Swot Analysis of Aj Total: A Cold Chain Logistics Service Provider (CLP) in Vietnam
Swot Analysis of Aj Total: A Cold Chain Logistics Service Provider (CLP) in Vietnam
By
GROUP 1
By
GROUP 1
Nguyen Hai Minh - 18330115
Cao Thi Thu Hue - 18330095
Le Khanh Linh – 18330100
Nguyen Xuan Dat – 18330109
ii
Abstract
The new normal state of the economy has fueled the development of the cold chain industry
in Viet Nam. Evaluating the competency of cold chain logistics service providers (CLPs)
is a crucial strategic approach for any party in Vietnam’s Logistics Industry. This study
aims to evaluate one of the most outstanding CLPs named AJ Total VN. SWOT (strengths,
weaknesses, opportunities, and threats) analysis is utilized to evaluate the characteristics,
synthesize key insights and provide recommendations for AJ Total VN.
Keywords: Vietnam’s cold chain; AJ Total VN; SWOT Analysis; Cold Storage; Cold
Logistics Service Providers (CLPs)
iii
Acknowledgements
Our team sincerely thanks the authors. The previous scientific researchers who have had
valuable scientific research articles contributed a lot to our understanding, knowledge, and
experience to complete the research into this report.
We would also like to thank Professor Eshetu and our classmates, who have followed us
and given their positive comments so that we can edit and perfect the report to the best of
our ability.
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Table of Contents
Chapter 2. Methodology........................................................................................... 16
1. Definition of SWOT analysis ...................................................................................... 16
2. Advantages of SWOT Analysis.................................................................................. 17
3. Limitations of SWOT Analysis ................................................................................... 18
4. Data Collection Method ............................................................................................. 19
Reference..................................................................................................................... 34
v
List of Figures
vi
List of Tables
vii
Chapter 1. Introduction
Vietnam can be cited as an example as, despite widespread COVID, the market is emerging
very fast due to a pile of causes. When the modern commercial sector saw continuous
jumps in customer demand from the increasing numbers of online orders in the e-commerce
sector, the pressure on the current facility of logistics companies is acknowledged to need
upgrading. Also, since the disruption of the Zero-COVID policy hits agriculture, the
exporting flow of agricultural and fishery products gets stagnant, making the refrigerated
warehouse run at full power. Another justification is the ubiquitous existence of the
Omicron variant, accelerating the vaccination and importing medicines, creating the work
of handling and keeping these items for the cold chain field. However, the fledgling cold
chain industry of Vietnam can only meet a small part of the demand of its supply chain. At
the time being, the number of strong logistics service providers (LSP) capable of handling
the complexity and intensity of the supply chain is rare, and most of them are Foreign
Direct Investment (FDI). In short, too much demand and too few supplies.
Cushman & Wakefield predicted Vietnam’s cold chain market grow rapidly, by 12% and
reaching $US295 million in 2025. Savills, a global real estate services provider, reported
1
that modern commercial retail was the driving force behind the industry growth, and
about 80 per cent of demands came from the food industry. In 2019, Vietnam had 48
refrigerated facilities with a total capacity of 600,000 pallets.
The cold chain is synthesized by FiinGroup in the figure 1 below, is the one of the most
promising logistics segments for growing in Vietnam thanks to soaring demands, creating
opportunities for both local and international companies to tap in.
Source: From Vietnam cold chain market report 2019 by Fiin Group, 2019. In the public
domain
According to the Vietnam Logistics Industry Report 2021, Vietnam Industry Research and
Consultancy (VIRAC JSC.) have stated that demand exceeds supply in the cold chain
sector, with the number of enterprises using in production eight times the number of
suppliers in terms of the opportunities of the Vietnam logistics industry. Demand in cold
chain and e-commerce drivers would be favourable factors to consider when it comes to
the collaboration landscape for Korean logistics providers – Entry strategies. (VIRAC,
2021)
Due to the high demand in the South, the majority of cold chain service providers are from
the South, with four different types of ownership: 48% domestic manufacturing
2
companies, 24% foreign companies, 14% logistics companies, and the remaining 14% are
other business types.
Some of the VLA Association's members developed cold storage systems named
Transimex, Gemadept, and Saigon Newport throughout the country. (VIRAC, 2021)
According to CEL research, 66.7% of exporting companies use cold chain production,
which is eight times the number of companies supplying the domestic market (8.2%).
(VIRAC, 2021)
Cold storage can be divided into 2 types: owned and rented as figure 2 below.
Source: Adapted from Vietnam Logistics Industry Report 2021(2021st ed.) by VIRAC, 2021. In
the public domain.
3
Figure 3 - Total designed capacity of cold storage warehouse for lease in Vietnam, 2015 – 2020
Source: Adapted from Vietnam Logistics Industry Report 2021(2021st ed.) by VIRAC,
2021. In the public domain
Figure 4 - Assessment of cold storage services’ capacity in Vietnam, 2019
Source: Adapted from Vietnam Logistics Industry Report 2021(2021st ed.) by Emergent
Cold, 2021. In the public domain
Cold storage is one of the most promising fields in Vietnam logistics because the demand
for cold storage is higher compared the supply. For the Vietnamese market, it is because
of high construction costs. Investors participating in this market are also not active. Foreign
enterprises are potential investors in the cold storage market by owning a professional team
and modern equipment. According to JLL, foreign investors are taking 60% market share.
4
JLL forecasts cold storage demand will continue to boom for at least the next half-decade
as global consumers are changing their shopping behaviour since the historical upheaval
of the pandemic. According to the MOIT report in 2020, frozen warehouses and cold
supply chains only meet about 30-35% of the requirements. (VIRAC, 2021)
Source: Adapted from Vietnam Logistics Industry Report 2021(2021st ed.) by JLL, 2021.
In the public domain
The Vietnam Logistics Research and Development Institute (VLI) synthesized the statistics
of cold warehouses in Mekong Delta area, and it can be seen that Mekong Logistics, Hanh
Nguyen Logistics and AJ Total VN is top cold storage providers.
Source: Adapted from Vietnam Logistics Industry Report 2021(2021st ed.) by VIRAC, 2021. In
the public domain.
5
1.2 Background of AJ Total
AJU Group was originally established by Honorary President Moon Tae-shik in 1960.
Today the company is separated into several affiliated companies which are AJU Group,
SINAJU and AJ.
Source: Adapted from Cold chain best practices by M. Phung Le, 2022. Copyright 2022
by AJ Total
Source: Adapted from Cold chain best practices by V. Trung Dao, 2022. Copyright 2022
by AJ Total
6
Figure 7 - Developing history of AJ Total
Source: Adapted from Cold chain best practices by M. Phung Le, 2022. Copyright 2022 by AJ
Total.
2. Value System
Figure 8 - Value system of AJ Total
Source: Adapted from Cold chain best practices by M. Phung Le, 2022. Copyright 2022 by AJ
Total.
2.1 Mission
The mission of AJ Total Company is to be happy with a throbbing heart, serve our
customers for their success, contribute to the sustainable growth of our society, and never
stop searching for new opportunities and the next frontiers.
7
2.2 Vision/ Slogan
The CEO of the company - Mr. Kim Geun-tae, has written the message to customers “AJ
Total is a food company specializing in refrigeration and freezing warehouse business and
F&B business.
Starting with the completion of Yongin Refrigeration in 1993, Suzy Refrigeration, Giheung
Refrigeration, and Cheoin Refrigeration were established to establish the largest
refrigeration and freezing warehouse network in the metropolitan area. Based on this, we
acquired AJ Hanrok Co., Ltd. for the livestock processing business, meat
import/distribution food business, and logistics transportation system, expanded our
business area to the 3PL business and advanced into the F&B business by establishing a
restaurant franchise.
In addition, we have established a refrigerated and frozen storage distribution center in Ho
Chi Minh City, Vietnam, and expanded the overseas food material import and distribution
business to become a global company.
AJ Total is striving to create an organizational culture where all employees can work
happily and happily based on the mission of a heart-beating and happy company', and we
will continue to strive to become a company that customers can trust. We, AJ Total, will
always be with you. We ask for your support and interest. Thank you."
“Turning your worries to your edge; Turning your complications to your speed” is the
phrase representing the company's vision and evoking a memory for customers.
8
Figure 9 - Core value of AJ Total
Source: Adapted from Cold chain best practices by M. Phung Le, 2022. Copyright 2022 by AJ
Total.
3. Report Objectives
Compare theoretical knowledge and facts with the actual situation, then analyze objectively
and honestly the cold chain logistics providers - AJ Total Vietnam Company.
Draw lessons from strengths and weaknesses (SWOT analysis) of AJ Total Vietnam
Company, which has had particular successes in the cold chain field. In order to be able to
apply lessons learned from that to other businesses in the same industry, we need an in-
depth understanding of the market and trends in cold chains. Companies can increase
competition among themselves to improve business areas and services for consumers.
9
4. Major Activities
4.1 A Glance at AJ Total’s Business
AJ Total diversified and specialized in cold chain operation from cold storage, cold
distribution to food processing.
Figure 10 - AJ Total business
Source: Adapted from Cold chain best practices by V. Trung Dao, 2022. Copyright 2022
by AJ Total
Source: Adapted from Cold chain best practices by V. Trung Dao, 2022. Copyright 2022
by AJ Total
10
4.2 Business Network in South Korea
Source: Adapted from Cold chain best practices by M. Phung Le, 2022. Copyright 2022
by AJ Total
AJ Total Vietnam builds and operates the largest and most advanced temperature-
controlled warehousing facility in Vietnam. The warehouse's location is advantageous for
all shipment operations, distribution, import, and export. It has diversified and specialized
in international quality, capacity, and ability to provide full service.
AJ Total Vietnam has other utilities such as a Checking room, Repacking room, more than
20 small and large forklift trucks, and a flexible inventory management system. The
company can meet the most complex requests from clients.
11
AJ Total Vietnam plays a significant role in the logistics supply chain to strengthen
fisheries in Vietnam and provide support services for all imported foodstuffs, such as ice
cream, dairy products, fruit concentrate, frozen vegetables, and other items.
AJ Total Vietnam facilities offer value-added services to support the ever-growing
Vietnam market: Handling, Sorting, Repacking, Labeling, Weighting, Bundle, Inspection
rooms, Office for rent, Refrigerated Transport, Cross-docking, Distribution Center, Order
Fulfillment, and Blast freezing. A brief overview is the following.
- Enter overseas markets by operating cold logistics center in Ho Chi Minh City (2021)
- Plan to build 3 logistics centers in Vietnam by 2023
- Each center has 30,000 tons of storage capacity
- Extend business field to import/ distribution of food resource
12
Figure 13 - Cold storage network in Viet Nam
Source: Adapted from Cold chain best practices by M. Phung Le, 2022. Copyright 2022
by AJ Total
13
Figure 14 - South warehouse in Viet Nam
Source: Adapted from Cold chain best practices by V. Trung Dao, 2022. Copyright 2022
by AJ Total
14
Figure 15 - North warehouse in Viet Nam
Source: Adapted from Cold chain best practices by V. Trung Dao, 2022. Copyright 2022
by AJ Total
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Chapter 2. Methodology
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employee turnover, complex decision-making processes, narrow product range,
and large wastage of raw materials.
− Opportunities: Opportunities are presented by the environment within which our
organization operates. These arise when an organization can benefit from
environmental conditions to plan and execute strategies that enable it to become
more profitable. Organizations can gain a competitive advantage by making use of
opportunities. The organization should be careful and recognize the opportunities
and grasp them whenever they arise—selecting the targets that will best serve the
clients while getting desired results is a difficult task. The market, competition,
industry/government, and technology may arise opportunities. Increasing demand
for telecommunications, accompanied by deregulation, is a great opportunity for
new firms to enter the telecom sector and compete with existing firms for revenue.
− Threats: Threats arise when conditions in the external environment jeopardize the
reliability and profitability of the organization's business. They compound the
vulnerability when they relate to the weaknesses. Threats are uncontrollable. When
a threat comes, stability and survival can be at stake. Examples of threats are -
unrest among employees, ever-changing technology, increasing competition
leading to excess capacity, price wars, and reducing industry profits.
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4. Maximize its response to opportunities.
5. Overcome the organization’s threats.
6. It helps in identifying the core competencies of the firm.
7. It helps in setting objectives for strategic planning.
8. It helps in knowing past, present, and future so that plans can be chalked out by using
past and current data.
SWOT Analysis provides information that helps synchronize the firm’s resources and
capabilities with the competitive environment in which the firm operates.
1. Price increase;
2. Inputs/raw materials;
3. Government legislation;
4. Economic environment;
5. Searching for a new market for the product which does not have an overseas market
due to import restrictions.
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4. Data Collection Method
We created a survey question for the collection of SWOT data involving a case of cold
logistics service providers of AJ Total. Below is a link to that.
After that, we send it to about 20 experts and non-experts who know about AJ Total VN
online to get the data for making SWOT.
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Figure 16 - The questionnaire form
20
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Chapter 3. SWOT Analysis of AJ Total VN
The strengths, weaknesses, opportunities and threats are synthesized in the figure 14
below.
1. Strengths
3.1.1. Expertise
It has expertise in cold chain warehousing & distribution and is able to identify the root
cause of customer problems and provide best practices for solving them.
AJU group has been operated in Korea since 1960 and become a giant in Korean cold chain market.
With substantial investments, they established AJ Total VN in the Vietnamese market.
3.1.3. Technology
AJ Total's cold storage in Long Hau industrial park is invested in high-tech facilities and
applied cutting-edge technology to help increase working efficiency and reduce human
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labour requirements. According to AJ Total VN, the warehouse is invested with a fireproof
partition system, automatic fire fighting system, backup generator, and technology to cool
the transit area with salt water, which is modern, leak-proof, and safe. For workers. The
delivery and receipt of goods at AJ Total cold storage is convenient and safe thanks to the
3,000 m2 buffer warehouse with 44 modern equipped import and export doors, surveillance
cameras, and automatic lifts. With the automation system, AJ Total is able to reduce most
of the operating cost from labour, gain more throughput capacity, better optimize the
resources and maintain higher reliability. Hence, the automation application give AJ Total
the prevalent competency through cost-efficiency.
1.4 Reputation
2. Weaknesses
Since AJ Total Vietnam entered the Vietnamese cold chain market in 2021, it is relatively
new, so the market share is not high and it is not as competitive as competitors with many
years of experience. Because of this, the lack of qualified human resources is inevitable,
and therefore high-qualified human resources must be recruited. Competitors in other fields
are not only involved in the cold chain but also in other areas. AJ Total VN, however, is
limited in the cold chain area, concentrating on a niche market, making it difficult for it
to compete with other LSPs.
3. Opportunities
Vietnam’s free trade agreements, along with the recent Regional Comprehensive
Economic Partnership (RCEP) are expected to play a major role in helping Vietnam’s
economic growth this year. As Vietnam further opens up its borders for international travel,
the government wants to ensure that the country returns to its pre-pandemic growth.
Vietnam’s FTAs and other bilateral agreements are likely to aid and play a significant role
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in the medium to long term. While Vietnam is one of the countries with several FTAs, most
recently it has signed new generation FTAs such as the Comprehensive and Progressive
Agreement for Trans-Pacific Partnership (CPTPP), EU-Vietnam FTA (EVFTA),
UK-Vietnam FTA (UKVFTA), and most recently the RCEP. While these agreements
will not only help Vietnam advance its economy and production network, it will also help
the country conform to labor standards while modernizing labor laws and industrial relation
systems.
Since the US-China trade war, and even before that, businesses have been looking at
Vietnam as a China plus one destination and to reduce their operation costs and diversify
their production capabilities, due to Vietnam’s stable politics, cheap inputs, competitive
labor costs, facilitative trade environment, and investment policies, particularly in
electronics and supply chain industries.
Businesses can further look at which industries can benefit from FTAs, and tailor their
production according to current demand and trends. For example, in January 2021,
Vietnamese exports were valued at US$29 billion increasing 1.5 percent over the same
period last year. Out of this, seven commodity groups, earned over US$1billlion each
accounting for a total of 63.3 percent for total export turnover as per the MoIT. Some of
these commodity groups were:
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− Agro, forestry, and fisheries (US$2.67 billion).
The increasing demand of cold chain benefited from the invest-flow help AJ Total to gain
more customers such as manufacturer producing and exporting fishery products to Europe
(EU) and other markets. In order to keep the products fresh and expand the product shelf
life so more profit would be gained, the cold chain system is necessary. They will have a
demand of building a cold room for their own to store the product under cold temperature.
In case they only specialize in production, they will have an LSP to take care of storing the
products in the cold outside warehouse. Transporting perishable products is rough when
the scorching heat and humidity of Vietnam's atmosphere cause a significant loss rate of a
product. That will need an CLP's hand specializing in the cold chain field. Outsourcing
logistics operations, also known as a Third-Party Logistics (3PL) solution, is when a cold
logistics service provider (CLP) handles all logistics activities from the final products
produced and transported to the end customer assured in the correct quantity, good quality,
and on time.
4. Threats
Prior to 2022, the global supply chain witnessed the rampage of COVID 19 and other
disruptions such as Suez Canal congestion, China closing border, US port congestion.
Furthermore, the war between Russia and Ukraine led to the increase in fuel cost,
inflation rate, severely damaged the logistics players in the entire world.
Because the cold chain facilities need a great deals of energy consumption to operate, AJ
Total could face the increase of energy cost due to the inflation and fuel cost, lowering
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the return on investment (ROI). Besides, although the number of CLPs in Viet Nam is not
many, those LSPs, rivals of AJ Total, own an integrated supply chain network while AJ
concentrates on just cold chain business. This could limit the opportunity for AJ to connect
more customers.
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Chapter 4. Lesson Learned
Cold chain industry is a promising field, yet, still developing because there are countless
challenges from many parties in Vietnam, for both upstream and downstream (figure 15).
Source: Adapted from Cold chain best practices by M. Phung Le, 2022. Copyright 2022 by AJ
Total.
There is a paradox in Vietnam logistics when individuals consider supply chain is the chain
of cost, so organization tend to cut the business cost whenever they can, regardless of the
opportunities cost. Therefore, agricultural products when finished, stacked on the dry truck
and transport to China through border. Meanwhile, the supply chain should be understood
as the demand chain because it originates from customer and when the customer demands
for product with high value, high-valued providers can gain a big share of the cake, of the
value-added chain. The value-added activities, which are organized in figure 16, ensure the
objective of cold chains.
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Figure 17 - The process of cold chain logistics
The objective of cold chain includes safety & security of shipment; clear, tight chain of
control, well-articulated responsibilities of participants; traceability of product movement;
tamper proof packaging; limitation of cross-contamination; and temperature monitoring
device in product and in transport vehicle.
Source: From Cold Chain Logistics 101 for Small Businesses by Optimal Route, 2021. In the
public domain.
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In the origin stage (upstream) of the production of agricultural products, the high qualified
product that meet the standards should be sorted and stored right at the harvesting stage to
preserve the quality. There rises the demand of building the cooling system or precooling
facility for the supplier, farmers, and manufacturers instead of using reefer container. For
production factory, higher quality packaging material and effective cold storage design
with large door is recommended. There should be separate storage between different
products and production lot as well.
Preparation before shipping, supplier should prepare the package, sort product by size,
quality, degree of ripeness (ripe products have very short shelf life and must be delivered
to market within a very short time), cull out dirty, insect infested, damaged, over-ripen
product and dry product completely.
The next step is shipping the product to the customer while control the quality of the
product within the appropriate temperature.
Conditional demand which means arrival time and their state of arrival drive the demand
for products that require cold chain shipping (Cold Chain Logistics 101 for Small
Businesses, 2021). The optimum temperature control determines the length of product shelf
life; however, different type of products need different temperature control as figure 18
below.
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Figure 19 - Temperature and shelf life.
Load integrity refers to technologies required to maintain the products in a shipment. This
includes adequate packaging and packing, as well as the conditioning that the product must
go through before transport (e.g., fruit washed and cooled down prior to transport &
storage).
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Transport integrity relates to the technologies required to ensure a cold chain’s
temperature-controlled environment stays intact. When transporting from the factory to the
customer, the Heat Shock Effect is caused by temperature fluctuations will happen between
the drop point (Figure 29). Because of that, during the delivery, the reefer truck should
always be turned on to keep the temperature stable.
Source: Adapted from Cold chain best practices by M. Phung Le, 2022. Copyright 2022 by AJ
Total.
For proper transport and handling, the truck driver should use a clean, cool, insect free
vehicle to pick up product, preferably in the morning and the vehicle should be in good
running condition to avoid emergency repair that will delay deliver. The employee should
load and secure product carefully, damage will cause fruit and vegetable to rot. Carton
board or plywood decking can be used to distribute weight pressure. For high value
customer such as convenient store, we can use crates or plastic baskets instead of cartons
to prevent product damage. The truck should be always on moving to keep movement
supplies ventilation and speeds up delivery time. In case of necessary stop, the truck should
be parked in a shaded a well-ventilated location. Cooperation with border control officials
to assign special times slots for agricultural product clearance or to set up a green corridor
for expedited border crossing or create practical means of dealing with overload is needed
in order to avoid shipment delays. When mechanical refrigeration is not available or too
costly, consider using insulated blanket, styrofoam containers and ice (if compatible with
product).
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Chapter 5. Conclusion & Recommendation
AJ in Vietnam is one of the companies that have been successful in the supply chain field,
especially in the cold chain. As one of the leading companies in the field of pioneering in
bringing customers the best services in cold chain products. With the company's values
set out to provide customers with the best services including trust, win-win,, challenges to
overcome, joy, customer assurance and professional expertise, AJ is to bring and provide
customers with the best service.
In addition, based on SWOT, we can see strengths, weaknesses as well as potentials and
challenges that AJ needs to overcome in order to lead the company to become stronger
and stronger. From there, based on the weaknesses and challenges that AJ is facing, we
can offer methods as well as strategies to help AJ overcome the weaknesses it is facing so
that the company can develop in perfect way.
Although AJ TOTAL has much experience in the Korean market, the new entrance to
Vietnam means that it has not acquired much market share. An expert with knowledge
about AJ has mentioned that the warehouse’s dock area serves 30 trucks per day. However,
the number of dock doors in the South warehouse has 44 doors; each door serves one truck
per shift, and there are two daily shifts. It can be seen that the facility has not operated to
its full potential.
Besides, in addition to cold chain transportation, AJ can also open and exploit many other
aspects of transportation goods in Vietnam. Currently, AJ Group has cold storage in Long
An and Hung Yen, with a large area suitable for expanding and developing many other
edge locks besides cold storage. Because of the geographical location of both provinces,
they are adjacent to major cities of Vietnam, which is very easy to move to transport all
kinds of goods. In addition, the expansion of scale and other types of services can help AJ
reach many other large customers. That will help the corporation grow and reach out in the
future. In another aspect, AJ Group is currently a relatively new name in the Vietnamese
market, so AJ will have to face a challenge to get more customers. However. That will not
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be difficult for AJ if the company has a complete and thorough preparation and clear plans
to develop the company. Thus, AJ can develop significantly compared to other companies.
To gain more customer and input flow, AJ needs to expand business connectivity by
connecting the true shippers from upstream and providing an integrated solution to meet
the satisfaction of their demand in the cold chain. Human resources are the most
challenging problem of the Logistic industry today because due to hot development, the
human resource of this industry is both lacking and weak. Currently, the supply of labor
for the logistics service industry only meets about 40% of the actual demand. Managers
are often key people, trained and retrained, but they lack business knowledge and
experience, are rarely updated with new knowledge, and their leadership and management
styles are unsatisfactory. Be in demand. Therefore, AJ needs to screen and select excellent
and key human resources to develop the company in the Vietnamese market.
33
Reference
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Chain Logistics 101 for Small Businesses.
2. Phung Le, M. (2022). The main location of AJ Total cold warehouse in Vietnam
[Presentation]. In COLD CHAIN BEST PRATICES.
3. Phung Le, M. (2022). Cold chain challenges in Vietnam [Photograph]. In COLD
CHAIN BEST PRATICES
4. Phung Le, M. (2022). Temperature and shelf life [Graph]. In COLD CHAIN BEST
PRATICES
5. Phung Le, M. (2022). The Heat Shock Effect [Graph]. In COLD CHAIN BEST
PRATICES
6. JLL. (2021). Cold storage development potential [Photograph]. In Vietnam
capacity of cold storage warehouse for lease in Vietnam, 2015 – 2020 [Graph]. In
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11. VIRAC. (2021). Vietnam Logistics Industry Report 2021. Vietnam Industry
34