Strained textile firms risk falling behind

Rising logistics and input costs are placing Vietnam’s textile and footwear industries under mounting strain, exposing them to weakening demand and risks of supply chain disruption.

- By Hoai Huong

Locked-in order prices mean some companies face a cost squeeze

(Photo: Le Toan)

At a meeting between the Ministry of Industry and Trade and industry associations and businesses in Ho Chi Minh City on March 17, companies acknowledged the immediate impacts of geopolitical tensions in the Middle East in terms of shipping costs and longer delivery times.

Nguyen Tran Thien Thanh, director of Thien Thanh Binh Company, said ocean freight costs have risen by 10 per cent, while domestic logistics costs have increased by a further 3-4 per cent, as fuel accounts for 30-40 per cent of total transport expenses.

“Marine insurance premiums on routes passing through high-risk areas have also risen by 10 per cent, pushing overall logistics costs, which already account for 5-8 per cent of product prices, even higher,” Thanh said.

However, the greater pressure is coming from raw materials. According to the Vietnam Textile and Apparel Association (VITAS), around 70 per cent of textile inputs, particularly polyester, are still imported. As conflicts affect oil-producing regions, petrochemical-based materials have become more expensive, driving up production costs.