employing cutting edge technologies like RFID and WMS to cater to the end user demand. Some players are experimenting with solar power in their cold storage facilities.

For more insights on the market intelligence, refer to the link below: -

https://kenresearch.com/automotive-transportation-and-warehousing/logistics-and-shipping/vietnam-cold-chain-market-outlook-to-2026/596105-100.html

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