The prolonged war tension in the Red Sea has caused shipping rates to increase by 80%, even up to 300% compared to December 2023. Faced with this difficulty, export enterprises in the province, especially those exporting to markets such as the US and EU, are struggling to come up with solutions to both ensure signed orders and maintain and stabilize production, create jobs and income for workers.
High sea freight rates have caused difficulties for garment export businesses in the province.
888 Company Limited (under Garment Corporation 10) in Quang Hop Commune (Quang Xuong) is a business specializing in processing garments including jackets, wool coats, women's vests, and sports pants for export to markets in the EU, the US, Japan, Canada, etc. Mr. Le Van Bac, the company's executive director, said: "From the beginning of 2024 until now, the company has had to continuously work overtime to meet export orders for partners. The fact that the company has signed many orders not only ensures jobs and income for employees until the end of August 2024, but also contributes to bringing the company's export value in the first quarter of 2024 to nearly 38 billion VND in revenue, an increase of 7% over the same period. However, due to the recent war tension in the Red Sea, shipping costs have increased, affecting the cost of exported textile and garment products. Therefore, although revenue in the first quarter reached nearly 38 billion VND, profit compared to the same period decreased by nearly 5 billion dong".
Profits are reduced but to ensure jobs and income for workers, the company still has to accept, at the same time have solutions to cope such as focusing all efforts on training human resources, especially workers' skills. In addition, research, reorganize production, products made to shorten time but still ensure product quality according to customer requirements. At the same time, launch annual, quarterly, monthly emulation movements to motivate workers to work enthusiastically in production. On the other hand, the company is closely monitoring the situation to negotiate new orders for the next quarter, but if this situation continues, it will be very difficult for the company.
Thanh Hoa Stone Association has 150 enterprises participating in the association's activities, each year producing and supplying the market with a value of about 50 million USD (for exported stones) and 2,000 billion VND (for domestic stones). Mr. Nguyen Van Tho, Chairman of Thanh Hoa Stone Association, said: "Although the export stone market from the first quarter of 2024 to now has improved a lot, increasing by 54.3% over the same period, due to the impact of high sea freight rates, profits are almost zero. However, stone exporting enterprises still have to accept to maintain orders, ensure jobs and income for workers. At the same time, efforts are being made to find new export markets, not depending much on the European market. In addition, searching for and expanding domestic stone consumption markets in provinces and cities across the country".
Thanh Hoa has 212 enterprises participating in exports in 53 markets with groups of industries and fields such as: footwear, garment, agricultural products, construction materials... Although in the first quarter of 2024, the export activities of enterprises in the province recorded strong growth with an export value of more than 1.57 billion USD, an increase of 60.5% over the same period and equal to 26.3% compared to the annual plan. However, due to the impact of the prolonged conflict in the Red Sea, the sea freight rates increased by 80%, even up to 300% compared to December 2023, causing many difficulties for enterprises participating in exports nationwide and export enterprises in the province.
To deal with this situation, according to Mr. Nguyen Van Thang, Head of the Import-Export Department (Thanh Hoa Department of Industry and Trade): In addition to proactively developing negotiation plans with partners to extend the delivery/receipt time, export enterprises need to consider purchasing insurance to avoid risks when there is a delay in delivery/receipt of goods. In addition, efforts should be made to find new markets, not depending too much on the European market... On the other hand, the Department of Industry and Trade will continue to increase support for enterprises to promote the search, expansion, diversification and opening up of the province's export goods market; continue to organize conferences to disseminate knowledge about FTA agreements, support enterprises to work with units of the Ministry of Industry and Trade, and trade counselors to learn about export market information.
Article and photos: Minh Ly
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