Vietnam Cold Chain Market Research Report to 2021: Ken Research

How Cold Chain Market is positioned in Vietnam?

The cold chain market has increased at a CAGR ~% during 2011-2016. Vietnam represents an attractive opportunity for refrigerated logistics service providers to serve the growing pharmaceutical industry. The pharmaceutical industry grew from USD ~ billion in 2011 to USD ~ billion in 2013. The cold chain companies have constructed cold storage facilities making a positive impact on the cold chain market in Vietnam. Konoike Vina built a warehouse in Dalat in 2015. In 2016, Swire Cold Storage planned to begin the construction of a new LEED gold rated cold store near Hanoi, Vietnam. Various cold chain firms have increased their storage units, fleets and pallet capacity in order to increase their revenues. Example of ABA Cooltrans can be cited for the same which acquired ~ pallet-capacity cold storage facilities in 2016. Another example can be cited of CLK Cold Storage that inaugurated a cold storage warehouse covering an area of ~ sqm in Binh Duong. Number of investors investing in Vietnam cold chain market has also made a positive impact on the market. In addition to this, the government is also supporting the industry due to high demand making a positive impact on the cold chain industry. Various new firms were established in the country in the review period which made a positive impact on the market such as New Land Vietnam Joint Stock Company was established in Vietnam in 2016. Increase in the number of supermarkets and restaurant have triggered the demand for cold storage and transport systems to keep the products fresh and maintain their quality. There are approximately ~ supermarkets operational in the country. Vietnamese government has taken a proactive step to promote cold chain infrastructure by introducing financial incentives to attract foreign investment. Foreign logistics firms have a strong presence in Vietnam, capturing ~% of market share worth USD ~ billion.

Which Segment Dominates– Cold Storage or Cold Transport?

Cold storage dominated the cold chain market in 2016 by attributing ~% market share owing to the fact that the companies which demand cold storage services do not have their warehouses. The operation cost for storage is high so the companies outsource these services. Cold Storage services include refrigerators, chilled room, thawing room, freezer room, blast chiller and blast freezer. Local providers dominate the cold chain market in terms of designed capacity whereas foreign-owned providers are the market leaders in storage quality and management services. The cold storage market increased at a five year CAGR of ~% during 2011-2016 which had a positive impact on the cold chain industry of the country. The growth factors include retail business expansion in the country requiring cold storage to keep their stock in good quality. The temperature controlled storage is classified differently by various companies based on the temperature range. Lotte logistics has Cold Storage (10 degree Celsius to -30 degree Celsius) and Dry Storage (18 degree Celsius to -25degree Celsius). CLK Logistics has various temperature ranges including Super frozen (-50 degree Celsius), Frozen (-25 degree Celsius to -18 degree Celsius), Chilled (-5 degree Celsius to +5 degree Celsius), Low (0 degree Celsius to +15 degree Celsius) and Constant (5 degree Celsius to 25 degree Celsius).

Cold transport has contributed a share of ~% in terms of revenues in cold chain industry in Vietnam during 2016 as most of the companies maintain their own fleet for the temperature controlled transportation. The cold transport market increased at a five year CAGR of ~% during 2011-2016 which had a positive impact on the cold chain industry of the country. Cold transport involves several stages including procurement of the goods from manufacturing unit to different modes of transportation and delivery of the products to the retailers. All these stages add to the revenues of the cold transport market. There has been a rise in ‘just in time’ inventory systems utilized by various companies to meet the demand for different products such as meat, fisheries and agricultural products over the period 2011-2016 which has affected the cold logistics market positively. Moreover, the shipping through road and air are also accounted in this segment. The processed food has attributed to the cold transport segment due to the requirement of temperature controlled atmosphere and short expiration duration.

What have been the Major Trends and Development in Vietnam Cold Chain Market?

Convenience Stores and Mini Marts Drive Cold Chain Market in Vietnam: The restaurants, shopping malls and supermarkets have supported the demand for refrigerated transport. In recent years, the super marts and mini marts have become popular amongst the Vietnamese. This can be advocated from the fact that it was observed that there were 1,500 convenience stores across the country and this number is expected to increase in the future. In addition to this, there are 1,300 new supermarket and 350 trade centers that are in the pipeline for 2020 in the country. The modern retail trade concept has improved from being only two supermarkets in HCM.

Increased Investment in Vietnam Cold Chain Market: Two Japanese logistics company launched New Land Vietnam Japan Joint Stock Company, a four-temperature (room temperature, fixed temperature, refrigerated and frozen) cold chain logistics JV in Vietnam in 2016. The companies have constructed logistics center and trucks to consistently manage temperature among all food product operations including storage to shipment. CLK Cold Storage, JV established by Cool Japan Fund, Japan Logistic Systems and Kawasaki Kisen Kaisha, Ltd. has been operating in Vietnam for over 20 years and K Line Group is experienced in marine and air transport services. Another Japanese investor, Yamato Holdings is seeking partners to start a chilled delivery service in Vietnam as the demand grows for sushi and other Japanese cuisine in the country. The increase in the investment in the cold chain market in Vietnam has made a positive impact on the market.

Increase in Cold Storage Capacity: The cold chain companies have been increasing their cold storage capacity over the years and various companies are planning to increase it in future due to the growing demand for cold chain services in the market. The demand for cold storage and transport systems have increased over the years with rising pharmaceutical industry and frozen and processed food industry. The construction of a Cold Storage Warehouse in Ho Chi Minh City, Vietnam by CLK Cold Storage Company Limited in 2016 can be stated as an example. It is a JV established by Kawasaki Kisen Kaisha, Ltd. (“K” Line), Cool Japan Fund Inc. (Cool Japan) and Japan Logistic Systems Corp. (Japan Logistic Systems). In addition to this, Konoike Vina Company has increased a warehouse in Dalat in 2015 to increase its capacity.

Lack of Infrastructure: Cold chain industry in Vietnam is at a nascent stage because the company lacks proper infrastructure. The country has poor road connectivity and obsolete vehicle fleet which increases the logistics cost. Moreover, there is lack of storage space in the country which poses a great challenge to the cold chain industry. There are delays in unloading, lack of refrigeration and improper coordination along the supply chain in Vietnam which pose an issue to the cold chain industry in the country. The country has broken cold chain during transportation, storage and last kilometer. This issue has led to less revenue generation from the cold chain industry. Lack of infrastructure also led to loss of 25.0% – 30.0% of fruits and vegetables in 2016. In addition to this, a percentage of seafood and meat items are also destroyed on their way due to lack of refrigerated transport and storage.

How the Competition is prevailing in Vietnam Cold Chain Market

Vietnam cold chain market is fragmented with presence of major players such as Kuehne Nagel, Swire Cold Storage, Preferred Freezer Services, Schenker, Agility, APL, K-Line, Maersk Logistics, CLK Logistics, Panasato, Sojitz and Kokubu, Konoike Vina, Mekong logistics, Hung Vong and Lotte Logistics.

The players compete on various parameters including total space of temperature controlled area, number of temperature maintained fleets, local coverage area, number of pallets, number of offices, warehouses, production capacity, clientele and verticals.

The companies in the country also strengthen their positions by offering multiple value added services to the clients. The companies producing components and materials for refrigeration machines could consider opening a production facility in Vietnam to enter the market.

What is the Future Outlook for Vietnam Cold Chain Market?

Vietnam cold chain market is anticipated to increase at a CAGR of ~% during 2016-2021 owing to the surging demand for refrigerated deliveries and warehouses near major population centers. The cold chain market will be influenced in a positive manner as the companies are planning to augment their capacity by increasing the number of warehouses in the country such as Konoike Vina. Also, Hung Vuong Corporation plans to increase its production capacity.

Yamato Holdings Co., Ltd., plans to launch a refrigerated transport service in Vietnam in 2017 for delivering perishable foods from Japan to Japanese restaurants and specialty supermarkets in Vietnam. Swire cold storage plans on expanding its functions by constructing new cold storage facilities. This will include the completion of its Bac Ninh project which will be constructed in August 2017. The rise in demand for cold chain services will be led by the expansion of the cold chain firms to other cities of the country such as Mekong Logistics Company Limited has plans of expanding to its potential markets Can Tho, Da Nang, Quy Nhon, Binh Phuoc, Hanoi, and Hai Phong in future.

Companies Cited in the Report

List of Companies Companies Covered in the Report

Konoike Vina

Swire Cold Storage

Lotte Logistics Vietnam Co. Ltd.

CLK Logistics Vietnam

Hung Vuong Corporation Major Players in Vietnam Cold Chain Market

Sojitz and Kokubu

Mekong Logistics Company Limited

Kuehne Nagel

Preferred Freezer Services

Panalpina