Delta variant outbreaks in poorly vaccinated Asian countries disrupt production
A gap has formed between the demand for well-vaccinated US goods and the ability of poorly vaccinated manufacturing countries to meet it, creating inflationary pressure. Outbreaks in Vietnam and elsewhere add to a long list of challenges, including epidemics in ports, shortages of freight containers and rising commodity prices, which companies face in delivering goods at low cost. and in time before the holiday season.
Vietnam, which has given two doses of the vaccine to less than 3% of its population, has seen an increase in cases over the past six weeks due to the Delta variant. The country’s strict Covid-19 containment policies – including locking down villages and quarantining tens of thousands of people in military barracks and other state-run centers – have worked for the first 14 month of the pandemic, as she pumped out exercise equipment, electronics and pajamas. for western consumers.
But the Delta variant has escaped Vietnam’s defenses, just as it has recently done for other largely unvaccinated exporters, including Indonesia, Sri Lanka and Thailand. The strain is spreading so quickly that it is difficult to track, according to the government. Authorities have ordered the closure of some factories and others to drastically reduce the number of workers in the field. This left Western brands, such as Adidas AG, Crocs Inc, to the fore. , and Steven Madden Ltd. – which strongly depend on Vietnamese manufacturing.
Companies are trying to find alternative suppliers in China and elsewhere, and pay expensive air freight to try to move products quickly to Western markets to make up for production delays.
“Vaccine inequality and immunization levels in these emerging markets are creating problems in these sectors and adding to cost pressures,” said Louis Kuijs, head of Asian economics for Oxford Economics.