In conversation with Sarawut Chaink, Operations Excellence Manager, we tried to understand the Cold Chain Market in Thailand. We talked about the major trends and factors affecting the market's growth and future outlook.
“The government’s vision of positioning Thailand as the Distribution and Logistics hub of the South East Asian region is supporting the growth of cold chain industry”
Q1. How do you describe the current stage of Thailand’s cold chain market?
The cold chain market in Thailand is in the growth stage and it is more advanced than other countries in the South-East Asian region such as Malaysia, Cambodia and Vietnam. However, the market still has a long way to go to compete with international standards
Q2. What are the major trends and developments in the Thailand Cold Chain Market?
The growing importance of technology is being observed in the market. The awareness has spread regarding the use of warehouse automation and real-time tracking of temperature, location and humidity.
In the past few years, cold chain companies in Thailand are trying to match international quality standards. Hence, most companies are putting special efforts to ensure they get the quality certificates such as ISO 9001, GMP, GSTP and HCCAP.
Q3. What are the major challenges in the Thailand Cold Chain Industry?
The shortage of adequate storage space is a major problem faced by the Thailand cold chain industry. Moreover, it is required for an international company to have a partnership with any local Thai company to be able to do business in Thailand. Such stringent industry regulations also hamper the free growth of the cold chain industry and the easy entry of new international players in the country.
Q4. According to you, what was the impact of covid-19 on the cold chain during and post-pandemic?
The cold storage market experienced an increase in storage requirements as the companies needed more storage space in order to store the products that they were not able to sell. Due to the fall in import trade volume along with China following the Zero Covid-19 policy, the cold transportation market was severely affected as Thailand is a major exporter of seafood, fruits and vegetables in the south Asia region.
Q5 According to you, who are the major players in the cold chain logistics industry in Thailand?
Some of the major players in Thailand cold chain industry include JWD Info Logistics, Thaimax Cold Storage Company, Thai Yokorei Co, Konioke Cool Logistics, Mobile Logistics, SCG Nicherei Logistics, and CTI logistics. Some of the companies such as Thai Yokorei, Kanoike Cool Logistics, and SCG Nicherei Logistics are joint ventures of big Japanese companies with some local Thai partners.
Q6 What is the process cycle of supplying goods from the production site to the end users?
Actually, cold chain companies act as an intermediary in the distribution of goods from customs warehouses or manufacturing hubs to the end users. The chain starts with the procurement of products from manufacturers/ importers at procurements hubs which are then carried by 20-foot or 40-footer reefers to warehouses where the goods are being unloaded. In warehouses, the goods are stored in temperature-controlled chambers, and then sorted and packed as per clients’ instructions. According to client requirements, the goods are then distributed to end users such as retailers, supermarkets, distributors and others in smaller reefer trucks like 4-wheelers and 6-wheelers.
Q7.What is the role of the Thailand government to promote the growth of the industry?
The government is trying to establish Thailand as the distribution and logistics hub for the Southeast Asian region. As a result, a lot of investment is being done by the government to develop the supporting road and sea infrastructure to ensure the growth of the logistics industry such as the Eastern Economic Corridor.
Q8 Which regions are expected to emerge as the hub of economic activities in the coming years?
Bangkok, being the capital city is the hub of all major economic activities. It generates most of the demand for seafood, fruits and vegetables which further drives the cold chain market. However, Chonburi, Rayong, and Chachoengsao are expected to be the hub of economic activities in the near future as they are the focus of development activities under government initiatives of the Eastern Economic corridor.
Q9. What types of automation technology are majorly being used in cold warehouses?
In terms of complex structural automation like ASRS, the adoption rate is 15-20% only. The reason for such a low adoption rate is the high cost of technology implementation, structural rigidity and loss of flexibility in operations. It requires a heavy commitment to the physical structure and as a result, the movement of goods becomes quite restricted in ASRS as compared to conventional racking systems like mobile racking and drive-in racking.
Such technological commitments are generally preferred by retailers in owned cold storages as they know their product requirements but third-party logistics avoid such technology adoption as they have to serve a variety of different customers’ needs.
Q10. What is the future outlook of the cold chain industry in Thailand?
The cold chain market has huge growth potential in Thailand. With the growth in international trade, domestic consumption and logistics-infrastructure growth, the demand for cold storage is expected to increase. However, in the near future, the investment scenario is expected to be grim. Companies are a bit cautious regarding any big investment due to international instability in terms of Chinese trade policies, Ukraine Russia conflict, chances of a potential recession in western countries and high energy and fuel prices.
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