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Dinh Vu

Economic Sector

Last updated: Friday, May 25, 2018


Cold Supply Chain Development Facing Many Challenges

Posted: Thursday, March 16, 2017

The potential development of the cold chain (a temperature-controlled supply chain) in Vietnam is ranked 17th globally. Cold supply markets globally are forecast to reach US$271.3 billion in 2022. However, to develop a cold chain in Vietnam, companies in the industry still face many challenges.

This is also the main content of Conference "Fresh, Cold Supply Chain Management and Agricultural Supply Chain in Vietnam". The event was recently organised by Vietnam Supply Chain to connect businesses, share experiences, and give an overview of problems and solutions in cold supply chain for agriculture in Vietnam.

In Vietnam, supply chain is used extensively in industrial manufacturing and consumption sector, and is quite new to the agricultural sector. The latest report on agricultural supply chain of the World Bank (WB) revealed some considerable indexes about Vietnam's agricultural sector. On a scale of 100, Vietnam is 55.7 points on supply chain operation, 60.6 points on product quality management and 48.4 points on agribusiness trade. Compared with the Philippines, Vietnam is better at management but poorer at supply chain operations and trade. Vietnam has also lower scores in trade than Cambodia and Laos. Moreover, losses during harvesting, processing, and storage transportation pose challenges for the agricultural supply chain in Vietnam.

According to the report of the Processing Department, the average loss ratio is now 25-30 per cent. However, based on the method of processing and transportation, the loss of fruits and vegetable can be up to 45 per cent and up to 35 per cent for seafood products.

According to research of the Food and Agriculture Organisation (FAO) of the United Nations, 63 per cent of the loss comes from harvesting, collection, transport and storage. The main reason leading to high loss rate includes low level of mechanisation of agricultural production, as well as low transportation capacities for frozen foods.

Many experts said the biggest barrier to the development of the cold supply sector is the control of chemicals being used in the current chain of agricultural products around the globe. These chemicals help agricultural products retain freshness for a long time without refrigeration or cooling, but have not been proven not to harm health or the environment. The usage of chemicals to keep agricultural products fresh is posing many challenges in many markets, and apparently, there have not been any solutions to control it, because chemical costs are rather low compared to other operating costs.

To improve the quality of exported products and domestic products, the food industry of Vietnam should focus on improving the cold chain. Agricultural producers, agricultural distributors, restaurant chains and supermarkets should cooperate more closely with cold chain service providers to improve the value and quality of the whole chain.

According to Mr Luong Quang Thi, Director of ABA, cold supply service providers are determined to maintain the quality and serve as an important link to sustainably build a cold supply market in Vietnam.

According to Mr Vincent Goalard, Representative of International Pharma Services, the cold supply chain is extremely important to the development of the medical industry. If it does not meet that criterion, the vaccine cannot take effect or is harmful to humans. Only a handful of transport providers can ensure this requirement, and focus on certain major hospitals. This limits the supply of vaccines.

According to Julien Brun, Representative of the CEL Consulting, the air-cooling supply industry in Vietnam is ranked 17th globally. The fresh-cold supply markets globally forecast to reach US$271.3 billion of the total value in 2022. The air-cooling supply chain is popular in traditional sectors such as agriculture, food, pharmaceuticals, aviation, and modern retail. Businesses which have long-term business and investment strategy in this sector are likely to dominate the market and lead the air cooling industry in Vietnam.

Ha Thu

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