High input costs hit wood product manufacturers

Rising input costs are eroding the profits of wood product manufacturers, putting them at risk.

Workers making furniture at a workshop. High input costs are holding back many wood product manufacturers. Photo vneconomy.vn

Rising input costs are eroding the profits of wood products manufacturers, putting them at risk.

Additionally, Russia-Ukraine tension is likely to cause a shrinkage of Russian timber supply, compounding the situation, a conference on Wednesday heard.

With timber supply becoming tighter, Vietnamese firms will have to compete more fiercely for timbers in international market, notably timbers from the EU and the US.

Tô Xuân Phúc, a policy expert at the non-profit organisation Forest Trends, said that Việt Nam had to import 5-6 million cubic metres of timber as input material every year.

The recent soaring demand for timber in timber-exporting countries has caused a shortage, pushing up prices. Higher material prices, coupled with mounting transportation costs, have added to import bills, driving many manufacturers into unprofitability.

The expert was concerned that timber prices would continue to climb in the short term, making Vietnamese wood products less competitive in the international market.

“Rising transportation costs and higher timber prices will erode the competitiveness of Vietnamese wood products in the international market,” he said.

Phan Văn Phước, director of Tân Phước Co. Ltd., forecasts that timber shortage will last for 2-3 months and reach its peak in March.

He said his firm had to raise its product prices to remain operational and would not import additional timber in the short term due to high costs.

He added that if foreign customers do not accept his firm’s new prices, there was nothing he could do.

Nguyễn Xuân Thụy, director of Liên Khanh Co. Ltd., underlined that tight timber supply was a hardship facing his timber-processing firm.

The firm had to stockpile timber months ago to produce enough material amid rising prices.

Despite mounting input costs, it is trying to keep processed timber prices stable at the expense of its own profits, thereby easing the burden on manufacturers.

“We are under increasing pressure to raise processed timber prices, but we will not do so in the short term for the good of manufacturers,” said the director.

Trần Quốc Mạnh, general director of Sai Gon Trading Production Development JSC, is more concerned about fuel costs than timber prices.

He said petrol prices had hit up to VNĐ27,000 (US$1.18) per litre, exceeding manufacturers’ coping capabilities.

Accordingly, manufacturers are reluctant to sign new contracts for fear that petrol prices will continue to go up.

“Many manufacturers of wood products have to stay idle amid high fuel costs and freight rates. They are unwilling to sign new contracts due to cost uncertainties,” explained the director.

Policy expert Phúc shares this view, saying that rising oil prices have pushed up freight rates, bringing transportation costs to a new high.

He said freight rates had increased up to sixfold since the pandemic began, and Russian military operations in Ukraine were making things worse.

He believes transport costs will continue to go up in the near future, plunging manufacturers deeper into difficulties.

As the wood products industry is feeling the pinch of rising input costs, Chairman of Đồng Nai Province’s Association of Wood and Handicraft Lê Xuân Quân has urged relevant authorities to link up with shipping lines to stabilise freight rates.

He also called for close cooperation between forest growers and timber-processing firms to develop sustainable sources of timber for the industry, creating less dependence on imported materials.

Thụy stressed high fuel costs as a setback for the industry’s development, calling on the Government to cut taxes and curb fuel prices to help manufacturers.

He also believes that Việt Nam should spare no efforts to have its own timber certified by international organisations, notably the Forest Stewardship Council, to add value to its exported products.

Phúc recommends the Government introduce favourable policies that allow forest growing firms to contribute untapped lands to private firms.

He believes such a partnership will enable the latter to expand forests, creating more reliable sources of timber for the industry.

He also recommends the Government tightens up on risky imported timber to make more room for domestic supply.

General Import and Export Vạn Xuân Corp. has suggested a data portal on timber to help manufacturers monitor prices and supply to better manage input costs and inventories.

Vietnamese timber and wood product exports hit US$1.55 billion in January, up 14.3 per cent against the same period last year.

The industry aims to raise the figure to $18-20 billion by 2025. — VNS

Source: VNA
vietnamnews.vn

Related News

Global manufacturers gradually focus on Việt Nam

Global manufacturers gradually focus on Việt Nam

Many manufacturers in the global supply chain of major firms are gradually focusing on Việt Nam.
Vietnam’s wood product export to France, Europe has good prospect

Vietnam’s wood product export to France, Europe has good prospect

The export of Vietnam’s wood industry to France and Europe at large have ample room for growth, according to the Agency of Foreign Trade at the Ministry of Industry and Trade.
Essential food manufacturers seek vaccination priority and new working schedule for employees

Essential food manufacturers seek vaccination priority and new working schedule for employees

Essentialnbsp;food manufacturers in HCM City have toldnbsp;Deputy Prime Minister Vũ Đức Đam thatnbsp;thenbsp;“three-on-spot” principle (work, eat and rest on the spot) was not working and should be stoppednbsp;so that production can be restored to meet consumer demand.
Global manufacturers flocking to Vietnam, reports Nikkei Asia

Global manufacturers flocking to Vietnam, reports Nikkei Asia

As part of the world’s largest financial publication, Nikkei Asia has published an article outlining how Vietnam is preparing for a shift of investment from the world’s giant manufacturing "eagles".

Latest News

Agricultural, forestry and fishery trade surplus value shoots up

Agricultural, forestry and fishery trade surplus value shoots up

VCN - According to the Ministry of Agriculture and Rural Development, the total export turnover of agricultural, forestry and fishery products in the first 10 months reached 51.74 billion USD, up 20.2% over the same period in 2023. Notably, the trade surplus value recorded a spectacular increase year on year.
New export and business cooperation opportunities from "dual conversion"

New export and business cooperation opportunities from "dual conversion"

VCN - According to a recent study from NielsenIQ, 16% of Vietnamese consumers consider a sustainable future as one of the important factors in their consumption decisions.
VN

VN's food processing industry struggles to improve quality and value chain integration

Despite accounting for 19.1 per cent of Việt Nam’s processing sector, the food processing industry has been struggling with major issues such as poor-quality raw materials and subpar value chain integration, said industry insiders and economists.
Approach strategy of the seafood industry when implementing UKVFTA

Approach strategy of the seafood industry when implementing UKVFTA

VCN - As one of Vietnam's strong export industries to the UK, especially when the Vietnam - United Kingdom of Great Britain and Northern Ireland Free Trade Agreement (UKVFTA) comes into effect, with a detailed information approach strategy, it has created a great driving force to promote the export of Vietnamese seafood products to this market.

More News

Mid-November: Vietnam

Mid-November: Vietnam's trade volume matches 2023 total, eyes record-breaking growth

VCN - By mid-November 2024, Vietnam's total import-export turnover reached an impressive US$681.48 billion, equaling the full-year trade figure for 2023
Vietnamese enterprises facing challenges from cross-border e-commerce platforms

Vietnamese enterprises facing challenges from cross-border e-commerce platforms

VCN – In recent years, with the rapid development of cross-border e-commerce (CBEC) platforms, domestic enterprises in Vietnam have been facing numerous difficulties and challenges.
Vietnam, Malaysia eye new milestone in trade ties

Vietnam, Malaysia eye new milestone in trade ties

The official visit to Malaysia from November 21-23 by Party General Secretary To Lam is expected to open up new opportunities for and mark a new milestone in the economic and trade cooperation between Vietnam and Malaysia. Vietnam and Malaysia are key economic, trade, and investment partners. Their economic and trade ties have steadily grown since the two nations established diplomatic relations in 1973.
Shrimp exports surge in 10 months, generating 3.2 billion USD

Shrimp exports surge in 10 months, generating 3.2 billion USD

Vietnam’s shrimp exports in October reached US$394 million, a strong 24% increase year-on-year, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).
Vietnam’s exports to the U.S. near US$100 billion milestone

Vietnam’s exports to the U.S. near US$100 billion milestone

VCN - By the end of October, Vietnam's exports to the United States approached US$100 billion, reaffirming its position as Vietnam's largest export market.
From the “abnormal” coffee price, worries about the new crop

From the “abnormal” coffee price, worries about the new crop

VCN - The Vietnamese coffee industry enters the new crop with the question of what is a reasonable price to ensure benefits for coffee growers while still retaining international consumers.
What obstacles limit the market share of Vietnamese goods in the UK?

What obstacles limit the market share of Vietnamese goods in the UK?

VCN - Vietnamese goods account for only about 1% of total imports into the UK market. One of the reasons is that they have not yet built their own brands and have not focused on effective strategies and approaches to market information.
Why seafood exports to some Middle Eastern Countries are stalled

Why seafood exports to some Middle Eastern Countries are stalled

VCN - Several shipments of seafood exported to certain Middle Eastern countries have been delayed due to legal challenges related to consular legalization procedures. This has created significant bottlenecks in accessing these markets.
Storm No. 3 destroys profits of many insurance companies

Storm No. 3 destroys profits of many insurance companies

VCN - Due to the impact of storm No. 3, the business results of the third quarter and the first 9 months of 2024 of the insurance sector have been significantly affected. This requires more efforts from businesses for the results of the whole year 2024.
Read More

Your care

Latest Most read
Agricultural, forestry and fishery trade surplus value shoots up

Agricultural, forestry and fishery trade surplus value shoots up

VCN - According to the Ministry of Agriculture and Rural Development, the total export turnover of agricultural, forestry and fishery products in the first 10 months reached 51.74 billion USD, up 20.2% over the same period in 2023. Notably, the trade surp
New export and business cooperation opportunities from "dual conversion"

New export and business cooperation opportunities from "dual conversion"

According to a recent study from NielsenIQ, 16% of Vietnamese consumers consider a sustainable future as one of the important factors in their consumption decisions.
VN

VN's food processing industry struggles to improve quality and value chain integration

Despite accounting for 19.1 per cent of Việt Nam’s processing sector, the food processing industry has been struggling with major issues such as poor-quality raw materials and subpar value chain integration, said industry insiders and economists.
Approach strategy of the seafood industry when implementing UKVFTA

Approach strategy of the seafood industry when implementing UKVFTA

VCN - Mr. Nguyen Hoai Nam, Deputy General Secretary, Vietnam Association of Seafood Exporters and Producers (VASEP), said that the advantage that UKVFTA brings is that the main products of the seafood industry enjoy 0% import tax to the UK, especially key
Mid-November: Vietnam

Mid-November: Vietnam's trade volume matches 2023 total, eyes record-breaking growth

By mid-November 2024, Vietnam's total import-export turnover reached an impressive US$681.48 billion, equaling the full-year trade figure for 2023
Mobile Version