Prospects are great for the Philippine cold chain sector.
Written by the PRIME Philippines Research and Advisory Team
The cold storage industry in the Philippines is evolving rapidly, propelled by the growing demand for temperature-controlled facilities across various sectors, including food and beverage, pharmaceuticals, and agriculture. This is vital as the country seeks to enhance its food security and reduce post-harvest losses, both significant concerns in the agricultural sector.
As of the second quarter of 2024, the Philippines has an estimated total cold storage capacity of 739,000 pallet positions, a 5% growth from the previous quarter. This is largely due to the addition of pallet positions in existing facilities, with notable expansions in Cavite, Bulacan, and Laguna.
Luzon accounts for the majority of the country’s cold storage capacity, holding 61.6% of the total supply. This dominance is supported by large facilities in Plaridel, Bulacan, and in Cavite, together contributing thousands of pallet positions.
There have been several key developments in the industry. One of the most significant is the planned National Food Hub at Clark International Airport, a public-private partnership project that includes cold storage facilities as part of its first phase. Slated for completion by 2027, it aims to serve as a central exchange for fresh food and a hub for food processors and logistics providers. This will further solidify the importance of cold storage in the country’s food supply chain.
Additionally, companies like Fast Logistics are making strides in green development by integrating renewable energy solutions into their operations. For example, their cold storage facilities in Cavite and Laguna have converted to solar power, marking a significant shift towards sustainability. This move not only reduces the environmental impact but also addresses the high operational costs associated with traditional energy sources.
Despite these developments, the Philippine cold storage industry faces several challenges. High electricity costs remain a major hurdle, making it difficult for operators to maintain profitability while keeping storage fees competitive. Moreover, the fragmented logistics network, particularly in reaching remote areas, limits cold chain’s efficiency here, potentially leading to higher post-harvest losses.
On the other hand, the rising importation of frozen goods has heightened demand for cold storage. The surge in imported food items, particularly pork, chicken, and fish, underscores the critical role that cold storage plays in preserving these products and ensuring their availability in the market. This trend is expected to continue, driven by rising consumer demand for imported food products and the expansion of the e-commerce sector.
Recognizing the sector’s strategic importance in ensuring food security and economic resilience, the Philippine government has implemented a series of initiatives aimed at bolstering its growth. As of 2019, the Department of Agriculture had accredited 151 cold storage warehouses across the country, with the majority situated in the National Capital Region, Central Luzon, and CALABARZON. This highlights a commitment to maintaining high standards in food preservation and safety.
Furthermore, the ongoing regional development push has led to significant investments, including the establishment of new cold storage facilities across the country. According to the Philippine Cold Chain Industry Roadmap, these efforts are designed to increase cold storage capacity by 10-15% annually.
Complementing these efforts, HB 10087, or the Cold Storage for Food Security Act, has been proposed. This legislation calls for the establishment of cold storage facilities in every region, aiming to reduce post-harvest losses and enhance the quality of food products. The bill outlines the use of funds from the General Appropriations Act and provides incentives such as tax holidays and subsidies to private entities investing in cold storage.
The Cold Chain Association of the Philippines has also played a pivotal role by promoting best practices, fostering collaboration among stakeholders, and setting strategic goals. CCAP’s roadmap for 2020-2025 emphasizes the importance of cold storage in supporting the country’s food security and reducing reliance on imports.
As the Philippines continues to enhance its cold storage capacity, the question remains: Is the country’s cold storage industry already chilling? The answer is a confident yes, but with the understanding that continued efforts are necessary to fully harness its potential. With the right mix of innovation, investment, and policy support, the Philippines is on the path to becoming a leader in cold storage in the region, ensuring that its food supply chain remains resilient and reliable for years to come.
PRIME Philippines is the leading real estate consultancy firm for emerging markets with offices in Manila, Cebu, and Davao. To learn more, visit primephilippines.com, or follow them on Facebook at facebook.com/PRIMEPhilippines.