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Trends in Vietnam's Logistics and Warehousing Market: Refrigerated Warehouse

Vietnam has a population of nearly 100 million and has maintained a high GDP (GDP) growth rate of + 6 ~ 7% in recent years. With the rapid increase in the number of middle class and wealthy people, it is expected to see as a consumer market. As a result, Vietnam's domestic logistics and warehousing markets are expected to continue growing.

With economic development and population growth in Vietnam, the size of the logistics and warehouse markets has been steadily expanding. The total area of warehouses in Vietnam is approximately 1 million m2 in the north and 2.8 million m2 in the south. The total area of warehouses in the south exceeds that in the north.

Demand for factories and warehouses in Vietnam has increased in recent years. Due to COVID-19, exports and imports have been delayed, and the use of e-commerce (EC) has been expanding significantly. In Vietnam, the use of e-commerce has expanded with the coronavirus pandemic, and many investors and developers are planning to develop logistics hubs.

Richard Ellis (CBRE), a leading U.S. real estate broker, predicts that warehouse demand will increase 4 ~ 11% from the year before after the coronavirus pandemic has ended. Over the past 2 years, the supply of factories and warehouses in Vietnam has been expanding. According to local reports, by the end of 2020, total supply in the north will increase by 25.3% from the previous year to 2 million m2 and in the south by 28.2% to 2.7 million m2. Refrigerated warehouses are also attracting attention as online sales of fresh foods are increasing.

 

Increased demand for refrigerated warehouses

Due to the expansion of the middle class, the food processing industry has been developing in recent years. Cold chain (low-temperature logistics) has been a major development issue in the transition from traditional trade to modern trade.

As the place where food is purchased changes from traditional markets to modern supermarkets, maintaining the freshness of food is becoming a more important consumer need.

According to a 2019 Euromonitor study, the size of the food and pharmaceutical markets that require refrigerated transport in the Vietnamese retail market is estimated to grow to about US $10 billion in 2020. Domestic and foreign investors are also targeting the cold chain segment for food, pharmaceuticals and cosmetics.

 

Coping with both promotion of e-commerce and reduction of CO2 emissions

Since the outbreak of the coronavirus, the use of EC has been increasing in rural Vietnam. In the past, young people in urban areas were the main users of EC, but the use of EC is expanding to rural areas and older people. As a result, demand for logistics is expected to increase.

The global trend toward decarbonization will continue for 10 years to come. As more and more companies are working to reduce CO2 emissions across their supply chains, the logistics industry is no stranger to this. Refrigerated warehouses consume a lot of electricity, and discussions begin with a review of the power supply facilities used. Currently, the southern part of the country, where warehouses are concentrated, has good solar radiation conditions and climatic conditions suitable for solar power generation.

 

Phu My ICD