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Aug 24,2022


The Russian-Ukrainian conflict has exacerbated global differences, and poor international logistics and transportation have hindered global cooperation and accelerated the brewing of a full-scale crisis. Of course, the current crisis is not one-sided, but a comprehensive one. Artificial intelligence robots accelerate labor substitution, capitalist oversupply and insufficient demand, the supply chain crisis caused by the epidemic, the inflation of raw materials caused by the conflict between Russia and Ukraine, and the forced labor by the Federal Reserve. Rate hikes are the result of multiple crises that dampen the stock market. At present, there are problems in the global supply chain, and global demand is further reduced, which shows that orders have dropped significantly. Suspension of production, holidays, lack of orders, intermittent resumption of work, etc. are becoming hot topics recently.


international logistics


Recently, news of the "order shortage" of Chinese manufacturing factories has appeared in the newspapers, and the Vietnamese factories that had previously had so many orders and even queued up to the end of the year began to "short of orders". Many factories reduced overtime hours and began to suspend production and holiday. Even the Samsung factory, a well-known electronics company, has been affected. When the new crown epidemic was the worst last year, business activities were even more active, but now it is sluggish. At present, a series of industrial manufacturing countries such as Germany, India, Vietnam, and Bangladesh have begun to experience trade deficits, and they have experienced a cliff-like drop in orders!


Missing order! Orders in Vietnam, India, and Bangladesh fall off a cliff

As a major investor in Vietnam, Samsung Group is not only the country's largest foreign investor but also Vietnam's largest exporter, with one company contributing one-fifth of Vietnam's exports. Now that Samsung is facing depression, it has also ruthlessly exposed the contrasting status of many countries in Southeast Asia recently.


1.stop production, holiday! Vietnam has no orders in the middle of the year, and workers have to take turns

Some time ago, the Vietnamese factories that were unable to recruit workers and were full of orders are now running out of orders. Vietnamese media express reported that after six months of a strong recovery in the first half of the year, many factories began to lack orders in the second half of the year, and had to shorten production time, stop hiring, and reduce labor.


international logistics


In the second quarter, the outbreak of the Russian-Ukrainian war, rising oil prices, and the epidemic... had an impact on people's global consumption habits. Purchasing power for fashion apparel products has plummeted, inventories are unsellable, and brands are not signing new orders. Some factories have no orders, forcing them to recalculate appropriate labor plans.

A factory manager in Vietnam said that the factory is still operating normally, but orders will be lost from September to October. According to the plan, the company will arrange for workers to take vacations at the same time, and in conjunction with the National Day holiday, the factory will stop production for 8 days. Then, depending on the situation, the company arranges for workers to take Saturdays off to reduce overtime. Worker earnings are expected to decrease by 10-20%.


Mr. Tran Viet Anh, the vice-chairman of the Ho Chi Minh City Business Association, said that industries such as electronics, textiles, footwear and apparel, wood, steel and other industries are also facing many difficulties due to the decline in purchasing power in key markets. This year, the market has been "deserted" a lot, factories have a lot of inventory, and there are still no buyers after price cuts. Companies have to reschedule production activities and reduce working hours. At present, the factory mainly reduces overtime and annual leave. Next time, however, the workload will not be enough for workers to work 8 hours a day for a week.


2. Exports drop by 15-40%! India's orders for next season all reduced


Affected by the global economic recession, the Indian textile industry has felt gusts of cold wind. Clothing and home textile export orders from the US and Europe fell by around 15%-20% as Western retail brands faced slow demand. In Panipat, an important home textile production hub, there are signs that export orders have fallen by as much as 40 percent. It is reported that inflation and rising interest rates caused by the Russian-Ukrainian war are the reasons for the recession and the decline in export orders.


According to data released by the Indian Ministry of Industry and Commerce, in June 2022, the export volume of cotton yarn, fabrics, finished products, and handloom products fell by 19.49% to 962 million US dollars; the overall export of cotton textiles fell by 14.30% to 1.699 billion yuan.


international logistics


Industry sources said importers from Western countries not only reduced orders for the next season but also delayed deliveries of previous orders. Retail sales in Western countries have slowed sharply due to high inflation. The warehouse is full of unsold goods.


Exporters in Panipat said they received 40 percent fewer export orders for home textiles than last year after attending a trade fair in Germany in June. Ramesh Verma, an exporter of Panipat and a member of the Handloom Export Promotion Council, said that big companies and retail brands from the United States and Europe purchased a lot of home textile products last year, but retail sales were still very weak. As a result, they have to buy less, and exporters have fewer orders for the next season.


3. 400 companies shut down! Pakistan cuts production by more than 50%


Overall, since the second quarter of 2022, Southeast Asia's cotton textile and apparel industries have fallen into the predicament of "upside-down" production and sales, declining orders, and cotton consumption apparently peaking and falling. According to the Pakistan Textile Mills Association, the textile industry will not only reduce its output by more than 50% due to the shutdown of production but will also be forced to borrow $6 billion overseas due to energy supply and cost constraints; at the same time, it will face the risk of losing orders, customers, default losses and other risks.


4. Orders drop by 20%! Bangladesh order production and shipment delayed

Recently, clothing orders in Bangladesh, a South Asian country, have fallen sharply. Bangladesh, the world's second-biggest garment exporter after China, also faces the risk of a surge in costs that could hamper its recovery from the pandemic.


Suppliers to U.S. apparel giant PVH and Inditex SA's Zara said its new orders for July were down 20 percent from a year earlier. It also said that retailers in the European and U.S. markets are either delaying finished product shipments or delaying orders


international logistics


Soaring inflation in export destinations has had a serious impact on local foreign trade exporters. In addition, the euro weakened against the dollar, making Bangladesh's exports less attractive. It is reported that the garment industry accounts for more than 10% of the country's GDP and employs 4.4 million people. Therefore, the decline in clothing orders is a risk to the Bangladeshi economy.

5. New orders decreased by 0.4% month-on-month, Germany fell for the fifth consecutive month month-on-month


Data released by the German Federal Statistical Office showed that due to the reduction in new orders outside the eurozone, after adjusting for seasons and working days, German industrial new orders fell by 0.4% month-on-month in June this year, the fifth consecutive month-on-month decline. German new orders from abroad in June decreased by 1.4% month-on-month; new orders from outside the euro area decreased by 4.3% month-on-month. In addition, the German Federal Statistical Office adjusted German industrial new orders in May this year from an initial increase of 0.1% month-on-month to a month-on-month decrease of 0.2%.


The German Federal Ministry of Economics and Climate Protection issued a statement on the same day, saying that due to the crisis in Ukraine, the shortage of natural gas and the uncertainty brought about by international logistics, the demand for new industrial orders will continue to be weak, and the industrial economy will continue to be sluggish in the future.