Cold chain logistics enjoy healthy growth: EIC
Thailand’s cold chain logistics industry grew by 8% over the last three years (2019-2022) and is now worth a total of 26 billion baht, Siam Commercial Bank’s Economic Intelligence Center (EIC) reported on Monday.
The centre said that cold chain logistics had seen the first significant jump in 2018, when its share of the logistics markets increased to 5% from 2% the previous year.
The jump was due to increased demand for preserving product quality and reducing waste from spoilage among transporters of meats, fruits and vegetables, seafood, instant foods, beverages and dairy products, it added.
Other factors that have supported growth include the rapid expansion of fruit exports to China and the resumption of seafood exports following the lifting by the EU of Thailand’s yellow card status for illegal, unreported and unregulated (IUU) fishing in early 2019.
Based on data from the Department of Internal Trade, Thailand’s cold chain logistics industry comprises two main segments: cold logistics and cold warehouse services.
The EIC said cold logistics services have an average growth profit margin of 24% but are at risk of a downward trend due to fluctuation in fuel prices, which are responsible for up to 40% of operational costs.
The cold warehouse services, meanwhile, enjoy an average growth profit margin of up to 40% which is expected to increase due to the rising demand for services, and a hike in rental fees at around 5% annually. The main operational cost, namely the price of electricity, also fluctuates very little compared to fuel prices.
The centre predicted that the cold chain logistics industry could see more players in the coming years as the required investment is not too high. Furthermore, more operators in the food and beverage industries are considering using cold logistics services to preserve their product quality, and are willing to use up to 10% of their logistics budgets for cold warehouse services.
These food and beverage companies could either establish a subsidiary specifically responsible for cold logistics services within the group, or outsource the services to 3rd party logistics operators.
