While sparking demand and sending more and more consumers online to do their shopping, the global pandemic has also proven to be a double edge sword for global trade. For quite some time, the ports have seen bottlenecks due to high yard density and low operational productivity. Inland services have been affected negatively with haulage being a noteworthy issue. And due to national lockdowns, factories and warehouses have been temporarily closed and we have seen a decrease in staffing in several key production locations. The latter is currently especially prominent in the south of Asia.
Vietnam is a crucial supplier for among other apparel and footwear and has since July been under stringent lockdown restrictions due to the Delta variant of COVID-19, leading to factories temporarily shutting down for weeks, some even months.
As of October 1st, the Vietnamese government lifted some of their restrictions. The “1 Road 2 Destinations (1R2D)” and 3 On Site policies which requested facilities in hot spot provinces to arrange accommodation for all workers at designated places to ensure limited travel to the facilities, is gradually being lifted with each province determining this individually. Truck drivers who deliver goods crossing different regions in Vietnam must continue to present their negative PCR test result with validity 72 hours.
Trying to partner as best as we can with our customers, we are following the situation closely and we trying to alleviate any pressure point we can. While we’re very pleased to see more workers return to our facilities, the disruption to manufacturing and logistics is expected to continue still. Taking tests, waiting for results, as well as getting more workers vaccinated, takes time. Also, as workers in the north can commute from home with more ease than workers in the south, the volume in the north is increasing significantly as customers switch production. This will all impact our ability to export your cargo and negatively affect further schedules.
What is Maersk doing?
- The manufacturing situation in the north is under control and our people are working in safe conditions.
- Adhering to governmental guidelines and considering the wellness of our people, we will gradually see more workers return to our Maersk operated warehouses in the south of Vietnam. The inbound and outbound operation has resumed, though with a reduced working force.
- All truck drivers coming to our facilities need to present negative PCR tests.
- For the customers that have reached out to us, alternative solutions will continue to keep your cargo flowing as best we can.
- Maersk office staff is still working from home and e-documents is being be applied for all customers. We are about to tentatively open our office with only skeleton staff (10%) on 14-Oct.
In terms of our operations:
- Customs is operating as normal, but strictly following Health and Safety requirements.
- Flights are operating as usual, but with longer transit times due to COVID situations at the different hubs.
- Equipment and space shortage is severe in the north due to customers switching production facilities. The equipment situation is better in the south as factories are now re-opening this week or next week with limited capacity.
- While operating as normal, most ports and depots deliberately have lower productivity and are limiting their drop-off timelines due to reduced staff and working shifts.
- Due to the congestions faced in destination ports (eg. North America and North Europe ports), vessels returning to Asia are delayed. This also has a negative impact on our hubs, and especially Singapore port where some of our cargo connects to the main ocean network.
Knowing this, what can you do to mitigate the impacts?
In the short term you could consider:
- Activating alternative sourcing for priority orders where factories are heavily impacted.
- Staying in close connection with factories on your manufacturing plan.
- Supporting local vaccination programmes. Getting staff vaccinated will help resume manufacturing.
- Monitoring local regulations and be on the lookout for changes. Controls and regulations at different areas may be slightly different. Know what applies for your factories so that you can react quicker to deviations.
- Always have visibility of the most urgent Stock Keeping Units (SKUs) and Purchase Orders if the ability to process shipments is limited. This will allow your origin partners to prioritise accordingly.
- Working closely with Maersk on the changes as well as the resilience plan.
In the long term:
- Review or revisit your sourcing and consider resilience. It is not just about having a backup site, but also for manufacturing to identify the maximum tolerable disruption period for each category of product and/or service. Then based on that, plan and think about contingency strategies.
Giving you the best ability to manage your supply chain is of the utmost priority to us and we are working to give you the tools and information you need to do so. Getting early advice from our customers about possible changes in supply patterns, priority shipments ++ will assist in providing you with the best possible service and outcome. Engaging as far upstream in the supply chain as possible will allow other solutions to be developed. Our teams are here to serve you, so please do not hesitate to contact us as we manoeuvre this situation as best we can - together.