Robust expansion of modern trade retail and food service chains set to boost domestic cold chain logistics, according to FiinGroup's Vietnam Cold Chain Market Report 2019.
FiinGroup expects Vietnam’s cold chain industry will reach $169 million this year, fueled by the development of the processing industry and modern retail.
The cold chain market is fragmented, with 44 specialized providers serving rising demand from food sectors including meat and seafood imports and exports and food processing. Approximately 80 percent of demand for cold chain comes from food sectors.
The robust development of modern trade retail, such as consumer food services, supermarkets, and convenience stores, is also considered a key driver of the sector. Modern trade retailers are optimistic, with a rise of 40 percent in the number of outlets in 2018, to 4,200.
These players also tend to outsource cold chain logistics given the robust expansion and requirement for logistics cost optimization, creating a bright outlook for domestic cold chain logistics providers. By segment, given the fragmented nature of the market and rising demand, FiinGroup expects consolidation in cold transportation in the next few years, with the rise of leading specialized players such as ABA Cooltrans and Tan Bao An.
Cold storage in Vietnam has seen aggressive expansion by both local and foreign players in recent years. According to FiinGroup, the total designed capacity of rented cold storage in Vietnam reached 600,234 pallets in 2018.
Local providers such as Hoang Lai and Phan Duy lead the market in terms of designed capacity, while foreign cold storage providers such as Emergent Cold, PFS, and LOTTE Logistics are market leaders in terms of quality and management services.
In particular, foreign-owned players offer multiple temperature zones (frozen, chilled), barcodes, inventory management systems, and diverse value-added services (classification, labeling, barcoding, and distribution) at high prices.
The market is more developed in Vietnam’s south thanks to high demand from seafood exports and retail. Meanwhile, the northern market saw a resurgence in 2015, with a rise in designed capacity from 26,750 pallets (2015) to 71,750 pallets (2018). As a result, the north is facing a temporary supply surplus and low utilization rate, especially for new facilities. FiinGroup forecasts that the north will reach equilibrium in the next two or three years.
Given the rising demand for cold storage, many providers, especially foreign firms such as CLK and Anpha, plan to make new investments with a total additional capacity of approximately 60,000 pallets for cold storage during the 2019-2023 period.
Cold transportation in Vietnam has two main segments: cold container and bulk. Approximately 11 percent of container throughputs via seaports (equivalent to 2 million TEUs in 2018) are refrigerated containers, driven by the continuous increment in import-export activities and infrastructure improvements.
The market is fragmented and seeing fierce competition from many small and medium-sized players. Key names are local players including ABA Cooltrans, Binh Minh Tai, Tan Hung, and Quang Minh. Their competitive advantages are a high-capacity fleet of refrigerated trucks, salespeople, and service quality (delivery time, temperature control, and value-added solutions).
According to FiinGroup’s analysis, full chain providers have outperformed the market, with a net profit margin of 19 percent, thanks to comprehensive expertise that offers value-added solutions. Cold transportation companies also achieved impressive results as their profitability ratios resemble that of full cold chain logistics companies.
Source: vneconomictimes.com
Date: 29/08/2024
Date: 29/08/2024
Date: 26/08/2024