FiinGroup expects that cold chain industry will reach US$169mn in 2019, fueled by the development of processing industry and modern trade retails.
Cold chain in Vietnam is divided into two main segments: cold storage and cold transportation.
Figure 1: Market size of Vietnam cold chain market, 2019
According to FiinGroup’s database, cold chain market is fragmented with 44 specialized providers, serving rising demand from food sectors (meat & seafood im-export, food processing, etc.). In particular, approximately 80 per cent demand for cold chain comes from food sectors. In the meantime, the robust development of modern trade retail (consumer food services, supermarkets, convenience store) is considered the key driver for this sector. Particularly, modern trade retailers are growing optimistic with a surge by 40 per cent in number of outlets to 4,200 in 2018. In addition, these players tend to outsource cold chain logistics given robust expansion and requirement on logistics cost optimization, creating bright outlook for domestic cold chain logistics providers.
By segment, given fragmentation nature of the market and the rising demand, FiinGroup expects the consolidation in cold transportation in the next few years with the rise of leading specialized players such as ABA Cooltrans, Tan Bao An.
COLD STORAGE IN VIETNAM recorded the aggressive expansion of both local and foreign players in recent years. According to FiinGroup’s Vietnam Cold Chain Market Report 2019, total designed capacity of rented cold storages in Vietnam reached 600,234 pallets in 2018.
Figure 2: Designed capacity of rented cold storage in Vietnam, thousand pallets
The market is more developed in the South region thanks to high demand from seafood export and retail. Meanwhile, the North market witnessed a resurgence in 2015 with a surge 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 market will reach equilibrium in the next 2-3 years.
Local providers namely Hoang Lai and Phan Duy lead the market in terms of designed capacity while foreign cold storage providers such as Emergent Cold, PFS, LOTTE Logistics are market leaders in term of quality and management services. Particularly, foreign-owned players offer multiple temperature zones (frozen, chilled), barcode, inventory management system and diverse value-added services (classification, labelling, barcoding and distribution) at high price. These players are considered “Tier 1” players.
Given rising demand for cold storage, many providers, especially foreign firms such as CLK, Anpha plan to put new investments with total additional capacity of approx. 60,000 pallets for cold storage during the period 2019-2023.
COLD TRANSPORTATION IN VIETNAM:
Cold transportation in Vietnam has two main segments: cold container and bulk. Particularly, approximately 11 per cent of container throughputs via seaport in Vietnam (equivalent to 2mn TEUs in 2018) are refrigerated containers, driven by the continuous increment in import-export activities and infrastructure improvement.
Figure 3: Cold transportation in Vietnam, 2018
The market is fragmented and witnesses 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 high-capacity fleet of refrigerated trucks, salespersons and service quality (delivery time, temperature control and value-added solution).
SECTOR FINANCIAL PERFORMANCE
Figure 4: Net profit margin of the sector, 2017
According to FiinGroup’s analysis, full chain providers outperformed the market with net profit margin of 19 per cent thanks to their 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.