Logistics center - promoting furniture trade will solve difficulties for the wood industry

Difficult market, export continuously decreases

Data from the Import-Export Department, Ministry of Industry and Trade shows that in August, wood and wood product exports reached 1.1 billion USD, down 2% compared to July and down 23% compared to August 2022. Of which, wood product exports are estimated at 742 million USD, unchanged from July and down 17% compared to August 2022. In the first 8 months of this year, wood and wood product exports are estimated at 8.3 billion USD, down 26% compared to the same period in 2022.

In addition to exported wooden furniture, some other items also decreased rapidly, such as wood chips reaching 1.2 billion USD, down 18% compared to the same period in 2022; wood panels and flooring reaching 956 million USD, down 24%; wood pellets reaching 380 million USD, down 8%; wooden doors reaching 24 million USD, down 27%... At the end of the first 8 months of the year, the wood industry had only completed nearly 50% of the export target of 17 billion USD for the whole year of 2023.

Regarding the export market in the last months of the year, the Import-Export Department stated that the wood industry is facing unprecedented difficulties due to a shortage of orders, exhausted cash flow, trade barriers from the US and the emergence of new barriers from the EU market... Therefore, promoting the export of wood and wood products in the last months of the year may continue to face many difficulties.

Wood exports continue to face difficulties in the first months of the year

New challenges emerge

Sharing at the workshop "Bringing Vietnamese fashion , furniture and household goods into foreign distribution systems" on the afternoon of September 15, Mr. Eryk Dolinski - Director of wood product business development, Supply Department of IKEA Group in Southeast Asia region said that Vietnam has many advantages to develop the wood industry thanks to abundant raw materials, competitive labor costs, developed infrastructure. Especially the macro economy has developed stably for a long time.

However, the wood industry is still facing many challenges in terms of labor intensity and requirements for wood traceability. In addition, high logistics costs increase the cost of bringing raw materials to factories and transporting them for export, along with increased delivery times.

In addition, key export markets for this group of goods such as the United States, the EU, Northeast Asian countries or countries in the CPTPP bloc are increasingly setting new standards, requiring more stringent market requirements, related to greening the production and supply chain, sustainable development criteria, circular production... posing many unprecedented challenges for domestic export enterprises.

Most recently, in mid-May, the EU also enacted the Carbon Border Adjustment Mechanism (CBAM) law. This regulation requires importers into the EU to report the carbon emissions of their goods. Or at the end of June, the EU enacted the EU Forest Degradation Prevention Regulation (EUDR). Accordingly, companies trading in wood and derivative products in the EU must prove that the goods they sell are not related to deforestation activities after 2021.

Building logistics center - promoting furniture trade

In the current difficult context, to improve competitiveness and participate in the wood supply chain of international distribution systems, IKEA representatives said that businesses need to focus on automation.

“Currently, IKEA’s factory in Vietnam uses the same technology as factories in the EU. Everything from unloading to receiving goods is automated, with conveyor belts installed to transport wood chips, wood powder, etc. This helps increase production efficiency and product quality, creating a much better working environment than before, while reducing carbon emissions. To do this, businesses need to strengthen the supply chain from sawmills to mills…”, Mr. Eryk Dolinski shared.

Speakers share experiences and solutions to bring Vietnamese fashion and household products into international distribution systems.

Another important issue emphasized by Mr. Eryk Dolinski is the need for new logistics solutions, focusing on transportation to optimize costs. “Using technology from loading goods onto vehicles, production to assembly. At the same time, bringing separate products from Vietnam to the EU for assembly to reduce costs, because transporting individual parts is more compact than transporting finished products,” said Mr. Eryk Dolinski.

Regarding this issue, Mr. Nguyen Chanh Phuong - General Secretary of the Handicraft and Wood Processing Association of Ho Chi Minh City (HAWA) - said: Currently, HAWA has proposed to form a logistics center - promoting trade of Vietnamese furniture in key markets, first in the US. This is to create conditions for export enterprises to combine to approach customers in host countries at low cost.

“An investment business will find it difficult to be effective because the costs and risks are too high, but if we establish a common home for export businesses abroad, it will partly remove difficulties and obstacles such as legal issues, warehouses, goods management, human resources, etc. Operating costs will also be greatly reduced, thereby improving professionalism,” Mr. Phuong affirmed.

The wood industry is witnessing a new shift as major Vietnamese furniture brands are expanding their presence in potential export markets, especially the markets of super-rich countries in the Middle East such as Saudi Arabia and Dubai. At the same time, businesses have also been more active in participating in domestic and international trade fairs. This helps businesses have more export opportunities.

According to Mr. Nguyen Chanh Phuong, General Secretary of HAWA, similar to Singapore and Malaysia, promoting national furniture brands at international furniture fairs is a strategy that Vietnamese enterprises need to focus on to effectively promote trade.

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