The global recession has impacted the Vietnamese economy more than expected as its exports in September declined by 14.6 percent from August to $29.82 as per Vietnam’s Customs Department Textile and clothing exports are the major casualties.
Textiles and clothing exports registered a decline of 31.9 percent in September according to figures released by Vietnamese Customs. Other major declines were in woodwork products (21 percent), mobile phone components (18.1 percent), and seafood (13.7 percent).
The apparel and textile orders started declining in July as foreign buyers experienced slow sales in countries due to high inflation and recession caused by the Russia-Ukraine war. The Vietnam National Textile and Garment Group (Vinatex) revealed that its members could operate at 50-70 percent capacity on orders they have for October. There are no orders for November and December. The factories are constrained to lay off workers.
Similarly, the spinners are also feeling the heat. There is a low demand for yarn and they do not expect it to increase anytime soon. Moreover, the increase in the cost of cotton and fuel prices would take yarn prices even higher and difficult to sell.
According to market experts, garment and textile enterprises could continue to struggle until the first quarter of 2023. Textiles and footwear saw strong growth of 30 percent year on year growth in the first half of this year due to favorable base effects. But production suffered in the third quarter due to the harsh lockdown in Ho Chi Minh City and the surrounding areas in the third quarter of this year. The base effects did keep some export activities in the 3Q22. The industry players see sharp declines in shipments as orders are falling.
Before the fall in orders freight transportation delays, primarily associated with port and rail congestion, as well as labor shortages, were worse than executives expected in the fiscal first quarter.
During the last quarter, Nike’s inventory in North America increased by 12 percent, but the goods weren’t in stores or distribution centers because they were stuck at sea, at import warehouses, or at nodes in the clogged supply chain. Transit times in Europe and other regions also suffered.
