Urban Outfitters turns to airfreight as Vietnam lockdown impacts supply chains

Fashion retailer Urban Outfitters has turned to airfreight to offset ocean supply chain disruptions and keep its products on shelves in Europe and the US.

Currently, the company is experiencing difficulties getting its products from Vietnam, the manufacturing origin, to inventories in Europe and the US.

Vietnam is in a strict lockdown due to rising coronavirus numbers. Under the lockdown measures, troops are ensuring civilians stay at home. Factories are continuing to operate under strict “closed loop” conditions where workers sleep onsite, but job other jobs across the supply chain — such as truck drivers — are affected.

In addition, ocean freight supply chains continue to be affected by severe delays and soaring rates.

In a recent conference call, Urban Outfitters chief executive Richard Hayne explained: “We are bringing a lot of or most of our product and now by air to try to offset the port congestions and the shipping charges on ocean and the lack of containers. So that’s all going to impact margins.

“But we believe that bringing the inventory in as quickly as we can is the most prudent thing to do right now.

“I am sure other people have the exact same situation where the country is completely closed. We have a lot of product there and we’re trying to get it in. ”

He added: “Currently, we are trying to bring inventory in earlier, and I would say, earlier is anywhere between a few weeks to up to six weeks, and we have to do that because there’s so much uncertainty out there.”

According to Everstream Analytics, Tan Cang Cat Lai Port has reached 100% capacity due to an “acute labor shortage of stevedores, forklift operators, and truck drivers” since July. 

“Once considered successful in containing the Covid-19 outbreak, Vietnam has struggled in recent weeks to manage a surging outbreak of Delta variant cases,” the risk analyst said.

“The country’s Southern provinces, particularly Ho Chi Minh City, have been severely affected. Authorities have implemented a slew of stringent restrictions that have paralyzed the country’s supply chain.”

Meanwhile, shippers and forwarders are facing delays of up to seven days on air cargo shipments from Shanghai Pudong International Airport (PVG) with the situation expected to ease in early September.

Ground handling and ramp operations have been hit by a series of Covid cases over recent days that have resulted in carriers cancelling services and diverting flights to other airports.

In a webinar, Flexport senior air trade lane manager Far East westbound Camille Carenton said that capacity from PVG was down by around 33%.

As a result, cargo being transported to North America faced a backlog of five to seven days and cargo on services to Europe had a backlog of one to three days.