Labor shortages, disrupted supply chains, and surging freight fares are likely to disrupt Vietnam’s garment exports in H2, says VmDirect, a securities firm in the country. The social distancing rules imposed in several southern localities are likely to impact transportation of garment and textile materials in the country, says Troung Van Cam, Vice Chairman, Vietnam Textile & Apparel Association. Around 30-50 per cent of garment and textile factories in the country have already been forced to close down as they could not implement the stay-at-work mode. Some firms failed to fulfill orders, deliver goods on time, and have their contracts canceled. This led to their orders being shifted to foreign countries, Van Cham affirms.

If the pandemic was not contained soon, Vietnam could fall short of its annual export turnovers target of $39 billion. The export turnovers may reach only $33-34 billion this year, he emphasizes. Even if COVID-19 is controlled late August, number of employees in garment and textile enterprises is likely to drop by 35-40 per cent, adds Vu Duc Giang, Chairman, Vietnam Textile and Apparel Association.

Many garment and textile firms plan to transport materials from the south to the north to prevent supply chains from breaking. But they have to bear high transportation fees, Giang says. The most feasible solution now is to speed up vaccination among garment and textile workers in industrial parks and industrial complexes, he adds.

However, there is still room for Vietnamese garment and textile firms to compete and increase their market share in the U.S. and South Korea, given that major competitors like India and Myanmar are also struggling in their Covid-19 fight, says VnDirect.

Vietnam’s garment and textile posted an export turnover of nearly $23 billion in the first seven months of this year, an increase of over 50 percent year-on-year, surpassing Bangladesh to become the world’s second biggest garment and textile exporter after China, adds Du Giang.