Shippers are facing a deteriorating supply chain situation in Vietnam as the government imposes strict lockdowns in an effort to curb the spread of COVID-19.
As the delta variant approaches crisis levels, the country introduced the strictest COVID restrictions to date – residents are banned from leaving their homes for at least two weeks, even for food, and troops have been deployed to enforce the order.
Supply Chain Disruptions
Under the order, factories in the affected regions can continue to operate, but only under strict conditions in which workers are required to sleep onsite. Approximately 70% of factories in the region have been forced to closed due to an inability to meet the requirements, and those that are still operating are currently running 50%-70% below normal capacity. and severe production delays have been reported. Component and raw materials shortages and customs delays have also slowed operations.
Reduced staffing levels (currently at 10%) is expected to result in severe customs processing delays and backlogs. Clearance times are currently 3-4 days for exports and even longer for imports due to the lack of manpower to conduct inspections.
Space continues to remain extremely tight due to worsening vessel congestion and equipment shortages, with most ships delayed an average of 3-5 days. Port terminal operations have also slowed dramatically due to a 50% reduction in labor.
Ho Chi Minh (SGN) and Hanoi (HAN) have announced many flight cancellations due to strict lockdown measures and staffing shortages. Severe delays and backlogs have also been reported at origin and hubs. Space is extremely tight and rates are rising on an almost daily basis, making accurate quoting a challenge.
Driver restrictions (including travel permits, COVID tests, and temperature checks), labor shortages, and longer than normal wait times at ports/terminals have further added to the supply chain disruptions.