The second wave of the COVID-19 epidemic has had a huge impact on Vietnam. Port congestion and transportation disruptions have caused factories to reduce production or even suspend operations, thus affecting cotton demand. The government’s requirement that workers have room and board in the factory has no effect. Companies have stopped production and asked the government to cancel this requirement.
Last week, Vietnam’s new crown cases hit a new high, and cotton imports in July have been affected, with only 140,000 tons, the lowest since February. The speed of exports has also dropped significantly. Orders in the third quarter of this year have become a big problem. The major clothing and footwear importers in the United States even asked the U.S. government to donate vaccines to Vietnamese textile factories. Vietnam currently has the lowest vaccination rate in the world.
In the week ending August 12, Vietnam only signed contracts to import 12,400 bales of U.S. upland cotton, and the cumulative contract volume for U.S. upland cotton in 2021/22 is only 604,000 package, a one-third decrease compared to the same period last year. Currently, there is a serious shortage of containers in Vietnam, 40-foot containers are nowhere to be found, and shipping lines also indicate that there are not enough containers to meet export demand in August.
It is reported that Ho Chi Minh City has implemented new closure measures since August 23. Only less than 30% of factories were still producing last week, and 19 provinces are at varying degrees lockdown status. Vietnam estimates that 80% of textile and garment companies in the southern part of the country have been forced to suspend production, and the proportion in the northern region is 20-30%.
Affected by this, U.S. textile and apparel importers in urgent need of Vietnamese products are considering air transportation. Winter coats are one of the urgently needed products. However, due to the impact of epidemic control, Vietnam’s air transport industry is facing great pressure, and freight rates have increased by US$4-10/kg in recent weeks. Now, the freight for a complete machine from Vietnam to Chicago in the United States is US$1-1.3 million, a 300% increase from before. This situation has also begun to spread to Cambodia.
Under the impact of the epidemic, Vietnam’s cotton consumption will decline in 2021/22. The specific extent depends on when logistics and transportation return to normal and what impact it has on the supply chain. </p
