The Vietnamese warehousing market is expected to experience robust double-digit growth by 2027, driven by e-commerce and adjustments in the global supply chain. Foreign investors are taking the lead in developing logistics infrastructure in key areas such as Ho Chi Minh City and Binh Duong. Join KTG Industrial in exploring the rapid development of the warehousing market in Vietnam.
Current Situation of the Vietnamese Warehousing Market
The warehousing market in Vietnam is undergoing spectacular growth, with a leap in modern warehousing space reaching 3.9 million square meters by the end of 2023. This impressive growth rate, nearly 23% annually from 2020, demonstrates that Vietnam has garnered significant interest from international investors [1].
Development of the Warehousing Market in Vietnam
Major corporations such as Mapletree, BW Industrial Development, and SLP control over 75% of the market share. They are aggressively expanding to meet demand from the manufacturing and e-commerce sectors [1]. From 2024 to 2027, the market is expected to welcome an additional 1.9 million square meters of new warehousing space. This development reaffirms Vietnam’s position as a key logistics hub in Southeast Asia [1].
Overall, Vietnam’s role is increasingly prominent, attracting investments and laying the foundation for economic development in the region.
Factors Influencing the Vietnamese Warehousing Market
Development of Logistics Services
As foreign investors enter Vietnam, they bring advanced technology and management techniques, transforming the local warehousing market. Their presence not only increases operational efficiency but also promotes healthy competition, paving the way for innovations and investments in leading-edge warehousing solutions.
Advanced Technology and Management Techniques Provided by Foreign Investors
Furthermore, with the explosion of e-commerce, the demand for warehouses capable of rapid distribution has become urgent. In response, new distribution centers are emerging everywhere, particularly in locations that are convenient for serving urban populations, optimizing delivery times, and enhancing customer experiences.
Notably, warehousing development projects near borders are reducing trade barriers and significantly improving supply chain efficiency. This not only helps to reduce costs but also boosts exports and imports.
Finally, the upgrading of warehousing infrastructure with automation technologies such as Automated Storage and Retrieval Systems (ASRS) and robotics has revolutionized how we store and distribute goods. This technology not only saves on labor costs but also increases accuracy and processing speed, yielding significant economic benefits for businesses in the industry.
Demand for Cold Storage in Vietnam
The demand for cold storage in Vietnam is on a strong growth trajectory, with an expansion projected at about 70% by 2028. The primary drivers of this growth stem from the seafood export sector and the domestic demand for fresh goods.
Strong Growth in Cold Storage in Vietnam
Cold storage facilities are primarily concentrated in Southern Vietnam, near the Mekong Delta. This location is advantageous for storing and transporting fresh agricultural and seafood products.
Additionally, foreign investment interest, especially from Japanese companies, has reaffirmed confidence in the potential of Vietnam’s cold storage market. This not only promotes market growth but also enhances the quality of warehousing services in the region.
Domestic and Foreign Investment in Vietnam’s Warehousing Market
In Vietnam’s warehousing market, foreign investors are leading the way, owning over 75% of the warehousing space. Conversely, domestic investors are leveraging the country’s port infrastructure to integrate warehousing services with maritime transport.
Dominance of Foreign Investors
Foreign investors currently hold 75% of the warehousing space in Vietnam, with major companies like Mapletree and BW Industrial managing 46% of the modern warehousing area. These investors are not only infusing substantial capital but are also bringing advanced technology and professional management skills to the sector.
Overall, the participation of foreign investors has set new standards, enhancing quality and efficiency, and increasing competition within the industry.
Impact on Domestic Investors
Meanwhile, domestic investors such as ICD ST and NPL Logistics account for about 10.6% of the warehousing space. However, they are actively utilizing Vietnam’s port infrastructure with an aim to integrate warehousing services with maritime operations.
Specifically, these investors focus on developing specialized warehousing solutions, including cold storage and high-tech warehouses. This approach effectively serves industries that require stringent preservation standards, such as pharmaceuticals and fresh food.
Clearly, domestic enterprises are gradually expanding their influence and enhancing their competitive capabilities in this globalized environment.
Focused Development of Warehousing in Southern Vietnam
Southern Vietnam is becoming a hotspot for the warehousing industry, thanks to its strategic location near key ports such as Cat Lai Port. Additionally, the Vietnamese government has made significant investments in improving transportation infrastructure, including the expansion of road networks and the renovation of railways. These projects enhance connectivity between industrial zones and ports, improving distribution efficiency.
Warehousing Development Concentrated in Southern Vietnam
Moreover, warehousing facilities in this region are transforming with the adoption of advanced technologies. From automation to modern inventory management systems, this technology not only enhances management efficiency but also reduces costs and increases competitiveness.
Impact of Warehousing Development in China
China is expanding its warehousing infrastructure near the Vietnam border, particularly through projects like the China-ASEAN Cross-Border E-Commerce Industrial Park. This development boosts cross-border e-commerce capabilities and increases competition in the Vietnamese warehousing market.
This competition could put pressure on Vietnamese warehousing providers, while also creating opportunities and challenges. Opportunities include benefiting from increased trade transactions and investments in local warehousing infrastructure. However, this growth also creates a fiercely competitive environment. Vietnamese warehousing businesses may face competition from more efficient and cost-effective Chinese facilities, potentially reducing the market share of both local and foreign warehousing service providers in Vietnam.
Current Warehousing Rental Prices
Industrial land rental prices in Vietnam are expected to increase by 3-9% in the North and 3-7% in the South over the next three years. This rise could significantly impact the warehousing market.
As rental costs increase, the operational expenses for warehouses will also rise, potentially putting financial pressure on investors.
On the positive side, this could be an opportunity to stimulate competition and encourage improvements in operational efficiency among investors and businesses. Enhancing cooperation and investing in warehousing infrastructure could be part of a strategic response, helping companies maintain competitiveness in a changing market environment.
Automation Development in Vietnam’s Warehousing Sector
Automation is reshaping the operations of the warehousing market in Vietnam, offering substantial benefits. Firstly, this technology reduces labor costs by automating repetitive tasks and speeds up the processing of goods. This not only enhances operational efficiency but also improves accuracy in inventory management.
Benefits of Automation in Vietnamese Warehousing Operations
Thanks to automation, businesses can offer quicker and more accurate services, thereby enhancing their competitiveness in the market. The adoption of advanced technology also encourages the development of warehouse marketing in Vietnam, opening opportunities to attract investments to improve the quality of warehousing infrastructure.
With advances in automation, the scale of Vietnam’s warehousing market is expected to continue growing, promoting a healthy competitive environment and fostering continuous innovation in the industry.
Development Trends in Vietnam’s Warehousing Market
The warehousing market in Vietnam is witnessing strong growth driven by the surge in e-commerce. As online shopping demand increases, so does the need for modern and efficient logistics infrastructure to manage inventory and distribution. This development is expanding the size of Vietnam’s warehousing market and strengthening warehouse marketing within the country.
The development of the warehouse market in Vietnam
Technological advancements are transforming warehouse operations. Innovations such as warehouse automation, cloud-based operational management, and the use of big data for optimizing processes are becoming increasingly common. These technologies not only enhance efficiency but also reduce costs and enhance competitiveness in the Vietnamese warehousing market.
The development of transportation infrastructure also contributes to the warehousing industry by facilitating easier goods transportation. Effective connections between urban areas and strategic locations like ports enhance the development of warehousing centers, especially in Southern Vietnam.
The involvement of foreign investors such as Mapletree, BW Industrial, and SLP in the modern warehousing rental sector significantly shapes the competitive landscape. They bring advanced technology and management methods, creating opportunities for local development and introducing international standards to Vietnam.
Lastly, sustainability trends are increasingly emphasized in the warehousing industry. Practices aimed at reducing energy consumption, waste production, and carbon emissions are gradually being integrated into warehousing operations to attract environmentally conscious customers and investors.
These trends contribute not only to the development of Vietnam’s warehousing market but also support expansion and innovation in the logistics and supply chain sectors in Vietnam.
Challenges of Investing in Vietnam’s Warehouse Market
The warehouse market in Vietnam is rapidly developing, yet it faces significant challenges. First, rental prices for warehouse space in Vietnam are relatively high, averaging between $4.7 and $4.9 per square meter per month for ready-built facilities in Tier 1 markets. Factors such as geographic location, material quality, and labor costs greatly influence the total expenses. This creates a financial barrier, limiting the expansion of both domestic and international investors.
Challenges of Investing in Vietnam’s Warehouse Market
Next, legal barriers also pose a considerable challenge. Local regulations are often complex and stringent, making compliance costly and hindering operational efficiency. Cumbersome administrative procedures can slow down expansion processes and lead to unexpected costs for businesses.
Finally, the dependence on foreign investment increases the uncertainty in the market. Global economic fluctuations can impact investment flows into Vietnam, causing instability for warehouse development projects. This dependence makes the Vietnamese warehouse market vulnerable to unforeseen economic shifts.
Potential and Investment Opportunities in Vietnam’s Warehouse Market
According to BlueWeave Consulting, the warehouse market in Vietnam encompasses approximately 78,968 square meters as of 2023 and is projected to grow at a CAGR of 10.66% from 2024 to 2030 [2]. This growth is primarily driven by the expansion of the e-commerce sector and the high demand for goods from international markets.
Potential and Investment Opportunities in Vietnam’s Warehouse Market
Moreover, automation technologies are being extensively implemented in warehouses across Vietnam, including Automated Guided Vehicles (AGVs), autonomous mobile robots, and collaborative robots. These technologies automate manual tasks, reduce processing time and costs, and minimize the risk of errors and workplace accidents.
Overall, the Vietnamese warehouse market faces many opportunities for robust development, though not without challenges. Investing in technology and infrastructure will be key for businesses to seize opportunities and overcome current barriers, adapting and thriving in a competitive market.
Conclusion
The Vietnamese warehouse market is emerging strongly, becoming a strategic logistics hub in the region. Despite challenges such as high costs and legal barriers, the sector still offers numerous investment opportunities thanks to the growth of e-commerce, automation technology, and foreign investment. Focusing on infrastructure improvements and the adoption of advanced technologies will not only ensure sustainable growth but also strengthen Vietnam’s position on the international logistics map.
References:
[1] Ngoc, Vietnam. “Foreign Investors Dominate Warehouse Segment.” Vietnam Investment Review – VIR, 24 June 2024. Available at: vir.com.vn/foreign-investors-dominate-warehouse-segment-112084.html. Accessed 4 Feb. 2025.
[2] “Vietnam Warehousing Market More Than Doubles Its Area to Reach 1.73 Million Square Feet by 2030.” BlueWeave Consulting, 2024. Available at: blueweaveconsulting.com/press-release/vietnam-warehousing-market-more-than-doubles-its-area-to-reach-1-73-million-square-feet-by-2030. Accessed 4 Feb. 2025.
