The Textile Industry And The Fear Of Supply Chain Disruptions

Although in the first seven months of the year, the textile and garment industry has achieved many positive results, due to the impact of the COVID-19 epidemic many businesses are concerned about the risk of material supply chain disruption, contract loss and failure to meet the demand. Ensure the progress of signed orders.

 
The textile industry is facing many difficulties during the COVID-19 epidemic. Photo: Tran Viet/VNA.

Goods circulation is difficult


Ms. Nguyen Thi Thanh Thuy, Deputy General Director of Bac Giang Garment Corporation Joint Stock Company, said that the application of anti-epidemic measures at quarantine checkpoints in localities has not been consistent, causing many difficulties for patients. In the case of enterprises in the circulation of goods, affecting export plans and production chains of enterprises, when they cannot import raw materials for production, leading to the risk of interruption or production stoppage may also occur. Not to mention, businesses may face the requirement to convert the form of export from sea to air, making the cost several dozen times higher.


Similarly, Mr. Than Duc Viet, General Director of Garment 10 Corporation, said that businesses are facing many difficulties. Container shortages for both import and export directions.


Along with that, the circulation of goods in the country is always in a state of congestion due to the lack of agreement between localities, so businesses face many difficulties when transporting imported materials from the port to May 10, then distribute and transport to member units in the provinces and finished goods transported from the provinces to Garment 10 in Hanoi for export.


In addition, transport businesses are "demanding" to increase freight rates by 20%, while May 10 still has to pay other additional costs such as testing for drivers, vaccination, etc.


Through research, the above fact is having a great influence on the export of textile and garment enterprises, because if the delivery is slow, the progress will be fined, along with the arising of more costs, which can cause enterprises to fail to produce.

Risk of supply chain disruption


According to Mr. Vu Duc Giang, Chairman of the Vietnam Textile and Apparel Association (VITAS), the textile and garment supply chain is facing the risk of breakage due to the lack of unified management of localities in the circulation of goods and raw materials.


Along with that, the implementation of social distancing according to Directive 16 of the Prime Minister in the southern provinces has caused most of the garment factories in these localities to close, because they are not eligible to do so.


Not only that, the implementation of "1 route, 2 destinations" also encountered many obstacles. “Businesses suffered great losses due to having to stop production, having to cancel export orders from customers, while still having to bear the costs of maintaining the factory and paying wages to employees. Businesses are struggling because they have to reduce 50%-60% of the number of employees working to implement the distance. The supply of raw materials and accessories is broken, and at the same time, it incurs many costs to establish measures to prevent the COVID-19 epidemic," said Mr. Vu Duc Giang.


The high cost of international road and sea transportation, along with the increase in fuel costs and the price of imported raw materials, have greatly affected the production process. In the first 7 months of the year, the textile and garment industry exported $22.86 billion, up more than 50% over the same period last year, surpassing Bangladesh to rank second in the world after China. Many textile and garment enterprises have had orders until the end of the first quarter of 2022, but the stressful epidemic situation is making businesses "sitting on fire" looking for ways to maintain production and ensure orders. The textile and garment industry is current operating at only 10-15% capacity.


“It is expected that textile and garment export turnover in 2021 will only reach about 32-33 billion USD, much lower than the target of 39 billion USD set. No textile and garment enterprise dares to think about the possibility of effective production and business in 2021," said Mr. Vu Duc Giang.