Textile Insight

Shutdowns and Shipping Delays Continue to Impact Sourcing from Asian Factories. By Bob McGee extile, raw material, and component makers that supply footwear and apparel factories in Asia will not be spared from the cross-industry storm that is sweeping the globe. However, these companies will experience it from a different perspective. Many suppliers may be asked to transport goods to another sourcing location or country in the months ahead if factory shutdowns in Vietnam do not ease. Others will be forced to delay deliveries or await payment until full-speed production in existing facilities can commence again. The supply chain, shipping, and logistics typhoon, which has battered many industries since the pandemic hit, increased in velocity during the Summer of 2021 with con- tainer shortages, port logjams, surging shipping costs that have forced some brands to resort to air freight and finally a shutdown of key Asian sourcing factories due to the spread of COVID among work- ers in Vietnam. These factors are likely to result in ship- ping delays for holiday and Spring/Summer 2022, late and/or limited deliveries to retailers, possible product shortages on key items and higher costs for consumers looking to snare the season's hottest prod- ucts. On the upside, limited inventory avail- ability should help vendors and retailers alike attain strong merchandise margins and limit the need for promotional pricing activity. The Vietnam Textile and Apparel Association (VITAS) confirmed in early September that 35 percent of the coun- try's textile and garment factories were shuttered with their respective footwear and apparel production suspended. Most impacted were small and mid-sized contract opera- tions who couldn't fulfill orders, deliver goods on time, or had their orders cancelled, according to vnInternational, a business publication based in Vietnam. Once garment and textile factories re-open, they are likely to see a 35-40 percent reduction in available employ- ees. Already, they have faced higher transportation costs moving materials from south Vietnam, where the pandemic outbreak is more widespread, to facilities in the country's northern region. "Raw material suppliers are closing down too," confirmed Jung Yoon, VP of accessories, footwear production and sourcing for Michael Kors during a recent supply chain conference. "These problems are going to be here for the long-term, and Holiday will be challenging." Yoon continued, "This situation is testing our creativity every day. I am constantly strategizing Plan A, B, C and D only to go back to the original plan. What's difficult is the [supply chain] situation changes pretty much daily, and you don't know where it's going." Big Brands, Big Problems Lululemon said it was banking on Vietnamese factories where 30 percent of its finished goods are produced to begin phased re-openings in mid-September. With south- ern Vietnam impacting approximately 20 percent of the brand's second half inventory, Lululemon executives have instituted air freight costs for some key holiday products and prioritized Fall/Holiday styles while seeking other sourcing possibilities. Vietnam, which has doubled its market share in the leather and footwear industries to 15 percent over the last decade, trails only China and Bangladesh in textile and garment production. During the first eight months of 2021, Vietnam generated $21.2 billion from garment and textile exports and $12.6 billion from footwear exports, according to the country's General Statistics Office. An estimated 50 percent of Columbia Sportswear apparel, accessories and equipment is produced in either Vietnam or China. Hanesbrands generates much of its international income from six countries, including Vietnam, and Deckers has an on-site supervisory office in the country to oversee production for its branded products there. During the company's Q2 ending in July, Deckers execs confirmed that some Fall shipments of UGGs were accelerated "to mitigate macro supply chain pressure" and ensure it had products "well positioned in the marketplace." Mary McNelly, senior director of logistics for Crocs, sums up the harsh realities of today's logistics and supply chain climate while suggesting the weather isn't likely to improve for any aspect of it for another year. "We're (vendors) paying more for less — for less predict- ability, less space and less movement," said McNelly, who predicts that "it's going to take a long time to get back to the new normal." Peter Hohensee of the footwear chain Rack Room agrees. "We have to be prepared for everything [within the supply chain] and be able to deal with [production delays and higher shipping costs] for the long haul…With the peak season coming up, demand is 50 percent higher than supply." l T SUPPLY CHAIN | SOURCING Holiday Headaches 33 • Textile Insight ~ September/October 2021 textileinsight.com "With the peak season coming up, demand is 50 percent higher than supply," says Peter Hohensee, Rack Room. "This situation is testing our creativity every day. I am constantly strategizing Plan A, B, C and D only to go back to the original plan." Jung Yoon, VP accessories, footwear production, sourcing, Michael Kors "We're paying more for less — for less predictability, less space and less movement. It's going to take a long time to get back to the new normal." Mary McNelly, senior director of logistics, Crocs

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