Labor shortages, higher freight costs see garment firms refuse orders

At a seminar Friday on sustainable development of the garment and textile sector, industry executives said two months after resuming operations, their major concerns now are the labor shortage, higher raw material costs, and Covid-19 safety expenses.

They have to cover the costs of Covid testing and provide care for workers suspected of infection, they said.

Logistics costs have shot up since the pandemic began. Now companies fear the labor shortage would delay production and thus deliveries, and to ensure timely delivery, they might have to ship products by air at enormous cost.

A manager of a garment company in the northern province of Bac Giang said its foreign buyer requires it to deliver goods quickly for the approaching Christmas season.

Tran Nhu Tung, chairman of Thanh Cong Textile Garment Investment Trading JSC in Ho Chi Minh City, said the company’s plant in the southern province of Vinh Long, which produces goods for Adidas, "does not dare" accept new orders.

"Air freight is very expensive, but not all partners share this cost."

Surveys by the Research Center for Employment Relations found 66.7 percent of foreign buyers of Vietnamese products accept late delivery, but only 16.7 percent agree to share air freight costs, said the center’s director Do Quynh Chi.

Only one fifth of buyers agree to include part of the anti-pandemic cost in the unit price, she added.

Vietnam will remain an important source of garments and textiles to foreign partners till the second quarter of this year, with 50 percent of surveyed buyers saying they will intensify purchases. But labor shortages will still be a big problem.

According to a survey by the center in November, 75-80 percent of workers returned to work at plants in southern provinces that month. But one month later, after their salary payment was late or they received little assistance from employers, a number of quit their jobs.

Vietnam exported over $29.1 billion worth of garments and textiles in the first 11 months of this year, up 8 percent year-on-year, according to the General Department of Vietnam Customs.

Specifically, the value of garments and textiles exported to the U.S. rose 13 percent to $14.3 billion, to the European Union 3.1 percent to $3.4 billion, while to Japan, it dropped 9.5 percent to $2.9 billion.