World Cold Chain Summit looks at Vietnam cold chain (Part 3)

Carrier’s fourth annual World Cold Chain Summit to Reduce Food Loss took to Vietnam in March and during its second session, it focused particularly on the Vietnam cold chain and its various challenges…

Dao The Anh, vice president of the Vietnam Academy of Agricultural Sciences (VAAS), kicked off the second session with an overview of challenges and opportunities in Vietnam’s cold agricultural value chain. Anh noted that Vietnam’s agricultural exports totalled USD36.5 billion (US) in 2017, up 4% over the prior year. He pointed out that Vietnam’s agricultural system is facing several constraints.

C007Hamza Harti, country director, FM Logistic Vietnam provided a detailed operational view of food transport issues.

On the production side, these constraints include high chemical input, high resource costs, and high greenhouse gas emissions, along with high post-harvest lost percentages in major food categories as well as food safety and quality challenges. On the export side, constraints include low quality and low income for farmers, lack of value chain institutions and farmer organisations, and poor logistics infrastructure and servicing. He noted that Vietnam lacks sufficient cold storage, cold transport, and logistics communication integration, and that the high cost of cold storage is a barrier to adoption.

Regarding the current state of cold storage in the agri-chain, Anh stated that the efficiency of existing cold storage is low. At the same time, investment costs and energy costs are high, putting downward pressure on new investment. Further, private investment in the cold value chain is not integrated, and cold chain service providers are lacking. Anh also suggested that fruit and vegetable producers remain reluctant to invest in cold chain technology due to the seasonality of their business and revenue streams, and that scepticism remains about the ultimate financial viability of cold storage investment. Additional constraints for expansion of cold chain technology include lack of consumer demand for it, weak value chain coordination, limited access to credit, and lack of advisory capacity for small farms in remote areas.

Significantly, Anh noted that the concept of sustainable food systems is new to Vietnam, and that research on appropriate low-cost technology for cold chain management is lacking.

All of these challenges and constraints, of course, spell opportunity. Anh cited Vietnam’s export focus, growth in the domestic modern retail market, and the high levels of loss across multiple food categories as opportunities for cold chain investment, while also calling for international cooperation in cold technology research along with effective policies to attract private investment in cold value chain services. 

Luong Quang Thi, general director, ABA Cooltrans Vietnam, followed with a logistics perspective on the cold chain in Vietnam. Thi noted that while the cold chain in Vietnam was highly underdeveloped 10 years ago, rapid urbanisation is bringing significant opportunity. The challenge involves how to ensure that food is transported from farms to cities in good quality, while still fresh and safe. Thi noted that Vietnam currently has a fragmented and underdeveloped cold chain, with a low application rate of cold chain to fresh food products (meat, dairy, fruits, and vegetables) as a result.

C002Dao The Anh, vice president of the Vietnam Academy of Agricultural Sciences (VAAS), spoke about the challenges and opportunities in Vietnam’s cold agricultural value chain.

Thi also stated that the birth of modern retail is driving the opportunity for cold chain development, although the predominance of small format (convenience) stores creates logistical challenges for cold chain providers. He pointed to three specific local cold chain challenges, including 1) extreme focus on cost, which leads to decreased quality as supply chain participants take shortcuts to save money, 2) breaks in the cold chain that occur due to excessive fragmentation (ie. too many participants with too many operating methods), and 3) not enough customers see the value of the cold chain, which impacts demand for it.

Thi closed by stressing the importance of collaboration and partnerships to upgrade the cold chain while balancing investment costs reasonably to deliver a greener and more sustainable Vietnam.

C008Eric Prieur of Carrier UTC (second right), interacting with delegates.

Hamza Harti, country director, FM Logistic Vietnam followed, provided a detailed operational view of food transport issues. Harti began by noting that fresh food comprises more than 60% of consumption in Vietnam as compared to 35-40% in Western Europe – again signifying the importance of a robust cold chain. He noted that consumer expectations around food revolve around three issues: safety and hygiene (which depend upon a proper cold chain), price, and quality. Delving into operational details, Harti explained the differences between dry retail and fresh retail, noting that fresh food operations come with high intensity, requiring temperature monitoring and that any time delays can lead to a problem. He provided an example of a warehouse in Russia which processes up to 100 000 boxes per day, noting that such volume leaves no margin for error. Harti noted that timely inbound processing of fresh food is critical as it affects the ultimate quality of the products.



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