The recent COVID-19-related shutdown in Vietnam is yet another challenge in the road that will likely impact holiday inventories during what has been an endless supply chain headache for fashion and footwear brands. In Ho Chi Minh City, companies in the apparel, textile, footwear, and electronics industries have been most harshly affected.
The southern region of Vietnam is about one week into a two-week lockdown that started last Sunday given a record COVID-19 case count in the country. In Ho Chi Minh City, companies in the apparel, textile, footwear, and electronics industries have been most harshly affected.
As authorities implemented COVID-19 restrictions in short-notice announcements, many companies have been unable to meet the requirements to continue operations.
Moreover, companies that can meet the requirements are reportedly required to register with authorities to be approved for the usage of the mitigation plans such as “3 in one spot”.
Vietnam garment makers face tough decisions between creating ‘bubbles’ or picking a temporary shutdown for Vietnamese manufacturers.
As the two-week lockdown started recently on the economic stronghold and manufacturing base of Ho Chi Minh City came up for review, authorities announced an extension of lockdown measures lasting until August 1.
“All I can say is that the stress levels are high, and for a factory that has more than 500 workers it is not quite worth it in terms of organizing the food and living conditions in these makeshift conditions. As Directive 16 will be implemented more strongly from this week, it will be harder to make it work,” a factory owner told media.
There are more than 6,000 factories in Vietnam, which employ more than three million workers. More than half of Vietnam’s apparel factories are located in the Mekong and Dong Nai areas.
In Hanoi, the requirement for factories, agencies and enterprises is to have Covid testing for workers every three to five days.
It remains uncertain to what degree the production suspensions will affect supply chains, but production shutdowns at footwear manufacturers have already caused supply chain disruptions at Nike, Inc.
Sources reported that the company has begun using airfreight to get its products out of Vietnam as quickly as possible amid a shipping crunch.
Also at risk of interruption are supply chains of other large companies that have their products manufactured in factories in Vietnam. The situation is likely to worsen in the coming weeks as the flow of cargo through Vietnamese ports increases.
Should logistical operations deteriorate while production continues, there is a risk of warehouse space becoming scarce.
As many companies sustained operations at their manufacturing facilities amid stringent COVID-19 measures, thousands of workers have been ‘locked down’ at the factories with sleep facilities and food provided by the company.
Should the situation continue, exhaustion of the workforce might occur, as not all workers are able or willing to spend a few months at the factory.
Due to the fluid and fast-moving nature of the developments and related restrictions around the COVID-19 situation in Vietnam, customers should have end-to-end visibility to help them identify disruptions and developments in real-time, conduct risk assessments, and monitor suppliers.