Vietnam Cold Storage Market and The Recent Development

To increase availability and to minimize losses while enhancing profitability, businesses need some help to maintain their products’ quality. This is important especially for perishable products. Cold storage is increasingly becoming the solution in many parts of the world, Vietnam included.

Recently, there has been a growing demand for Vietnam cold storage market across various industries. A prominent market research firm, GMI Research on their Vietnam cold storage market forecast estimated that it would see substantial increase in the years ahead. This rapid development is owing to the rising number of exporters and importers in medications. In addition, there is also a growing middle class which prefers premium imported meats and fresh produce.

Vietnam’s cold storage industry is in its early stages of development and expansion. Cold storage warehouses, crucial components of the cold chain, are facilities engineered with precise environmental controls. There is also ongoing upkeep to safeguard goods at optimally low temperatures. Therefore, reliable electricity supply is critical to prevent damage to stored items.

Perishable items requiring cold storage include food, chemicals, among others. Cold storage warehouses typically house tenants such as third-party logistic firms, specialists in cold chain logistics, or supermarket chains.

The cold storage sector in Vietnam is made up of both independently run and commercial facilities. Geographically, these facilities are often clustered near seaports, industrial parks, and rivers. The southern region, fueled by growth in agriculture and fisheries, leads in industry development.

Vietnam’s cold storage industry has seen robust growth in the last two years. It is propelled by rising export and import activities involving vaccines and medicines. This upward trend is anticipated to continue post-pandemic. It is bolstered by innovations in healthcare and the introduction of new therapies.

The scarcity of cold storage facilities presents an opportunity for this sector. Despite high demand, only a handful of companies have ventured into this segment, leaving a gap in comprehensive cold storage solutions. Despite significant demand, investors remain cautious about entering this sector due to various hurdles. One of the primary obstacles contributing to supply scarcity is the substantial initial investment needed for constructing and maintaining cold storage warehouses.

Building cold storage facilities necessitates specialized equipment, ongoing inspections, and significantly higher electricity consumption in comparison to typical logistics facilities. In fact, constructing cold storage facilities can be 2 or even 3 times more costly than building conventional warehouses. Moreover, construction periods often extend from 6 months to 1 year with lease agreements typically lasting between 15 to 20 years. It is further restricting the market's supply.

Consequently, despite the potential long-term advantages, businesses lacking substantial financial backing are reluctant to undertake the construction and operation of cold storage facilities. In Vietnam while major companies invest in the storage infrastructure, smaller and mid-sized enterprises rely on the saturated rental market.

Furthermore, the intricate nature of warehouse management, particularly in sectors such as agriculture creates hurdles that deter investors from entering Vietnam cold storage market. While cold storage effectively addresses the storage and quality maintenance of agricultural products, operators face significant challenges due to the seasonality of the goods.