INTRODUCTION
The cold supply chain is a crucial concept in developed agricultural countries, encompassing systems that effectively control and maintain optimal temperatures for temperature-sensitive goods This ensures the proper storage and extended shelf life of various products, including agricultural items, seafood, fresh-cut flowers, and specialized pharmaceuticals like vaccines.
The development of cold supply chains is driven by globalization and the rise in global trade of perishable goods, including vegetables, seafood, and fresh flowers In recent years, there has been a growing trend towards the consumption of high-quality, safe, and healthy products, particularly in developed countries.
In Vietnam, the emerging cold supply chain market presents significant investment opportunities, enhancing efficiency and minimizing losses in the transportation of perishable goods such as fruits, vegetables, seafood, and poultry These cold supply chains are essential for both domestic consumption and export, ensuring the freshness of agricultural products and beverages while supporting various non-production business activities.
I conducted research on "Cold Chain Logistics for Agricultural Products in Vietnam" to gain insights into the industry, assess its potential, and provide recommendations for enhancing the adoption of cold chain logistics in Vietnam's agricultural sector.
This article examines the current state of cold chain logistics for agricultural products in Vietnam, highlighting the agriculture industry's status and the effectiveness of existing cold chain systems It identifies gaps in the current logistics framework and compares Vietnam's cold chain development with that of developed countries, drawing valuable lessons for improvement.
The research methodology involves selecting and gathering information from both domestic and international reference sources to support the thesis and facilitate the analysis of the research subject The types of documentation utilized include magazines, news articles, textbooks, organizational reports, scientific studies, and internet research.
In addition to the Table of Contents, List of Tables and Figures, Introduction Conclusion and List of References, my research is divided into three parts as follows:
• Theoretical review of cold chain logistics
• Cold chain logistics for agriculture product in Vietnam
• Solution for cold chain logistics in Vietnam
BODY PARAGRAPH
THEORETICAL BASIS OF COLD CHAIN LOGISTICS
1 Overview of cold chain logistics
1.1 Definition of cold chain logistics
Cold chain logistics refers to a supply chain system that maintains low temperatures during the transportation and storage of goods to preserve their quality and properties post-production This essential process is utilized globally for the safe handling of perishable items, including meat, fish, seafood, eggs, milk, fruits, and vegetables By ensuring that these products remain at the appropriate temperatures, the cold supply chain plays a crucial role in food safety and quality assurance.
The Global Cold Chain Alliance (GCCA) defines cold chain management as the process of controlling the temperature of perishable products to ensure their quality and safety throughout the distribution chain to the end consumer This concept is essential for supply chains that require consistent cold storage, particularly in countries with advanced agricultural sectors It plays a crucial role in preserving the shelf life of temperature-sensitive items such as pharmaceuticals, frozen foods, aquatic products, and agricultural goods.
A cold supply chain is a specialized logistics system that relies on a complex refrigeration network, ensuring that all stages—from procurement and processing to distribution, retail, and consumption—operate at temperatures below normal levels (Zhang & Chen, 2011).
1.2 Emergence of cold chain logistics
Historically, humans utilized ice and snow for food preservation The practice evolved in the late 19th century when France started importing frozen pork from South America, and the UK began sourcing frozen beef and pork from Australia.
"food freezing" has been in use A New Zealand Despite the relatively recent implementation of food refrigeration, the term "cold supply chain" didn't originate until the 1980s
As air conditioning and refrigeration systems gained popularity, logistics companies developed innovative methods for transporting temperature-sensitive goods Previously, cold supply chain activities were primarily managed internally by manufacturers, resulting in low productivity and limited scale However, significant support from regulatory agencies in the U.S has enabled logistics firms to specialize in cold chain logistics services, enhancing efficiency and expanding capabilities.
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Thanks to specialization, many large logistics service providers such as FedEx and
UPS not only stop at the transportation sector, but also steer to niche markets, shifting their focus to the transportation and storage of sensitive goods higher temperature
As major enterprises pave the way, an increasing number of businesses are entering the refrigeration market, intensifying competition This heightened rivalry is driving the advancement of more convenient and efficient refrigeration services.
The cold chain supply system is gaining recognition for its critical role in maintaining the efficacy of temperature-sensitive products, particularly in the pharmaceutical industry Historically, vaccines were transported without stringent temperature controls, leading to potential risks of ineffectiveness and adverse effects on users This highlights the importance of proper analysis and testing in ensuring the integrity of these vital medical supplies.
The rising demand for exchange and trade has intensified the need for effective preservation of goods Cold chain logistics, enhanced by technology, enables greater investment in the cold supply sector.
1.3 Features of cold chain logistics
Cold supply chains are composed of two essential logistics systems: a cold storage network and a refrigerated transport system The cold storage network comprises temperature-controlled facilities designed to store sensitive and perishable goods, while the refrigerated transport system utilizes specialized vehicles, including trucks and refrigerated containers, equipped with tools to monitor and maintain the required cold temperatures during transportation and delivery.
Rogrigue & Notteboom (2020) identify two additional components of the cold supply chain: cooling systems and cold processing and distribution systems The refrigeration system ensures that goods are maintained at the appropriate temperatures for processing, preservation, and transportation Meanwhile, the cold processing and distribution system facilitates the transformation and processing of goods, while also maintaining hygienic conditions during the loading and unloading of boxes, crates, and pallets for distribution.
1.4 Stages of cold chain logistics
The cold chain consists of four interconnected systems: precooling, cold storage, refrigerated transport, and marketing Each component is interdependent, meaning that issues in any part can lead to increased food loss and waste, ultimately affecting the efficiency of the entire cold chain.
Before entering the cold chain low-temperature environment, the first step for fresh agricultural products is precooling, which is critical to ensure food safety and extend
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Precooling is essential for extending the shelf life of fresh produce, as it quickly removes field heat after harvest, slaughtering, or fishing This process effectively slows down physicochemical activities, reduces disease development, and preserves the sensory properties and nutrients of the produce.
In terms of temperature standards in the cold supply chain, different types of goods will have different temperature requirements throughout the entire supply process, which include:
- Deep Frozen from -28 to 30 degrees This is the coldest temperature mainly for transporting seafood
- Frozen from -16 to 20 degrees, mainly for maintaining meat
- Chiller which from 2 to 4 degrees, is the standard temperature in refrigerators commonly used to transport fruits and vegetables
The optimal storage temperature for most pharmaceutical products ranges from 2 to 8 degrees Celsius, ensuring their efficacy and safety For bananas, which are the most widely produced and transported fruit globally, a temperature of 12 to 14 degrees Celsius is ideal for maintaining quality throughout the supply chain.
A refrigerated warehouse (RW) is essential for maintaining the quality of fresh agricultural products by providing a long-term low-temperature environment post-precooling RWs play a vital role in the food supply chain, offering centralized storage and management, balancing supply and demand, and regulating transport capacity The primary storage methods for fresh agricultural products include cold air storage (CAS) and modified-atmosphere storage (MAS).
Refrigerated transport (RT) is essential for linking the upstream and downstream segments of the cold chain, utilizing various modes such as marine, air, road, and rail The choice of RT mode is influenced by factors including shelf life, economic value, cost, and customer demand (Yavas and Ozkan-Ozen, 2020) Operating primarily in challenging environments, RT systems face numerous adverse factors that can impact cooling performance, including relative humidity, wind speed, variable climatic conditions, solar radiation, heat infiltration, and insulation material degradation (Artuso et al.).
COLD CHAIN LOGISTICS FOR AGRICULTURE PRODUCTS IN VIETNAM
1 Current situation of cold chain logistics activities in Vietnam for agricultural product
1.1 General situation of Cold Chain Logistics service in Vietnam
The cold logistics supply chain market in Vietnam is currently in a transitional phase, remaining relatively small However, it is experiencing growth due to the rising demand for high-quality products among Vietnamese consumers.
Figure 1: Vietnam cold chain market revenues by end users
The cold storage market is experiencing a rising occupancy rate due to an undersupply of warehouses, particularly in major cities and ports where demand surpasses availability This high occupancy is driven by the need to preserve seafood, agricultural products, and fresh food While southern Vietnam holds the largest share of cold storage facilities, it remains overloaded as the demand for food and essential goods continues to grow for nearly 90 million residents in Ho Chi Minh City.
FiinGroup research reveals that the average profit margin in the cold chain industry is 11%, with refrigerated transport services achieving a higher profit margin of 17% In contrast, cold storage services have a lower profit margin of just 6% Notably, businesses that offer integrated services from harvesting to consumer delivery enjoy the highest profit rate at 19%.
Figure 2: Net Profit Margin of Cold chain logistic component
Vietnam's cold supply chain is primarily composed of cold storage and cold transport Cold storage is categorized into two groups: commercial cold storage managed by logistics companies and internal cold storage utilized by manufacturers or households Likewise, refrigerated transport can be conducted by transport companies or managed independently by manufacturers and households.
1.2 Situation of refrigerated warehouse service
Cold storage demand in Vietnam is high with 90% occupancy rate at nearly all facilities with highest share from export industry rather than for domestic
Figure 3: Total cold storage capacity for lease in Vietnam over the years
The total cold capacity of cold storage rentals in Vietnam reached 600,234 pallets in
In 2018, the growth rate of cold storage capacity in the Vietnamese market was relatively slow and showed little increase; however, a significant breakthrough occurred in 2016, leading to a steady growth rate that has been maintained since then.
The cold storage service market in Vietnam is segmented into three main categories: self-manufactured cold storage, commercial cold storage, and bonded cold storage The self-operated segment dominates the market, holding an impressive 83% share, primarily consisting of seafood processing enterprises concentrated in the Mekong River region In contrast, commercial cold storage represents 16% of the total market share, while bonded cold storage accounts for a mere 1%.
Cold storage is more expensive than conventional warehouses The rental fee usually fluctuates by 50-100% Cold storage rental price ranges from 45-160 USD/m2 The
The rental price for pallets typically ranges from $0.70 to $1.30 per sheet per day This pricing reflects the significant investment and operational costs associated with modern warehouses, which can be 2-3 times higher than traditional facilities Additionally, the construction of these warehouses takes approximately six months, and rental agreements usually span 15-20 years, contributing to a shortage of cold storage options.
Currently, businesses are leaning towards two primary trends in cold storage solutions Small companies are increasingly opting for mini frozen storage, a compact version of industrial cryogenic systems that offers affordability and ease of installation Advances in technology have enhanced the usability of these mini warehouses, allowing businesses to select from various models and customize sizes to meet their specific needs Conversely, many businesses prefer renting cold storage to minimize investment and operational costs However, the cold storage market remains fragmented, often presenting accessibility challenges for businesses seeking these services.
These cold storage service providers are classified into 4 main groups: group of domestic companies, group of foreign companies, group of forwarding agent and others
Figure 4: Manufacture capacity of cold storage industry in Vietnam
Domestic companies Foreign companiesForwarding agent Others
Foreign suppliers dominate the cold storage market due to their advanced equipment and professional staff, despite only holding the second position in the number of cold storages provided They offer diverse temperature zones, barcode management systems, and value-added services, positioning themselves as tier-1 industry leaders In contrast, domestic enterprises in Vietnam, classified as tier-2, struggle with low investment, basic equipment, and outdated techniques This has resulted in limited storage capabilities and ineffective planning policies Consequently, the cold storage system faces imbalances, with both surplus and shortages, leading to suboptimal performance, low preservation efficiency, and unsatisfactory service quality for customers.
Foreign providers 48% High quality facilities and professional management team
14% Process service for existing customers
Figure 5: Comparison among storage providers in Vietnam
In fact, the preservation of agricultural products at cold temperatures is only done by a few large enterprises such as ABA Cooltrans, Quang Minh, Duc Tan-Saigon and Thang
Long logistics processes and inadequate preservation methods lead to diminished quality of harvested agricultural products The lack of standard procedures for storage and transportation exacerbates these issues Additionally, the limited size of warehouses for preservation and export hinders opportunities for technological advancements in the preservation of goods.
In recent years, both foreign and domestic logistics companies have significantly invested in the development of cold storage infrastructure in Vietnam, leading to a booming cold storage market.
As of September 2021, the country boasts 48 cold storages with a total capacity of 600,000 pallets, with the southern region leading the market, housing 36 facilities that account for 526,364 pallets In contrast, the Central region has only one cold storage with a capacity of 21,000 pallets, while the North has 11 facilities totaling 54,780 pallets Notably, approximately 80% of these cold storages operate at a high utilization rate, reflecting the region's economic and natural advantages.
In the Northern region, cold chain warehouses are primarily situated in major cities and industrial zones near key transport hubs like seaports and airports, particularly around Hanoi and Hai Duong However, their availability is still significantly lower compared to the Southern region, leading to a temporary oversupply and low utilization rates in the cold chain market, which poses challenges, especially for start-ups.
Regarding the Southern region, cold storage is especially concentrated in the areas of
Ho Chi Minh City, Binh Duong and Dong Nai Not only having a large quantity, the southern cold chain market also has a much higher response capacity than the northern market
1.3 Situation of refrigerated transport service
In Vietnam, refrigerated transportation is divided into 2 main segments: full container cargo and bulk cargo About 11% of container traffic through Vietnam's seaports (about
2 million 20-foot equivalent units (TEUs) in 2018) is reefer containers, thanks to the continued increase in import and export activities and the improvement of facilities infrastructure
In today's market, businesses increasingly rely on specialized containers and vehicles equipped with cold storage systems to facilitate the transportation of goods within the cold supply chain The rising demand for fresh goods transportation from North to South has significantly boosted the need for refrigerated containers.
Figure 6: Vietnam refrigerated transport in 2018
Recent statistics from FiinGroup reveal that approximately 60% of businesses in refrigerated transport have transitioned to Full Container Load (FCL) methods for shipping perishable goods This shift offers significant advantages, as FCL ensures that a shipper's refrigerated items are securely housed in dedicated containers, minimizing the risks associated with loading and unloading By eliminating the need for intermediate warehouses and transshipment points, FCL enhances the integrity of the cold chain, ultimately reducing spoilage rates by about 25-30%.
SOLUTION FOR COLD CHAIN LOGISTICS IN VIETNAM
• Customer awareness about cold chain services
The cold chain market in Vietnam primarily serves the seafood sector, with a significant scarcity of locally sourced fruits and vegetables Additionally, there is a low level of awareness among farmers and agricultural producers regarding the critical role of cold storage in preserving product quality.
The complexity of the supply chain for Vietnamese vegetables, tubers, and fruits is primarily due to the numerous intermediaries, specifically traders These traders create a barrier between farmers and businesses, as they generate significant profits while providing minimal value, contrasting sharply with the farmers who receive low returns for their efforts.
Over 90% of farmers rely exclusively on traders for market information and as their primary buyers of agricultural products In the Mekong Delta, traders purchase 85% of fruit and vegetable products, which are then sold to wholesalers before reaching consumers This supply chain involves multiple intermediaries, primarily small businesses that lack the resources to invest in or outsource a cold chain system, resulting in most goods being transported without refrigeration at any stage.
• High rate of damage goods
The current demand for refrigerated transport vehicles far exceeds their availability, leading to significant challenges in the cold chain industry Delays in unloading, insufficient cold storage, and poor coordination within the supply chain further exacerbate these issues During the agricultural season, most products are transported or consumed locally, resulting in inadequate preservation and limited access for distant markets This not only hinders the business growth of many manufacturers but also diminishes the overall value of agricultural products.
Figure 20: Percentage of damage agricultural products in post-harvest handling in
Due to limitations in infrastructure, technology, and supply capacity, logistics costs for products are rising, leading to increased consumer prices This makes it challenging for many businesses to compete on price with markets that benefit from lower transportation and cold storage costs Despite offering high-quality products, the elevated prices hinder sales, rendering the entire cold chain logistics effort ineffective This issue is particularly pronounced in the agricultural sector, where consumers face numerous choices, forcing businesses to decide whether to invest in cold supply chains for extended storage and access to new markets or to remain within their comfort zones.
● Growth rate of demand for high-quality agricultural products both domestically and internationally
The growing demand for high-quality agricultural products is driving a significant rise in the need for cold storage and cold transport solutions This surge in demand has prompted cold chain service providers to ramp up their construction and investment efforts According to consulting firm Emergent, the cold storage construction market is projected to reach a value of $18.6 billion by 2027, reflecting an annual growth rate of 13.8%.
Despite ongoing construction efforts, cold storage shortages are expected to persist due to the high demand for fresh food The current nationwide cold storage capacity can only partially satisfy this demand, with inadequate infrastructure, particularly for the deep preservation of aquatic products Additionally, there are significant disparities in capacity distribution and technological advancement Furthermore, the cold supply chain for food reaching domestic markets, including restaurants and supermarkets, remains severely limited.
The globalization of the food industry necessitates a synchronized cold supply chain on a global scale, presenting significant opportunities for logistics service providers in Vietnam and allowing foreign companies to expand their services within the country.
● The State and ministries are gradually focusing on investment
Cold chain is one of the main factors determining the quality and value of agricultural products, is being invested by the State and ministries
According to the Vietnam Logistics Report 2019 by the Ministry of Industry and Trade, various support options are available for investment in warehouse construction and infrastructure to enhance connectivity The emphasis is on leveraging logistics to increase the value of agricultural products, and numerous webinars and seminars addressing cold chain challenges have been organized.
The Vietnam Green Startup Fund is currently launching a project aimed at connecting resources to support export-oriented farmers targeting the EU and Middle East markets, leveraging the benefits of recently signed free trade agreements This initiative includes plans to establish five smart cold storage facilities in the Mekong Delta Furthermore, Vietnam's cold chain market has garnered significant interest from numerous foreign enterprises.
Therefore, with the support of the ministry and foreign enterprises, the cold chain market in Vietnam will have the opportunity to develop stronger
3 Cold chain logistics model in foreign countries
Vietnamese fruits possess significant export potential, yet recent increases in export turnover have not aligned with production capacity Agricultural experts attribute this discrepancy primarily to inadequate postharvest practices and cold storage supply chains, which compromise quality and fail to meet international standards In contrast, India, a diverse nation with a population exceeding 1.4 billion as of 2022, stands as one of the world's largest agricultural producers, recording a remarkable 303.34 million tons of production in 2021.
In the 2020-2021 fiscal year, India achieved a record horticultural crop production of 331.05 million tonnes, positioning itself among the top 15 agricultural exporters globally With agricultural exports valued at $38.54 billion in the 2019 financial year, India has prioritized the enhancement of its agricultural product chain through the development of a robust cold chain operation The country has successfully implemented modern technologies in its fruit cold supply chain, which are now widely adopted internationally To elevate the quality of Vietnamese fruits, it is essential to integrate India's advanced cold supply chain strategies into Vietnam's agricultural practices.
In recent years, the rapid growth of modern trade in agricultural products has led retailers to establish professional distribution systems, focusing on creating large distribution centers This centralization enhances distribution efficiency by streamlining costs and ensuring quick operations Additionally, the involvement of large modern supermarkets helps standardize agricultural products, while the introduction of quality standards boosts the competitiveness of export products and standardizes the domestic market.
The cold supply chain for Indian agricultural products hinges on a small-scale farmer labor force, which is essential for establishing cooperative linkage models These cooperatives, whether official or informal, share the common goal of marketing and connecting with companies to secure investments and cover expenses This approach to contract gardening encompasses three key elements.
• Farmers have strong ties with one another
• Dependable and do not like to sell to businesses that will dump their products
• Local government policies ease contract signing and performance and assist parties in adhering to the terms of the agreement
Currently, India also applies commonly used international standards The standards are built based on existing standards in the world: AHSRI, Eurovent, ISO, UNECE
Since 2007, the Indian government has implemented strict regulations for the cold supply of agricultural products, establishing a standards committee in June 2009 to oversee compliance In 2010 and 2011, India introduced additional national standards through the National Horticulture Board, which outlined technical requirements for constructing cold supply chains Key standardized elements focus on ensuring the quality and efficiency of cold supply operations in the agricultural sector.
• Standard for cold storage of agricultural products with and without pre-cooling
• Standard of pressure controlled in cold storage
• Standard of ripeness of Indian fruit products
• Standard for equipment used in cold supply chain
CONCLUSION
Cold supply chains are increasingly vital globally, enhancing agricultural efficiency and drawing interest from businesses and consumers, particularly in Vietnam As a country with a rich agricultural history and significant export value, developing its cold chain for agricultural products is crucial Despite two decades of cold chain development, Vietnam faces challenges regarding service quality and quantity Therefore, investing in and researching the cold chain market is essential, especially as Vietnam's economy rapidly evolves and attracts international investors.
The project "Cold Chain Market for Agricultural Products in Vietnam" aims to analyze the current state of the cold supply chain, identifying its challenges and limitations By understanding these issues, the project seeks to propose strategies to enhance efficiency and optimize operations within Vietnam's cold chain system.
The project acknowledges existing information gaps and generalized responses arising from time constraints, limited research scope, and actual data on cold supply chain activities To address the challenges within the cold supply chain market, the research aims to provide valuable references and data for the study of agricultural products utilizing cold chains in Vietnam.
Theo báo cáo của A, D (2019), trong ngành vận tải logistics tại Việt Nam, doanh nghiệp FDI chỉ chiếm 2% về số lượng nhưng lại nắm giữ tới 70% thị phần Điều này cho thấy sự ảnh hưởng mạnh mẽ của các doanh nghiệp FDI trong lĩnh vực logistics, mặc dù số lượng doanh nghiệp nội địa nhiều hơn.
(2) Abivin (2020) The Urgency To Transform Vietnam's Cold Chain Logistics From Abivin: https://www.abivin.com/post/the-urgency-to-transform-vietnam-cold-chain- logistics
(3) ALS (2021) Cold logistics supply chain in Vietnam From ALS: https://als.com.vn/en/cold-logistics-supply-chain-in-vietnam
(4) Danfoss (2020) National for cold chan development of India.