Concerns are escalating across global seafood supply chains in response to the rapid spread of the COVID-19 Delta variant in Vietnam, and the restrictions imposed by the Vietnamese government to slow infection rates. Vietnam was among the world’s most effective administrations in dealing with the initial wave of the virus during H1 2020. However, the country has struggled to contain the Delta variant since early-Q2 2021. Daily infection rates during the month of September 2021 were four-to-five times higher than total aggregated cases recorded in Vietnam during the 2020 calendar year.
From July 31st, the Vietnamese government has imposed stringent lockdown measures across key manufacturing and processing hubs in southern Vietnam. This includes the port city of Ho Chi Minh City, which also serves as the nation’s economic base, and the main gateway for seafood trade. At least 100 seafood processing factories have reportedly been mothballed since May 2021.
As a major global processing centre for squid, prawn and pangasius, to name a few, it has become increasingly difficult for factories in Ho Chi Minh City to source raw materials due to restricted farm labour. Companies are also reporting inflated freight and transportation fees from farm to factory, in addition to delays associated with increased checks along the main truck routes.
This lack of raw materials and freight bottlenecks has contributed to higher ex-factory costs of local seafood. As an example, the average ex-works price of Vietnamese tiger prawns (fresh, 31-40-count per kg) increased by USD 0.5/kg (+5.8%) month-on-month in August 2021 to USD 9.1/kg, which also represented a USD 1.4/kg year-on-year increase (+18.2%). Indeed, the August 2021 price was the highest monthly average since March 2020.