Investors eager to boost cold storage

December 14, 2022 | 15:08
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The demand for cold storage is increasing thanks to the growth of agriculture and seafood, which is boosting investment trends in the market.

Hau Giang Cold Storage Logistics is eager for completion of the first cold storage centre in the Mekong Delta province of Hau Giang, in which construction was started in July.

Investors eager to boost cold storage
Illustrative photo (Source: VNA)

The centre will combine six cold storage units and one cool unit at capacity of over 88,000 tonnes. The units, which cost a total of VND500 billion ($21.7 million), will be installed with modern technology imported from the EU.

The first one is expected to welcome goods from the third quarter of 2023. The construction of the remaining storage in the centre will be slated for 2027, with an average construction speed of 1-2 units per year.

Company director Nguyen Van Kich said, “The demand is increasing because the export activity of fruit and seafood are being fostered. The current supply source has yet to meet the demand.”

At present, the network just concentrates on Can Tho and Hau Giang with a capacity of 50,000 pallets of seafood. “We have experience in preserving frozen seafood. Thus, we are confident that our service will meet the strict requirement in the storage of foreign clients,” Kich added.

Indo-Trans Logistics Corporation (ITL) is meanwhile accelerating its plan to lead the cold storage market with over 50,000 pallets by next year. According to the plan, ITL wants to set up a new company combining ITL Keppel and ITL Logistics, which is managing its warehouses across the country.

The new company will specialise in warehousing and cold chain development with modern technology in Ho Chi Minh City and Hanoi, and will provide 350,000sq.m of warehouse space, over 300 small trucks, and 50,000 pallets for cold storage.

Along with these firms, many domestic and foreign-invested investors are increasing their network in Vietnam, such as Transimex JSC and AJ Total Vietnam.

As of early October, Vietnam currently has approximately 70 cold storage units with the capacity of over 800,000 pallets, which concentrate in Ho Chi Minh City and the Mekong Delta region, according to the statistics published by the Vietnam Logistics Business Association.

The largest cold storage area in Vietnam and Southeast Asia, of nearly four hectares and a total investment of VND1.3 trillion ($56.5 million), is located in Tan Tao Industrial Park of Binh Tan district in Ho Chi Minh City, operated by Hung Vuong JSC. The area is equipped with 60,000 pallets, with a capacity of 60,000-70,000 tonnes of goods. The company is preparing a plan to invest in another unit at Hiep Phuoc port.

Le Minh Phung, marketing director of AJ Total Vietnam – a South Korean chain operator with three units in Vietnam – said the company has plans to invest in an additional 5-6 units.

“The factor fostering the development of this segment is the improvement of infrastructure in the Mekong Delta. Besides that, having easy access to capital has helped seafood companies build their own warehouses on a considerable scale, and most companies can build themselves warehouses meeting international standards,” Phung said.

The remarkable development of the fruit and vegetable export industry, especially export to China, had created a sudden growth in the system of storing, cooling, and transporting fruits and vegetables in the north-south direction. “Furthermore, the participation of multinationals and large private corporations in Vietnam in the retail market has created a remarkable development in cold storage,” Phung added.

Vietnam raked in $10.2 billion from exporting aquatic products in the first 11 months of 2022, up 28 per cent on-year, the Vietnam Association of Seafood Exporters and Producers reported. This figure contributes to making Vietnam become the world’s third-largest seafood exporter, accounting for 7 per cent of global market share.

According to Cushman & Wakefield, the lack of cold storage units is an opportunity for the segment. While demand is high, only a few enterprises have invested and no-one can provide full related services. Only 14 per cent of cold storage is from logistics companies and the remainder is held by members of the Vietnam Logistics Business Association, such as Transimex, Gemadept, and Saigon Newport.

Supply is more plentiful in the south as demand there is higher, while 60 per cent of the market share is in the hands of foreign investors, Cushman & Wakefield reported. Vietnam’s cold storage logistics industry is forecast to reach $295 million by 2025, with a 12-percentage-point annual growth rate, it said.

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By Oanh Nguyen

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