THE ROLE OF COLD SUPPLY CHAIN IN VIETNAM LOGISTICS DEVELOPMENT

Many of us still do not fully understand the role of the cold chain in the logistics industry in Vietnam. Therefore, businesses sometimes ignore this system and do not focus on it. The following article of Nam Ha Noi Cold Storage will change your view on the role of cold chains as well as the reason why you should invest in them.
 

Overview of Vietnam Logistics today

In recent years, Vietnam Logistics has made positive changes as more and more manufacturing enterprises successfully apply cold supply chain to production:

- Food preservation, transportation and storage are more focused.

- Enterprises have a move to build, expand and upgrade the cold storage system to meet their storage requirements.

- Demand for cold storage rental services is also more than before.

Thanks to the efficiency improvement of the cold chain, businesses have reduced losses and waste, improved the productivity as well as competitiveness in the domestic and international markets. Many market analysts have expected that Vietnam Logistics industry will have more favorable steps in the coming years. But due to the impact of the Covid-19 outbreak at the beginning of 2020, Vietnam Logistics has suffered significant losses.

The damage caused by the pandemic to Vietnam Logistics industry is huge

According to the General Statistics Office, the number of newly established transportation and warehousing enterprises in the first 9 months of 2020 decreased by 5.3% compared to the same period last year (reaching 4,033 enterprises). At the same time, there are also 485 transportation and warehousing enterprises in our country that have completed dissolution procedures.

At that time, the State had policies to support as well as facilitate the Vietnam Logistics to maintain operations, ensure continuous goods circulation and balance supply - demand in the domestic market. Plus, Vietnam has very well controlled the pandemic situation across the country, so the market is showing signs of recovery and prosperity.

Specifically, in September 2020, our country's total freight volume was estimated at 156.8 million tons of goods, increased 4.5% over the previous month and increased 10.54% compared to September 2019. Rotation reached 27.9 billion tons.km, increased 3.2% compared to August 2020.
 

The State of Vietnam has appropriate support policies for Logistics enterprises to operate again

Forecasting Vietnam Logistics activities in the coming time is generally still difficult but will gradually recover because the mass production of Covid-19 vaccines and the rule of goods in the peak season at the end of the year in terms of trade and transportation help the market will be more active.

*Verified data from: http://logistics.gov.vn/

To be able to recover and develop Vietnam Logistics, one of the important factors that businesses need to concern is to pay attention to and firmly grasp their cold supply chain. The cold chain will help businesses to find out new path for their products even during the Covid-19 pandemic and beyond.

The role of cold supply chain in Vietnam Logistics industry

The reality of cold chain application in Vietnam

Currently, Vietnam is still a country with many advantages in agricultural, forestry and fishery production with several export items ranked in the top in terms of quantity and types on the world market. However, there is a paradox that many businesses know, that is, logistics cost in the country are often higher than products imported from abroad.

The main reason and also the problem that exists in Vietnam is the fact that very few manufacturers for the domestic market apply cold chains in production. Goods had to go through too many intermediaries, from the supply of raw materials for production to the distribution of goods to consumers. This leads to an increase in transaction costs and selling prices. The examples are:

According to the latest statistics of CEL Consulting (2020): “66.7% of export companies apply cold chains in production, 8 times (8.2%) the number of enterprises supplying the domestic market.”

The reality of the cold chain application

The fear of many domestic enterprises and manufacturers about the cold supply chain (fear of increasing transportation costs, having to rent a warehouse, taking a long time for personnel) has made them always put their businesses at the "safe" mark:

- Low demand of importing wholesale even though they enjoy a high discount according to the quantity purchased.

- Dispersing cold chain functions into different rooms to reduce staffing and management. For example: Inventory is assigned to the accounting department, the transport function is of the administrative department responsibility and the purchasing function belongs to the marketing or sales department, etc.

That is why some domestically produced foods cost much more than imported products and are subject to state taxes.

The role of cold supply chain in Logistics industry

The cold chain plays a very important role in the distribution and pricing of business’s products. Because thanks to this system, goods and materials of enterprises will be transported to the right places where customers need on time with the lowest cost.

Cold chain plays a very important role in product distribution and pricing

The cold chain reduces the damage of goods to the lowest level, taking advantage of the internal advantages of the business (such as capital) or the cold storage partner (transportation, warehousing, human resources) to form a supply chain of high quality standard.

In addition to key markets such as in urban areas and big cities, cold supply chain will help goods reach more customers through the arrangement of retail networks scattered throughout potential markets such as in the countrysides, mountainous areas or islands - where the demand is high but the supply is lacking. Moreover, cooperating with cold storage rental companies and dividing the warehouse system into primary, secondary and central can also reduce transportation costs and losses for businesses.

Cooperating with cold storage rental companies to help businesses become more professional
 

Cold supply chains will become the competitive potential of businesses in every market when they are applied correctly. Improving the efficiency of transportation and the available warehouse system is how businesses do this. In particular, the warehouse and cold storage system is considered a key factor determining the success or failure of the cold supply chain. Once an enterprise is limited in this issue, the cold supply chain will not be able to exert its full potential, hindering the overall development of the business and greatly affecting the consumers’ interests.

Industrial cold storages and the development of Vietnam Logistics

One of the points that needs to be overcome in Vietnam Logistics in general and the cold supply chain in particular is the warehouse and cold storage system.

Warehouse and cold storage system is lacking in Vietnam

As mentioned in Part II, some domestic manufacturing and distribution enterprises are still hesitant to invest in warehouses because they are very expensive, lack administrative personnel, and need high qualified personnel who understanding of goods preservation and temperature control. The location of the warehouse also determines a lot to the transportation cost of the business. Where to allocate and build warehouses becomes a difficult issue for businesses because it takes more time and costs more. In addition, not all enterprises have enough resources to invest in many primary warehouses. Therefore, finding a solution to satisfy all the desires is what businesses are looking for today.

Of course, nothing is without an appropriate solution, especially in the time of need and business opportunities like today. The fact that industrial cold storage rental service in many locations across the country is one of those solutions.

In the articles Benefits that businesses receive when using cold storage services or The importance of distribution channels in frozen goods business, we have clearly explained the benefits that businesses will gain when using this solution in fact. In short, it is necessary to have food manufacturers and traders who can ensure a closed goods distribution process if Vietnam logistics industry wants to develop. Starting with the use of industrial cold storages, businesses will have a more complete supply chain (with quality goods, stable prices and costs for logistics transportation).

To do that, businesses, especially manufacturers in the North or more specifically is Hanoi can come and cooperate with the cold storage rental service of Nam Ha Noi Cold Storage to acquire large-scale cold storage facilities, especially businesses that are intending to expand their business in this area.

For the best consultation on cold storages, contact 0772.84.9999 today for more details. Let's share your knowledge, experience and useful suggestions with us by leaving a comment below!