Logistics optimisation boosts garment exports

December 17, 2021 - 08:49

Garment and textiles are considered key industries, accounting for 12-16 per cent of the country's annual total export turnover.


Garment products are made for export to the EU. — VNA/VNS Photo Trần Việt 

HÀ NỘI — Developing a sustainable and greener production and optimising logistics activities to better ensure supply chains are considered two important tasks to help the local garment and textile industry earn US$100 billion export turnover by 2030 and have 30 brands entering the global market, insiders have said. 

Garment and textiles are considered the key industries, accounting for 12-16 per cent of the country's annual total export turnover. However, the complicated developments of the COVID-19 pandemic and recent events in the maritime industry have negatively impacted the global supply chain. 

Deputy general secretary of the Việt Nam Textile and Apparel Association (VITAS) Nguyễn Thị Tuyết Mai said container shortages and delays at ports were causing a headache for exporters and importers globally.

Delivery delays meant textile and garment businesses could have to pay compensation to buyers, Mai said in a seminar in HCM City late last week, adding that skyrocketing logistics costs threatened to affect Việt Nam’s economic competitiveness, particularly its textile and garment industry.

She cited an example of a small and medium-sized textile and garment enterprise that had to order an entire A330 aircraft, equivalent to one container, to promptly deliver its order to Japan.

From September to October, this firm had to pay US$400,000 to deliver garment products by plane. In addition, there were some large companies which had to spend up to $1.8 million for good delivery by plane in the two months of October and November. 

According to Mai, the huge cost was mainly due to container shortages and lack of space on the ship, while the freight rates skyrocketed. Businesses that wanted to meet the time of orders had to accept high logistics costs or had to ship goods by plane. 

Moreover, the overlap and inadequacy in some regulations of the ministries and sectors and the inconsistent implementation of the Government's directives in the localities had hindered logistics activities and made logistics costs higher, Mai said. 

She added that the US was the largest market for Vietnamese textile and garment exports, accounting for about 41 per cent of the total export turnover. It was followed by CPTPP signatories (about 13 per cent), China (11 per cent) and the EU (9.5 per cent).

If the logistics issue was not solved efficiently or the cost of logistics services did not decrease, Vietnamese textile and garment enterprises would not benefit from the new-generation free trade agreements Việt Nam had signed. That is a painful problem and VITAS wants to work with associations and logistics service providers to help Vietnamese textile firms overcome difficulties, she noted. 

VITAS had petitioned the State to soon issue a strategy on developing Việt Nam's textile and garment industry to 2030, with a vision to 2035 so that businesses could understand clearly the support roadmap from the State, Mai said, adding that her association also suggested developing shipping lines for shipments to Europe and the US, making it less reliant on international shipping lines.

For local textile and garment enterprises, Mai recommended that they should always review their capabilities and needs in order to draw up contingency plans while applying lean management and considering outsourcing services to optimise logistics operations and costs.

Nguyễn Thị Mỹ Lệ, deputy marketing director of Saigon Newport Corporation (SNP), said her company had made efforts to provide a full package of logistics services and solutions to help customers reduce costs.  

SNP has provided additional solutions to connect its two member companies - Tân Cảng-Long Bình ICD, Tân Cảng- Nhơn Trạch ICD with Cái Mép-Thị Vải port area. That had helped slash 20-30 per cent of transport costs for businesses in the area. In addition, SNP has also provided warehouse services that would fully meet the standards of the garment and textile industry and others.

In 2022, SNP planned to build new warehouses, expand existing ones while optimising freight services, customs clearance and package logistics services, she said. 

Statistics from VITAS showed out that Việt Nam's textile and garment exports fetched $35.68 billion in the first 11 months of 2021, up 12.73 per cent over the same period last year.

In November alone, the figure was estimated at $3.37 billion, up nearly 2.5 per cent compared to the previous month.

These were very impressive numbers amid the pandemic, VITAS said. 

It also forecasts exports to likely hit $39 billion by the year-end, up 11.2 per cent year-on-year. — VNS