Logistics is an essential part of the supply chain that helps ensure goods can reach customers at the right time. Besides transporting goods, storage is also necessary to ensure that goods can reach the buyer at the right time with the best quality.
Therefore, the warehouse system in Vietnam has developed strongly, and many units providing warehousing and storage services have been established to meet the needs of customers best.
Even developed markets such as Japan or Australia have relatively few cold storage facilities, with a total supply lower than the US or Western European markets. The Asia-Pacific region is becoming more populous, leading to an increase in demand for cold storage services and attracting the attention of many large investors.
Overview about the Vietnam warehouse Market
Savills assessed that the strong growth of the retail and e-commerce markets, especially during the pandemic outbreak, has contributed to boosting the demand for warehouse rental of businesses globally.
To cope with the challenges of disrupting supply chains, businesses and manufacturers are forced to adapt to new consumption trends and look for more imaginative warehouse spaces in diverse locations.
Vietnam’s rapidly growing GDP as a young population and a willingness to embrace new technologies. The country’s logistics market is in transition, and demand for logistics is increasing rapidly.
The Vietnam warehouse market is driven by strong economic growth, rising local production, rising consumption, and thriving e-commerce. Market limitations include a lack of transportation infrastructure and high logistical costs.
One of the critical developments in the Vietnam warehouse market is contract logistics. The country’s increasing e-commerce provides an opportunity for last-mile deliveries and value-added services.
The logistics sector in Vietnam is becoming increasingly liberalized, opening up new chances for new businesses to capitalize on rising demand.
Cold Storage as the new Vietnam warehouse Market trends
Cold storage according to factory size is a form of service that can provide freezers and chillers to preserve frozen or fresh goods. Most food items will be stored in cold storage. The tenant may be third parties such as Logistics companies, units specializing in cold storage logistics, or supermarket chains.
Mr. Michael Fenton, Director of Industry and Warehouse in Savills Australia, said: “Cost to invest in building cold stores and factories and equipment because it is valid many times compared to building buildings usually, common, normal. Due to a lot of capital, cold storage providers will often have to rent a long-term construction area of 10, 15 or 20 years.”
Another benefit to investors is cold storage contracts commonly carried out in a three-fold net hire (NNN). The employment committed to paying all the assets’ costs, including taxes, Real estate, building insurance, and maintenance. Therefore, the investor will save a lot of general management costs.”- Mr. Fenton adds.
This is not a new field but becomes essential in the Asia Pacific region when the demand for good quality foods and imported foods increases. At the same time, the development of the Online sales platform also requires more storage areas. Across the Asia Pacific, the growing population and increasing riches demand for fresh and frozen foods.
Mr. Fenton said that “Cold storage in nature is related to the current life is food security and essential retail spending. Regardless of the state of the economy, consumers still spend on food, and cold preservation facilities are the focus of food supply chains.”
“Demand for cold storage continues to increase due to Covid-19 pandemic and cold storage operators have to adjust their supply chain model. The cafes and restaurants may have to close the door, instead the food delivery service explodes, the way the delivery of food for customers has also changed.”
We recognize a lot of interest of foreign investors in developing cold stores in Vietnam to take advantage of the urbanization and retail modernization process that will change the way cities Large of Vietnam find new food sources. With the investment and development of significant infrastructure such as Long Thanh International Airport, the supply routes will be relieved in the future.
The ability to provide domestic services of cold stores in our country has been verified and will continue to grow in the coming time. This will facilitate air transport to accelerate export, especially Vietnam’s seafood with high-quality cold storage requirements.”
Cold storage prices skyrocketed
The latest report on Savills’s cold supply chain said the explosion of e-commerce in Vietnam in the context of pandemics is promoting the demand for cold storage.
Short of supply, failing to meet the growing demand, causing cold storage rates in the southern region of 52 USD One ton in the first quarter of 2020 has rushed to 87 USD a ton to the beginning of the fourth quarter of 202, increasing 1, 67 times in the past 24 months.
According to Savills, the Vietnam cold storage market is expected to value 295 million USD by 2025, 12% per year. Cold storage demand is growing, but the supply is short because of only 48 establishments with about 600,000 shelves. Cold transport only recorded more than 700 trucks and frozen barrel trucks.
The updated data of this unit shows the current capacity of cold storage in Vietnam reached 0.116 m3 per capita, third high school in the Asia Pacific, after China (0.132 m3 per capita) and Japan Version (0,315) but excelled 1.4-3.1 times more than Australia and the Philippines.
Consumer trends moving to online markets promote demand with cold storage stores, which are deficient in severe supply in Vietnam. The cold storage market is traveling in the direction of not meeting the demand for spike due to the impact of Covid-19.
Currently, the supply of cold storage is mainly concentrated in the southern provinces operated by small and medium providers, of which foreign investors hold about 60% market share cold storage supply.
The cold storage supply in Vietnam is limited because cold storage facilities need more time to build than other logistic real estate. Cold storage costs are two to three times higher than the typical warehouse, and the construction process may be longer to six months longer. Besides, the lease term usually lasts 15-20 years, making the supply more capacity.
It is forecasted that cold storage demand will continue to grow strongly for at least half of the next semester because Vietnamese consumers are changing shopping behaviors since pandemic history fluctuations. This also opened up many opportunities to attract investment in the niche but potentially cold supply chains in the future.
Read more: The best Vietnam International Leasing Company in Vietnam
Looking for an excellent industrial real estate agent in Vietnam
Ensure that the logistics house has a view of the entire logistics landscape, it’s not as simple as finding a transportation company. However, they may lack the experience and expertise to deliver consistent quality of service and positively contribute to improving your operational efficiency.
Professional industrial real estate agents in contract logistics understand the business needs of specific industries. They can provide services tailored to the needs of each client. In this way, they help customers achieve their goals by designing and implementing supply chain solutions that can grow as the business grows.
Visit Industrial Savills’s website for more information
Facing the increasing trend of warehouse rental and warehouse rental service is also developing rapidly. You can easily find information about warehouse rental on several real estate websites with a wide range of warehouse rental information of all sizes, qualities, and prices.
Recognizing this leading trend and finding a reputable and quality warehouse for rent is one of the essential factors for businesses to get a head start in the race between eager companies. Understanding the need to find a reputable warehouse for rent, Industrial Savills always offers suitable plans and solutions and makes reasonable efforts to make investors satisfied in the transaction.
Savills Industrial is one of the leading suppliers of industrial real estate in Vietnam; Savills Industrial can help you decide if renting or selling your warehouse or commercial property is right in today’s market. With a team of leading experts in Vietnam, we provide top notch consulting services from industry experts with in-depth knowledge and experience of the market.
