Due to the ongoing lockdown in Vietnam, goods from the ports of the Southeast Asian country are currently delayed by an average of 25 days, while the interrupted power supply in Chinese factories is also burdening imports of products from the Far East. This will also affect the upcoming Christmas business, as many traders have been suffering from high transport costs and a lack of freight capacities for months and are now feeling the effects of the two additional difficulties in the fourth quarter.
Apple, Adidas and Nike badly affected
Apple, Adidas and Nike, among others, have been severely affected by the lockdown in Vietnam. The US company, for example, has half of its shoes and a third of its clothing produced on the Mekong and has already lost ten weeks of production. The Bochum software house Setlog expects that it will take months before the entire supply chain has recovered.
“Many factory workers fled the cities to the countryside in order to survive because there was no work, the factories were closed or only weekly shifts could be done,” explains Ralf Düster, a member of the Setlog board. He anticipates that there will be more production relocations from Vietnam, which has recently been chosen as an alternative to China for many companies.
Christmas business affected
According to Setlog supply chain management experts, the situation will not change significantly until after Christmas. There will be significant relief from Easter 2022 at the earliest.
This forecast is also confirmed by the figures: For an analysis, the company evaluated data from 100 companies and brands from the second half of 2019 and 2021 that use Setlog’s SCM software OSCA. The evaluation showed that products from Vietnam are delayed by an average of up to 25 days before they reach the warehouses in this country. In fact, only 17 percent of all deliveries will arrive on time in 2021; in 2019 it was 70 percent, in 2020 around 38 percent.
Delays affect sea freight and rail
The experts took a special look at the sea freight sector and found that the transport time for containers from the Far East was extended by an average of nine days; you will be traveling for up to 52 days this year. But even with the train there are delivery delays lasting days. The reasons for this were capacity bottlenecks and delayed clearance at several customs crossings. Setlog’s evaluations showed that bookings for the railways are made an average of four to six weeks before the departure date of the freight train.
Gloomy, however, sees a glimmer of hope on the horizon: Freight rates have leveled off in recent weeks and there have even been first rate reductions – albeit at a level that, depending on the route, shipping company and loop, is six to eight times what it was before the pandemic. Prepaid (prepaid) rates fell in some cases by around 1,500 US dollars (around 1,300 euros). Some shipping companies want to freeze their rates. The availability of sea containers has also eased slightly. They are available on almost all routes and problems only arise in individual cases.
Good planning and collaboration are key
“It is still important that bookings are made early and that suppliers, freight forwarders, carriers and importers work closely together. Data and information must be exchanged transparently, quickly and digitally, ”advises Düster. In the long term, he believes that this year’s turbulence will subside.
“But problems such as the shortage of tens of thousands of truck drivers, especially in Great Britain, but also in Germany, other EU countries and the USA, will massively disrupt the supply chains if measures are not taken promptly,” says Patrick Merkel, Managing Director of Hamburger Prologue Solutions GmbH, to consider.