The rapidly growing ASEAN Cold Chain Logistics Market

The distribution of food products is rapidly shifting from traditional markets toward supermarkets and convenience stores. Refrigerated and frozen products are easier to procure as major distributors offer shipping via insulated trucks. The quality of local cold-chain services varies widely. Food products have been damaged from a lack  of refrigeration, as well as from loading and unloading at room temperature. It is estimated that 90% of Southeast Asia’s food waste is created during transport.

With the COVID-19 pandemic challenging the economy, it has upended the cold chain logistics sector with massive changes in operations, supply chains, regulations and manpower requirements. It has also transformed the market with lasting impact on the future. Modernization in the logistics sector has supported the growth of the refrigerated logistics market.

Growth of E-commerce and Increasing Consumer Choices
ASEAN e-commerce sales are significantly increasing, which attracts many investors across the world to set up their business. E-commerce has given consumers access to goods and commodities that were previously out of their reach, from imported groceries to trendy cosmetics. The basic perception of the consumers regarding frozen and refrigerated food has been changing significantly, coupled with rapid urbanization, where frozen food is moving more online. E-commerce is reshaping the online retail sales, where the growth in the sales of chilled and frozen food creates the demand for cold chain infrastructures, such as refrigerated transport, storage facilities, and optimum supply chain. Online shoppers are no longer looking at e-commerce as a platform to get discounts on items such as electronics, but have expanded their online habits to purchase lower-cost daily items such as groceries, clothes and personal care products. Additionally, the rapid growth in the sales of fresh food has offered challenges and opportunities to the service providers. The increasing online purchases put pressure on the grocers, and  consequently, it is being transferred to the people who store and transport it. With the COVID-19 pandemic and lockdown in large parts of the countries in the region  since February 2020 and increasing penetration rate of online shopping, the demand for medical supplies and frozen food is continuously increasing for which the e-commerce and pharmaceutical companies are actively outsourcing the services of cold chain logistics providers to meet the growing demand with efficiency.

Increasing Perishable Trade in Philippines Creates Opportunity for the Cold Chain Industry
In the Philippines, there is an ongoing shift in consumer habits to buy fresh and frozen produce from supermarkets than from traditional wet markets. Besides the internal demand, external demand is also driving the explosion in cold chain storage facilities and logistics. The Philippines agricultural exports have increased dramatically in recent years. The Philippines has also witnessed a shift in consumer behaviour to buy fresh products. Additionally, the growth of online grocery and e-commerce has bolstered the growth of cold storage facilities and infrastructure support. The US-supported Philippines Cold Chain Project (PCCP) is also expected to  play an important role in enhancing the Southeast country’s cold chain logistics facilities and infrastructure. The project aims to increase agricultural production, which  meets international food safety requirements by developing cold chain-related markets and improved technologies. Additionally, the country’s agricultural products get a boost, with China signing a USD 1 billion in agreement for imports. The investments indicate the need for a temperature-controlled environment for integrating supply chains and creating value addition to customers.

Competitive Landscape
The cold chain logistics market landscape of the ASEAN region is fragmented in nature with a mix of global and local players. The market is still served by small- and medium-sized local players with small fleets and storage spaces. Some of the countries, like Singapore, have a strong presence of global players, like DHL and Nippon Express. Additionally, global players are investing in the market and acquiring local companies to increase their footprint in the region. For instance, Tasco, a subsidiary of Yusen Logistics, acquired two major cold chain service providers in Malaysia. To compete with global players, local enterprises are also investing in cold chain infrastructure to meet the standards. Furthermore, logistics companies in Japan strengthen their activities in ASEAN by setting up bases of land transportation in ASEAN countries for each country within the manufacturing and distribution industries, thereby pushing the construction of a supply chain. The companies are also involved in the development of cold chain and also actively invest in logistics related to fruits and vegetables, flowers, cosmetics and consumer goods.