The outbreak of the novel coronavirus (COVID-19) has adversely affected several sectors, including the seafood industry in Vietnam. The pandemic has led to cancellations, delays, and raw material shortages, causing most seafood companies to experience a decline of 35-50% in orders, according to a recent survey by the Vietnam Association of Seafood Exporters and Producers (VASEP). In this article, we examine how the pandemic is impacting the seafood industry in Vietnam and what measures companies can take to navigate this challenging period.
The impact of COVID-19 on seafood companies
Seafood producers and exporters in Vietnam are facing declining demand, causing a build-up of inventories. For example, the survey by VASEP found that 35-50% of shrimp orders to the US and EU were delayed or cancelled, leading to an increase in inventories. Despite this, shrimp exports increased slightly by 2.6% to $383 million, mainly due to the 16% increase in exports to Japan. However, exports to China fell by 37% and to the EU by 15%.
Tra fish exports to China are expected to decline by at least 20% in the first quarter of this year due to low demand and interrupted transportation via border gates. China is the largest market for Vietnam’s tra fish, accounting for 35%, and exports to China fell by 52% in the first two months. Similarly, exports to the EU fell by 40%.
Vietnam’s seafood industry is still eyeing growth in other markets. VASEP predicts that the EU and the US will increase their demand for Vietnamese canned tuna products by about 15% this year from more than US$719 million last year. Exports to the US alone were worth $316 million, up nearly 38% from 2018.
Measures for seafood companies to navigate the COVID-19 crisis
The seafood industry in Vietnam needs to focus on adapting to the current market conditions and take measures to remain competitive. Some measures seafood companies can take include:
- Diversifying markets: Instead of relying on one market, companies should diversify their customer base by tapping into new markets such as Japan, South Korea, and ASEAN countries.
- Improving quality: Enhancing the quality of products to meet international standards can help companies attract new customers and maintain existing ones.
- Investing in technology: The use of technology can help improve productivity and reduce production costs. For example, companies can invest in automated processing and packaging equipment.
- Strengthening supply chains: To ensure a steady supply of raw materials, companies can strengthen their supply chains by working with multiple suppliers and implementing risk management strategies.
- Supporting employees: Companies need to provide adequate support to employees during this challenging period. This includes implementing measures to ensure the safety of employees, providing training and upskilling opportunities, and offering financial assistance where necessary.
COVID-19 has had a severe impact on Vietnam’s seafood industry, but there are measures that companies can take to navigate this challenging period. By diversifying markets, improving quality, investing in technology, strengthening supply chains, and supporting employees, companies can remain competitive and emerge stronger in the post-pandemic era.