June 24, 2024 10:22 am

The spread of the virus in Vietnam exacerbates the supply chain crisis, Nike sneakers may soon be out of stock

According to a report recently released by Panjiva, a supply chain research organization, as the new crown pneumonia pandemic continues to cause severe damage to the supply chain, the global sportswear leader Nike Inc.’s sports shoes produced in Vietnam may soon be sold. Out of stock, facing a crisis of out of stock.

   According to Sneakers, due to the rapid spread of the new crown virus in factories and communities, Nike’s two main suppliers in Vietnam, Chang Shin Vietnam Co. and Pou Chen Corp., recently stopped production. Nike said that in fiscal 2020, the Nike branded shoes produced in Vietnam’s contract factories accounted for about 50% of its total sales.

   S&P Global Market Intelligence (S&P Global Market Intelligence) supply chain research agency Panjiva released a report on Monday (July 19) that nearly half (49%) of Nike’s US seaborne imports in the second quarter of this year came from Vietnam.

   Panjiva said that Nike’s imports from Vietnam are mainly footwear. In the 12 months ended June 30, footwear products accounted for 82% of its total imports.

   It is worth noting that Nike is returning to the Chinese market recently, and imports from China increased by 54.6% in the second quarter. Previously, due to issues such as tariffs and the epidemic, some companies, including Nike, moved their manufacturing operations to Vietnam and other countries, hoping to diversify their supply chains.

   On Monday, Nike’s share price fell about 1.3% to $157.87 per share. The stock has risen about 11.5% so far this year, surpassing the 10.7% increase of the Dow Jones Industrial Average over the same period. The current market value of Nike is approximately $250 billion.

   Last month, Nike Chief Financial Officer Matt Friend stated on the earnings call that the company expects that supply chain delays and rising logistics costs will continue for most of the 2022 fiscal year. In many cases, consumer demand exceeds market supply.

  The supply chain faces a series of challenges

   “This raises the question of whether other major sports shoe brands are facing similar challenges,” Panjiva senior researcher Christopher Rogers wrote in the report.

  In fact, when the back-to-school season is approaching in the United States, not only the epidemic,but other obstacles including shortage of containers and insufficient port space have also exacerbated the supply chain crisis in the retail industry.

   US sports equipment company Brooks Running Company CEO Jim Weber (Jim Weber) said last month that the company’s current freight cycle is about 80 days, compared to 40 days in the past.

   “There is no doubt that the supply chain in our industry is too tight,” he pointed out.

   Due to the spread of the epidemic, clothing brands including Levi Strauss and H&M are also facing similar problems in Bangladesh. Bangladesh is a major clothing manufacturing center for multiple brands.

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