Vietnam's exports of wood and wood products slow for two consecutive months

Vietnam's exports of wood and wood products slow for two consecutive months

From April 2022, Vietnam’s exports of wood and wood products showed signs of slowing down. As of June and July 2022, Vietnam’s exports of wood and wood products fell year-on-year after maintaining an average annual growth of more than double digits for a long time. 11% and 5.5%, showing negative growth.

According to a survey of member companies by relevant associations in Vietnam, representatives of many woodworking companies and handicraft and wood industry associations expressed concern about the difficulties plaguing the wood industry.

Orders have been canceled or reduced in volume recently, while some importers have requested a temporary freeze on their orders, even though Vietnamese businesses plan to continue producing their products.

Some importers canceled orders without prior notice, while others left orders in Vietnam and made excuses for delayed payments. Some importers have even cancelled orders when the product has already started production.

About 47 of the 52 companies that participated in the survey reported a drop in export orders. Among them, 14 companies face a 70-90% drop in orders, while 18 companies face a 30-60% drop. About 15 companies reported a 10-30% drop, and only 5 timber companies reported a 10-30% increase in export orders.

Due to the sharp drop in export orders, many wood processing companies have downsized production, leading to massive layoffs. About 65% of wood processing businesses have cut 20-50% of their workforce, and some businesses have reduced their workforce by 70% compared to pre-pandemic levels.

Mr. Nguyen, vice president of the Ho Chi Minh City Handicraft and Wood Industry Association (HAWA), pointed out that the main reason is that major export markets such as the United States and Europe are affected by the conflict between Russia and Ukraine, and face many difficulties. In addition, high inflation in many countries has caused consumers to retrench, resulting in less demand for unnecessary products, including wood products and furniture.

Another reason is the massive congestion of goods in warehouses and ports abroad and in Vietnam over the past period. It takes 3, 4 months or even 12 months to resolve commodity inventories.

In particular, the decline in exports of wood and wood products to the United States, Vietnam's largest export market for wood and wood products, has affected the industry's export turnover. In addition, the lumber industry is also facing a U.S. Department of Commerce (DOC) investigation into wooden cabinets and vanities, resulting in lower orders and high inventories.

According to the forecast of Vietnam's Ministry of Agriculture and Rural Development, the export value of Vietnam's timber and wood products will reach 16.3 billion US dollars this year, and the cumulative export value as of July is 10.3 billion US dollars.