Vietnam's textile exports in the first 7 months of this year increased by 50% year-on-year

According to data from the Vietnam Textile Association (Vitas), Vietnam's textile exports in the first seven months of this year reached nearly 23 billion U.S. dollars, an increase of more than 50% year-on-year, surpassing Bangladesh, ranking second only to China and ranking second in the world.

But since July, the complicated epidemic in southern provinces and cities has spread, affecting the production and operation of enterprises.

In addition to worrying that the epidemic will affect the supply chain, rising logistics costs, severe shortage of containers, and congestion of many seaport export goods are all obstacles that directly affect the production of textile enterprises.

Logistics costs, which currently account for about 9% of the cost of textile products in Vietnam, are rising sharply. According to VnDirect, container leasing prices have tripled in the first six months of this year. At the same time, the shortage of containers affects the business of ODM and OBM orders and slows down the delivery progress of partners.

In addition, rising freight rates will also put downward pressure on purchase prices. Most textile processing companies use FOB for export, and the delivery of goods is only slightly indirectly affected. However, if the delivery time cannot be guaranteed, it will affect the delivery commitments with partners and customers. In this case, there is no other way than to renegotiate the delivery time with the partner.

Another difficulty in the textile industry in the second half of the year is labor shortage. Vitas predicts that if the new crown epidemic is brought under control by the end of August, the number of workers is only expected to reach 60-65%. Vitas Chairman Wu Dejiang said: The shortage of labor resources will be very serious for some time to come.

At present, many textile and garment enterprises are considering choosing raw materials from south to north to avoid production interruption. But even in this case, Mr. Jiang said that when companies bear the additional transportation costs, they are not too optimistic, and it is difficult to guarantee the delivery time for various brand companies.

Vitas Chairman said that under the current urgent situation, speeding up the vaccination of many workers including the production areas of textile companies in industrial parks and industrial parks is a fundamental issue.

Faces many challenges, but opportunities for the textile industry still exist, which is to win the market from competitors. According to the VnDirect report, many countries considered to be "direct competitors" in Vietnam's textile and garment industry, such as India and Myanmar, have also been affected by the new crown epidemic, making garment factories currently only have 50% production capacity.