Cold chain logistics presents opportunity

Naoki Sakai, general director of Japan’s CLK Cold Storage, told VIR that there are growing food safety requirements in Vietnam, and that construction of high-quality cold chains is essential for food safety, and the demand is expected to increase in the near future.

In July, CLK Cold Storage inaugurated a cold storage warehouse covering a total area of 9,300 square metres in the southern province of Binh Duong. With the investment capital of around US$18 million, this is the first facility to provide deep-freeze storage in Vietnam, at temperatures ranging from 25 degrees Celsius to -50 degrees Celsius.

Sakai said that Binh Duong boasts convenient access to international ports, airports, and consumption areas. The warehouse aims to serve Japanese and Vietnamese companies, that are currently dogged by a lack of adequate refrigerated storage facilities.

CLK Cold Storage is a joint venture established by Cool Japan Fund, Japan Logistic Systems, and Kawasaki Kisen Kaisha, Ltd. (“K” Line Group). Japan Logistic Systems 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 and Thailand, as the demand grows for sushi and other Japanese cuisine, Bloomberg reported.

Yamato Holdings is expanding its operations overseas as it targets the growing middle-class population of Southeast Asia, while the population shrinks in its home country of Japan.

Mekong Capital also announced that the Mekong Enterprise Fund III recently invested in ABA Corporation, following its US$6.9 million investment in restaurant chain Wrap & Roll.

Chad Ovel, Mekong Capital’s partner, said that ABA Corporation has established itself as a leading cold chain transport service and solutions provider in Vietnam. He expected that ABA would grow at a rapid pace and compete successfully against multinational competitors.

Luong Quang Thi, ABA Corporation’s general director, said that the firm boats a fleet of 80 temperature controlled vehicles, a number which should increase five-fold in the next few years.

The firm also intends to open more cold storage facilities through mergers and acquisitions, or by establishing new facilities. Teaming up with Mekong Capital will help ABA Corporation to implement this expansion plan.

According to StoxPlus, there is a lack of cold chain infrastructure in Vietnam, in both commercial cold storage and in port-based bonded warehouses for import and export.

Few foreign and local companies tap into this segment, and none provide a whole service chain in Vietnam.

The first foreign-invested company to tap into the Vietnamese cold storage market was Konoike Transport from Japan, with the establishment of a logistics joint venture in 1998. That same year, Australian firm Swire Cold Storage followed Konoike Transport in building one of the most modern cold storage facilities to date in Vietnam.

Lotte and Preferred Freezer Services entered the Vietnamese market in 2009 and 2010, respectively.

Khieu Duy Hai, research associate at StoxPlus’ research wing, Biinform, said that cold chains encompassing cold storage and cold transportation are one of the logistics sectors with the highest potential for growth.

The enforcement of the Trans-Pacific Partnership agreement in 2018 is expected to facilitate goods flow into Vietnam, especially of seafood and agricultural products, resulting in a higher cold storage demand in the future.

“Foreign logistics companies are eyeing the Vietnamese market, and are interested in developing cold chains in the country to serve their existing clients,” Hai said.