Red Sea tension likely to affect garment and footwear exporters from Q2
The tension in the Red Sea, which has led to increases in logistic costs and shipping time, is forecast to affect Vietnamese exporters of garment, textile, footwear and leather products from the second quarter of 2024 if it persists.
According to the Vietnam Leather, Footwear and Handbag Association (Lefaso) and the Vietnam Textile and Apparel Association (VITAS), the tension in the Red Sea has yet to affect Vietnamese firms, as a majority of them have received orders in the Free on Board (FOB) form, which means they do not have to pay for shipping costs.
Currently, domestic exporters have received orders until the end of the first quarter of this year, and are hardly impacted by changes in Red Sea shipping routes.
However, if the tension lingers, Vietnamese businesses are likely to face difficulties in receiving new orders from the second quarter.
VITAS Vice President and General Secretary Truong Van Cam said that domestic enterprises are keeping a close eye on the situation to negotiate new export deals.
Tran Thanh Hai, Deputy Director of the Agency of Foreign Trade under the Ministry of Industry and Trade, said that due to the Red Sea tension, the logistics costs for each container passing through the European region can increase by between US$1,000 - US$2,000.
Hai advised domestic businesses to keep a close watch on the situation to take timely response measures.
