4. Imports plummet due to shutdowns
As factories shut down and manufacturing slowed across the country, exports from Vietnam to the U.S. began to drop as well, the executive vice president of industry and services said in an email. The steepest decline in exports came in September, months after the lockdowns started.
“As for why the volume held throughout July and August and only started to fall in September, we have to account for the delay between manufacturing and shipping.”
“Given the global shipping crisis, it is likely that Vietnamese exports to the United States in July and August were manufactured much earlier in the year.”
After years of growth, Vietnam imports plummet in September
Total imports from Vietnam in TEUs
5. Global brands faced elevated risks
The combination of factors affecting shippers’ ability to make and export products affected brands worldwide, though not every product and company was affected equally.
A research was published early October, looking at the potential effect on sales shutdowns in Vietnam could have. As part of that research, analysts at the investment banking looked at specific brands’ exposure to country by measuring the percent of their sourcing base with operations in Vietnam.
As the situation worsened in August and September, a number of companies with high exposure said they expected financial hits in SEC filings as a direct result of the situation in Vietnam.
A CFO of a furniture factory said factory closures were expected to cost the company $60 million in sales “due to receipts [we are] not expecting to get in time for the normal selling season.”
Brands highly dependent on Vietnam were exposed to more risks
% of total sourcing in Vietnam for each brand
6. Furniture, apparel sellers feel the effects
One of the furniture suppliers specifically called out its furniture product category as an at-risk segment for sales. Furniture is Vietnam’s top export, representing 35% of total TEUs brought into the U.S., and 28% of bills of lading, according to Customs and Border Protection data.
But companies that source other categories are feeling the effects, too.
Apparel imports also cratered in September 2021
U.S. imports from Vietnam since 2019, in TEUs
Factories began to reopen as of October, but it may take a while before capacity recovers.
The events of the past months took a significant toll on workers in the country. In the days after restrictions were lifted, Reuters reported thousands of workers left Ho Chi Minh City, where nearly half of the reported COVID-19 cases took place. And now, manufacturers in Vietnam fear additional labor shortages despite a reopened economy.
In its research note, it suggests capacity could normalize anytime between the end of October 2021 (an “optimistic but least realistic view”) and Q1 2022.
Until capacity recovers, companies will continue to face product delays or cancellations.
“Orders are now 8 weeks plus delayed according to our contacts,” the author of the report, said in an email the first week of October. In addition, “vendors are canceling orders the retailers are making.”