Covid-19: New opportunities and challenges for Vietnam seafood industry

The most affected markets include China, down -27%, EU down 16%, South Korea 11% and ASEAN down nearly 7%. The trend of the world consumer market changed due to the impact of the Covid epidemic, blockade orders of many countries and the fear of consumers, causing the demand in the food service segment to drop sharply.

The income of consumers has decreased, so the consumption of high-class products tends to decrease, reducing the average price of exporting seafood products. In the main products, pangasius export got the strongest decrease of 29%, cephalopod exports fell 24%, tuna sales dropped 10% while shrimp exports still kept a slight increase of 1.8%.

The Covid-19 epidemic caused a series of disturbances in the seafood value chain. The supply chain of raw materials and finished products has been "broken", orders have dropped, shipping activities, freight transportation have been delayed, congestion at ports, shortage of goods and cash flow and inventory congestion in the context of businesses still have to maximize social responsibility with the value chain and with employees causing businesses to face many difficulties and great pressures during the Covid-19 epidemic.

However, the Covid-19 epidemic is and will be creating new trends in the seafood supply chain, which can be seen as new opportunities and challenges for Vietnam's fisheries sector.

New challenge in fisheries sector due to the impact of Covid-19 epidemic

- Purchasing power from markets decreases and recovers slowly:

- There will be some businesses being eliminated: closed/bankrupt or sold to other investors.

- The outstanding debts may increase, affecting both related industries (insurance, banking, supporting industries such as manufacturing of medicines, chemicals, packaging materials, ...)

- Increasing production costs.

- There will be many ponds that stop raising, causing more material shortages in the future and raw material prices will soar.

- Supply chain interrupted

- Increasing inventories and shortage of cold storage.

- Labor shortage will be increasingly difficult.

Opportunities for Vietnam's fisheries industry to adapt, recover and develop in the coming period:

- Investor confidence in Vietnam and Vietnam's seafood has increased significantly today and after the Covid epidemic (thanks to effective policies and guidelines to combat the epidemic, implement social security and economic development).

- The main countries competing with Vietnam, such as India and Ecuador, have to blockade and quarantine to prevent epidemics, reducing 50% of production and export; Indonesia or the Philippines and Thailand also dropped about 30%. These countries will have significant latency than Vietnam in restoring production to maintain the supply to the world. This is a great opportunity for Vietnam seafood to increase production to gain market share in the markets.

- There will be a shift in production from China to Vietnam, especially after the US-China trade war and the Covid -19 epidemic.

- The demand for raw materials from preliminary processing from Vietnam tends to increase.

- Convenient and value-added fishery products tend to be preferred in the world market.

- Supporting industries for aquaculture (producing medicine, chemicals, packaging materials, equipment, equipment for aquaculture, processing, etc.) have a chance to develop in Vietnam, thereby creating favorable conditions for seafood businesses to be more active in production.

Forecast

Covid's epidemic situation is still very complicated in countries around the world, so, in the next few months, seafood exports will definitely continue to decrease. Exporting enterprises have not been able to escape the situation of declining, delaying or canceling orders, stagnant transportation and payment was not favorable.

Seafood exports in the second quarter will not be able to recover because some markets are still strongly affected by the covid epidemic, especially the EU market. Export to China also could not recover like before the outbreak. Countries in the epidemic center may release the blockade, but the transactions will not be smooth and recover immediately.

To get an overview, forecast production and export trends in the second quarter and 2020 and capture more details about the actual export status of each item to markets in the first quarter of 2020, please register Report on Vietnam seafood exports, Quarter I/2020, issued by VASEP in May 2020.

Get more information on this report here: http://seafood.vasep.com.vn/505_13560/seafood-reports.htm