What is RCEP?
The Regional Comprehensive Economic Partnership (RCEP) is the largest FTA in history with an estimated worth of US$26 trillion covering roughly 30% of global GDP, between Asia-Pacific nations. According to researchers at Johns Hopkins, it is estimated that it will add $186 billion to the global economy.
Businesses looking to engage in cross-border trade within RCEP markets will benefit from the lowering of preferential tariff rates by about 92% of goods.
What does this mean for Vietnam?
The seamless flow of commerce and goods between member countries will boost Vietnam's exports by allowing it to enter foreign markets more easily and via access to reduced tariffs and expedited customs processes.
This will also usher in competition from other countries as cheap imports enter the Vietnamese market thanks to a relaxation of trade. High-value imports will also become more affordable to Vietnamese consumers.
How will it impact logistics?
The RCEP aims to assist SMEs in the use of e-Commerce, encouraging paperless trading and acceptance of cross-border electronic signatures. This will create a favourable digital environment for international trade. Countries will need to ensure their infrastructure can handle a rapid increase in demand for transportation and storage. The overall increase in trade volume may add strain on infrastructure in countries where capacity constraints exist.
Most businesses were negatively impacted last year and are eager to increase trade and revenues as they look to limit losses from the Covid pandemic. Sea freight rates are still high as container supply is limited amid supply chain constraints. The global supply chain has been under pressure for some time due to increased costs in raw materials as well as higher delivery lead times. Overly complex administrative processes and customs delays have been factors holding back international trade.
Now that RCEP seeks to remove some of these barriers, we can expect a sharp increase in trading volume in an already constrained business environment which logistics operators need to prepare for.
Vietnam Cold Storage Challenges
Vietnam’s total export of agricultural products is at around 41.2 billion USD per annum. Vietnam is now the third-largest seafood exporter globally. The seafood industry accounts for the largest share of cold storage use in the country. However there is very limited cold storage space in Vietnam. Warehouses only meet 30% of Vietnamese demand for seafood, fruit & vegetables and fresh food storage.
1) Lack of capacity
The few available warehouses are operating at maximum capacity, therefore the market is experiencing a sharp increase in rent prices. In Southern Vietnam, cold storage rental increased by 167% in 2021 from 2020.
2) Safety and service are lacking
In the existing warehouses, there is a lot of room for improvement. Safety is a primary concern, as well as service. The supply chain is very decentralized consisting mainly of small and medium sized warehouses that are often disconnected or far from one another.
Large, centralized cold storage networks cater mostly to multinational companies and require large commitments in terms of volume. At present, it is a huge challenge for businesses to find a reliable cold storage solution in Vietnam.
What is the solution?
There are options to remove the hassle that businesses experience when they search for flexible cold storage in Vietnam. Arctic Wolf Global is the leading expert on customized cold chain solutions to fit every budget. We lease and maintain purpose-built Titan Arctic Store units that can be moved to any location nation-wide in a variety of sizes to tailored to meet your business' requirements. These units are electricity-efficient, with built in safety features and remote monitoring so you can sleep soundly at night knowing your products are stored safely.
In addition to storage, we are able to expertly handle your cold logistics & distribution in Vietnam. Our market-leading insulated boxes are breathing life into cold chain: they come in a variety of sizes that keep temperature for days on end, with no more styrofoam and no dry ice required. Our Olivo Boxes will also reduce your business' impact on the environment by lowering CO2 emissions in transportation. We precondition the boxes and load them onto trucks and trains, ship them nationwide with the unbroken promise that the cold chain will never break.
Get in touch with us and let's make your cold chain bulletproof.
* We are official agents of Titan Arctic Store units and Olivo Insulated Boxes in Vietnam.