Delta variant is killing the Vietnam seafood factories- especially for panga! Vietnam is suffering from the pandemic, and the seafood business is in a mess.
Ocean Treasure lists some facts from the pangasius factory side and hopes all of you see the real situation in Vietnam and think carefully about your business and your purchase plan. For other fish products, the situation is similar.
The raw material collection and transportation is hard
Due to the restriction of the Government Directive 16, the social distance restriction is highlighted. The new raw material is hard to collect because less labor can go to the farm. The transportation fee is much higher than before, even tripled. Few truckers will load the raw material to the factory because there will be many checks during the long distance. Moreover, these drivers are also concerned about being affected. Even though they have their trucks and drivers, some big factories still need to pay more to keep these drivers run regularly. However, if one driver drivers another area to collect the material, this driver will be quarantined. What does it mean? It means truck drivers may stay in quarantine in turns, which will badly influence the material transfer efficiency. Also, the factory must cover this cost; if not, no drivers will work for the factory!
The labor situation in the factory
Since the daily confirmed cases are still high, the factory got a solution for the labor force. They ask the workers to stay in the factory for the whole day, and the factory will figure the food and the dormitory. Only 20%-30% of the workers choose to stay and live in the factory, and the factory will pay 3-4 times salary than usual. Since now, the workers of some factories have stayed in the factory for almost two months. The factory thought the whole lockdown would only last till early August, but the situation seemed not to end soon.
This complete lockdown will continue and will last at least two weeks. As ocean treasure knows, all the workers will have the acid test every week, and the factory will cover the cost. The test fee is around 10 $ per person per time. If the lockdown continues, the factory may have tremendous pressure to keep these workers there. So plus the quarantine fee, the total cost for one container will increase by approximately 5000$.
Factory production situation
For the factory’s production, most of the factory has the stock semi-treated products. As Ocean Treasure knows, these semi-treated products can last for about one month. Many factories stopped gutting the new materials for the processing situation since there might be some infection from the fish from the farm. All the labor now is doing packaging and will not touch the raw material. The factory strictly separates the material and the workers. In this condition, the production efficiency is terrible affected.
Many factories are hesitating to accept the new orders because they cannot afford that much production yet. Usually, a big factory can produce 200-250 containers a month, but now the capacity is only 30-40 containers. But still, most of the factories have many pending orders that need to finish, so that the production capacity will be a big issue for the factory. Also, there is a high possibility that the factory may have to cancel some orders according to the actual status.
Fish farm situation
The farm’s raw material will stay in the water until most factories’ pandemic situation is stable. Usually, the factory prefers the small fish to process it into fillet for panga fish – the most sale presentation for panga. The latest update is that the farmers will try to feed less the fish (so the fish will not grow too big). The big-size panga fish price is low than the small size. If the panga grows slow and small, then the fish production in September will be a big problem. Also, for the small size panga, the raw material price will increase by 100% sure.
Shipping lines have announced increasing freight rates and fees by 2-10 times (depending on the route or carrier). Especially in many essential routes such as the US, Europe, Canada…which causes sudden difficulties, congestion, and very high costs for Vietnam’s seafood export industry and export industries in general. The aggregate price index of eight major shipping routes globally has also increased by nearly 300% over the same period last year. Despite such high rental prices, it is still difficult for the shipper to book due to the shortage of containers at ports and routes. Typically, even though containers have been booked a month in advance, many exporters still could not rent them. Averagely, each container will increase by at least 5000$, and we should pray that we get the empty container, which reminds us of the freight situation in China.
Vaccine efficiency is low
Although the Vietnam government starts the vaccine program, the efficiency is still relatively low to the confirmed case number. Many factories encourage the workers to have the vaccine and go back to the factory. Since the vaccine efficiency is low, the number of workers going back to the factory is still low, even none. Plus, if the factory has more workers coming back, the house, meal, and acid test costs will also increase.
The domestic need for fish is increasing
Since the pandemic is widely spreading, the food section in Vietnam is also suffering. Meat is in a significant shortage! Some factories are targeting supply fish to the market to replace the urgent meat demand. This trend could also affect the export of fish products.
Through all these points, we can see that the fish price of the exporting market has a very high trend of huge increase and this situation will be even worse at the end of August – the regular peak season coming. Vietnam covers almost 80% of panga products worldwide. For sure, the orders will entirely rush to the market; at that time, the price increase will become routine, and the increasing rate might be insane. Imagine! Only 20%-30% production left, which will suit the 100% market demand!
Ocean Treasure recommends we’d better order from the reliable factory instead of some small factories.