Behind cold storage’s hot streak in the Logistics industry

From the sudden underground wave that exploded in 2020, the cold supply chain faces the opportunity to stir up logistics real estate in 2021.

JLL has just reported the cold storage market’s potential with optimistic predictions and excellent development opportunities in the next 12 months. In 2019 and prior, cold storage is a term that is less known in Vietnam’s market since it is usually the playground for national investors, primarily servicing the aquaculture industry.

However, the existence of COVID-19 changed everything. The unstable pandemic situation has reinforced the tendency for online shopping so as to social distancing is happening very quickly and effectively. This leads to a boost in demand for cold storage for food and other essential supplies. In 2020, cold storage is one of the industrial real estate segments that is becoming profitable and attracting significant attention from investors not only in Vietnam, Asia Pacific but also worldwide.

According to Prnewswire1, the cold storage market globally is estimated at 4.7 billion USD in 2019 and is predicted to reach 8.2 billion USD in 2025, while the average yearly growth is 12.5% between 2020 and 2025.

Many retailers, manufacturers and investors are urgently searching for cold storage closest to customers to provide goods sensitive to temperatures, such as cosmetics, food, medicine. Moreover, the reason why the cold storage industry is in high demand comes from the COVID-19 vaccine market and future medicine.

JLL’s latest report indicated that all top vaccines require extremely low temperatures to maintain effectiveness. Thus, solving the problem for preservation and cold transportation for the vaccine could be crucial to boosting the manufacturing and logistics industry’s growth rate.

At Michigan (U.S.) and Belgium, the workers will place the vaccine into trays; they are then placed into cold boxes monitored using GPS, filled with dry ice in order to preserve the vaccine at temperatures lower than North Pole’s winter. After that, the delivery company’s transporting vehicles will deliver the vaccine to airplanes or directly to hospitals and vaccination points.

All of these are uneasy standards for a service that never existed before in the market. Besides the promise of high profit, it will also bring many challenges for investors and service providers to overcome.

Mrs. Trang Bui, Senior Director in JLL Vietnam markets, shared that the pandemic situation’s complicated development is pushing the logistics industry to develop and high automation, with cold storage being the primary trend for the foreseeable future.

The multimodal logistics and cold storage chains for products sensitive to temperatures, like food, cosmetics or vaccines, will require constant logistics providers’ innovation. The innovation process, as well as the cold storage technology, will take place firmly in 2021 to avoid missing the beneficial opportunity from these rapidly growing segment demands.

NTL