Strong demand for fruits and vegetables is driving food hygiene and safety requirements in Vietnam, which are, in turn, spurring investments in new cold storage facilities. The demand for them is increasing because of internet shopping’s growth, a market that is critically undersupplied globally. According to research companies, internet shopping in Asia-Pacific will rise by 30% yearly up to 2024. Therefore, cold storage warehousing is now becoming a necessity. This article will breakdown further why this necessity is rising.
What is a Cold Storage Warehouse?
A cold storage warehouse is a storage facility constructed with precise climatic conditions in mind to keep items safe at suitable temperatures. These warehouses usually look like any other warehouse from the outside, but differ in their internal environment.
Some cold storage facilities have such severe conditions, depending on the type of items and the customers’ demands. Cold storage warehouses may also be constructed in a variety of configurations depending on the needs. As a result, it is a critical node in the food supply chain logistics and other sectors.
What Is the Purpose of a Cold Storage Warehouse?
As the name implies, a cold storage warehouse differs from other types of warehouses. It needs additional maintenance and monitoring in terms of temperature and heat exchange. Products that can be damaged in typical room temperature settings require cold storage to ensure their safety.
- Food and beverages
Everything we buy at the market and keep in your refrigerator is mainly from a cold storage facility. Cold warehouse storage is required for dairy goods, meat, vegetables, ice cream, etc. The final retail outlets are located a long distance from the manufacturing point.
As a result, it is critical to maintaining the quality of manufactured goods. These items are stored at various cold storage facilities based on their proximity to the ultimate place of sale. In certain situations, the product price includes the cost of the cold storage warehouse, which is why such items are slightly more expensive than other ones.
- Plants and flowers
Plants are likewise divided into separate areas in cold storage warehouses. When you purchase a plant or a bouquet from an online retailer, the goods are kept in a refrigerated warehouse. The plants are grown on a farm, but they are stored in this warehouse to prevent spoiling for long-distance deliveries.
- Pharmaceutical applications
Cold storage warehouses also play an important role in saving people’s lives. Many pharmaceutical items, such as medications and supplements, must be stored at a certain temperature. To meet their demands, several hospitals have term-based contracts with such warehouses.
Vietnam has a strong demand for cold storage facilities, particularly in the food, cosmetics, and vaccine industries. These types of items are frequently entrusted to a cold storage warehouse. Otherwise, since Vietnam is the third-largest seafood exporter globally, the seafood industry accounts for a sizable portion of the cold storage warehouse market.
Benefits of a cold storage warehouse
- Quality assurance
It is a significant responsibility to keep commodities secure from deterioration in a cold storage facility. Manufacturing businesses would suffer a significant loss if cold storage warehouses did not exist, as most manufacturing hubs are located far from their final destination.
- Cost-effectiveness
If each business had its own cold storage warehouse, it would take up lots of space and money. Outsourcing and centralizing cold storage warehouse services allows them to take advantage of their time, money, and space.
- Smoothen logistics supply chain
Logistics refers to the entire process of distributing manufactured items to end-users. It includes several operations, such as manufacturing, distribution, and so on. Warehousing is a component of the chain that helps to simplify the whole process. By offering short-term storage of commodities, the cold storage warehouse plays an important role.
Cold Storage Warehousing demand is on the rise in Vietnam
Numerous analysts believe that specialized sectors within the industrial real estate industry will benefit from the increasing consumption of a multi-channel retail and distribution strategy in the long run from the epidemic’s impact. In 2021, fresh food will increase tenant demand for cold storage systems.
Globally, the rising trend of customers shopping online has increased demand for cold storage warehouses, although investment in cold storage facilities has remained relatively low. While demand is strong, few businesses have invested in the area, and no one can supply comprehensive cold storage services. Cold storage capacity is more abundant in the south due to increased demand, but foreign investors own 60% of the market.
Due to Vietnam’s large population and the rapid expansion of the middle class, there is a growing need for fresh, high-quality food, which drives the demand for cold storage. An investment level is required immediately to reach the next stage of industrial logistics growth and remain competitive.
Additionally, a network of roadways and utility networks, including renewable energy, must be developed. From there, the process of cross-border commerce exchange might be improved in terms of speed and cost. Vietnam’s cross-border transaction costs, including document and process compliance costs with import/export charges, are higher than those of other regional nations.
Conclusion
The development of the logistics sector has boosted the need for cold storage warehouses. There are numerous cold and cold storage firms in Vietnam, including warehouse limited and other subsidiaries. And now, we intend to grow further to establish a professional presence in the cold and cool supply chain, which includes cold storage and cold delivery.
Savills Industrials Vietnam advises occupiers, developers, and investors on lease and investment transactions. Savills Industrials aims to provide dependable advice, investment assistance, and industrial consulting services. Mr. John Campbell, Department Head, is spearheading the endeavour, having negotiated several leases, factory acquisitions, and sale-leaseback transactions. John and his dynamic team provide Landlord Advisory, Tenant Representation, Strategic Leasing, Investment Brokerage, and Sales & Leaseback services to a diverse range of clients.
