According to a recent report published by Mordor Intelligence, the ASEAN Cold Chain Logistics Market’s size is estimated at USD 8.34 billion in 2023 and is expected to reach USD 12.70 billion by 2028, growing at a CAGR of 8.77% during the forecast period (2023-2028). Over the past few decades, the ASEAN (Association of Southeast Asian Nations) region experienced impressive economic expansion, transforming it into a center of international trade and commerce. The ASEAN cold chain logistics market has been developing quickly to meet this demand while maintaining product quality and safety.
Key Cold Chain Market Trends
Rising Demand for Temperature-Sensitive Goods
Due to urbanization and a growing proportion of the middle class, perishable goods are in high domestic and international demand. This includes medications, seafood, produce, and fresh fruits and vegetables. The demand for cold storage and transportation increased due to the growing urban population and changing customer perceptions. The market for frozen goods in Southeast Asia is growing significantly. Thailand has a total capacity of 940,000 metric tons for governmental and private cold storage facilities. The capacity of the private market in Vietnam is roughly 500,000 pallets. The capacity numbers for Indonesia and Myanmar are 370,200 metric tons and 88,148 metric tons, respectively. They only represent the capabilities of large companies, though.
The ASEAN pharmaceutical market is expected to have a market valuation of USD 148.3 billion throughout the anticipated period. Most medications, especially vaccinations, must be transported to the last mile since they are temperature-sensitive. Logistics in the cold chain are helpful for last-mile delivery.
E-Commerce Expansion:
The ASEAN e-commerce sales are rapidly increasing, luring many international investors to open offices there. Consumers now have access to goods and services previously out of their price range, such as trendy cosmetics and imported cuisine. People's perceptions of frozen and cold foods have significantly changed as more people move to urban areas. Online retailers are now increasingly selling frozen meals. The growth in sales of chilled and frozen foods increases the need for cold chain infrastructure, such as refrigerated warehousing, refrigerated transport, and an efficient supply chain. E-commerce is redefining online purchasing.
Online shoppers no longer view e-commerce as a way to save money on necessities like gadgets; instead, they have expanded their online buying preferences to include less-expensive daily necessities like food, clothing, and cosmetics. Additionally, the enormous increase in fresh food sales has created challenges and opportunities for the Southeast Asian cold storage leasing industry.
Growing online purchases are taxing supermarkets. Thus, the burden is transferred to those in charge of storing and shipping it. The demand for frozen foods increased due to the pandemic, lockdown, changes in online shopping, and a few other factors. Cold chain logistics services are hired by e-commerce businesses to address this demand immediately.
Meat Consumption has Grown in Recent Years:
Increased meat consumption and feed imports result from Southeast Asia's growing population, rising affluence, urbanization, and retail businesses. Thailand, Vietnam, Indonesia, Malaysia, and the Philippines are the five significant emerging markets. Even though fish and shellfish are the most widely consumed and produced meat sources and are mostly to blame for feedstuff demand, meat consumption has increased in recent years. The Malaysian chicken industry is the most lucrative and has the highest production value. A per capita intake of roughly 50 kilograms of poultry meat is produced in the nation every year.
Thailand is the world's fourth-largest poultry exporter, and more than 80% of the chicken is grown in vertically integrated farms . In 2020, its annual per capita consumption was 7.9 kilograms. Most of Thailand's pork production is currently consumed by its citizens. Even though the value of Thailand's live pig exports increased by 339% in 2020, this is still the case. This is because Thailand is one of the few nations that hasn't seen any African swine fever outbreaks.
The two biggest pork consumers in the region are Vietnam and the Philippines, with annual per capita consumption of 25kg and 14.9kg, respectively. There is a substantial surge in renting cold storage in Southeast Asia because these meat items are perishable and must be provided through retail shops and, in some circumstances, as frozen packaged goods.
The Need for Leasing Cold Storage in Southeast Asia
Opportunities: Lenders, venture capital firms, and real estate investors are all interested in renting cold storage in the Southeast Asian region. Additionally, logistics organizations want to expand into new regions, and investors are looking at cold storage facilities as an alternative to conventional industrial real estate. The major goal of Southeast Asian countries is to reduce the loss ratio of fresh food. One of the key motivations for developing cold chain logistics is to advance the novel concept of cold storage rental in Southeast Asia. Making long-term earnings is a further consideration. High-quality cold chains can yield large investment returns and financial gains.
Southeast Asia will still need to rent cold storage space because of ongoing urbanization, rising consumer spending power, and increased food waste awareness. Since the correct investment requires little maintenance and upkeep, businesses may be able to create long-term profits by investing in high-quality cold storage facilities and equipment.
Challenges: One of the main obstacles is the high upfront cost of developing and operating a cold storage facility. Compared to other logistical facilities, one refrigerated warehouse requires specialized equipment, frequent testing, and high amounts of electricity. Some cold storage facilities are twice as expensive as a typical warehouse.
Furthermore, the availability of leasing cold storage in Southeast Asia is severely constrained due to building times that can last anywhere from six months to a year and lease terms that can last fifteen to twenty years. Due to this, businesses without significant financial support are reluctant to construct and run cold storage facilities despite the long-term advantages.
ASEAN Cold Chain Logistics Market Leaders
The environment of the ASEAN cold chain logistics market is fragmented, with a mix of international and local firms. Small- and medium-sized enterprises still use small fleets and storage facilities to supply the market. Global companies like Nippon Express and DHL are well-represented in some nations, such as Singapore. Global players are also investing in the industry and acquiring regional businesses to expand their presence there.
Additionally, Japanese logistics firms expand their operations in the ASEAN area by establishing land transportation hubs in each of the ASEAN nations for the manufacturing and distribution sectors, which promotes the development of a supply chain. Some of the key players operating in the market are listed below.
- Nippon Express
- Tasco Berhad
- Deutsche Post DHL
- Yamato Transport Co. Ltd
- DSV Agility Logistics
Learn More
For more information about this fast-growing market, have a look at the ASEAN Cold Chain Logistics Market, a 300+ page report with detailed insights on market trends, dynamics, segmentation, competitive landscape, and company profiles of key cold chain logistics companies.
