Unsatisfied market potential, growth in demand and the need for improvement all mean that there are a lot of opportunities for investment in cold storage facilities in China, according to Clement Lam, director and general manager of Swire Pacific Cold Storage.

“We do believe that the percentage of products being transported and stored in proper cold chain facilities will increase disproportionately to the growth of capacity,” said Lam, who was speaking at the first Cool Logistics Asia conference in Hong Kong, during a session on cold chain investment projects.

Demand for cold storage will grow because of three factors, said Lam.

The first is urban renewal. “Warehouses closer to the city centre are generally being pulled down and reshaped into commercial properties,” he said. “This causes a reduction in prime locations, and we think this is going to help us because we’re investing in large cold storage facilities on the outskirts of cities.”

Swire Pacific Cold Storage, which aims to develop a cold chain storage network throughout China, has four facilities in operation: Guangzhou, Langfang, Shanghai and one which recently opened in Ningbo. The company has plans for additional facilities in Xiamen, Wuhan, Chengdu and Nanjing.

Lam’s two other factors are an increase in imports and a focus on quality.

The need for improvement also represents a significant opportunity because food safety is the third largest problem in the eyes of the public, according to Lam.

“As long as food safety is among the top four categories, we think this is going to be a necessary investment,” he said. “What we’re building is the necessary infrastructure to facilitate the safe transport and logistics of food products.”

Cold chain investment in China is not without its risks, though. Risks include government regulation, currency and economics, a lack of customers, the speed in adoption, rising costs and food supply chain complexities, Lam said.

One other risk concerns the issue of land, which often presents a number of challenges for businesses. Swire Pacific Cold Storage generally wants to build facilities in locations that are close to major logistics centres and wealthy cities with large populations, according to Lam.

“But of course, buying land in China is not a science,” he said. “It’s an art.”

By Jeffrey Lee

Asia Cargo News | Hong Kong