Cold storage market to top $295 mln by 2025: forecast

The growth rate is being driven by a surge in demand from the fisheries industry and for storage of vaccines, it said.

Advisory firm Asia Perspective said despite the high growth rate expected, the market is nowhere near its full potential.

As of May 2021, there were only 48 cold storage warehouses in the country with a capacity of around 700,000 pallets. In 2020, only 8.2 percent of food suppliers to the domestic market used cold storage systems, while 66.7 percent of exporters did so.

Cold storage facilities are mainly located in industrial parks and ports. The market is more developed in the south because of high demand from seafood and agriculture exporters.

Cushman & Wakefield said Vietnam’s cold storage industry has caught international investors’ attention in the last two years, and many are looking for opportunities to enter the market through new investments or acquisitions.

Cold storage costs are generally 50-100 percent higher than dry warehouse rentals at US$45-90 per square meter for consumer products and $45-160 for medicines.

"The shortage of specialized cold storage due to supply-demand mismatch can drive prices up even higher", Trang Bui, Cushman & Wakefield’s director general for Vietnam, said.

The rapidly growing demand would motivate investors to build new storage facilities despite the high costs of equipment, insulation and machinery, she said.

Many investors are also eyeing entry into the market through acquisitions to enjoy first mover advantages, she added.

But Cushman & Wakefield has warned the industry of growing challenges, including compliance with cross-border trade processes that lead to higher costs and a longer lead time.

The fledgling Vietnamese cold storage market was worth $169 million in 2019, it said.