Global Trade Operation _ Omgt2321 a3 _ Assignment Three

Purpose: The purpose of this assignment is to discuss current challenges related to international trade and technological solutions that could alleviate those challenges. Requirements From a global perspective, you will explain how the following challenges have aggravated and contributed to supply chain disruptions around the world since 2020: Supply chain shortages, e.g., raw material shortages, supply delays (what they are, why they are caused, what are their consequences, examples). Infrastructure problems, e.g., port facilities, road and railroad conditions, IT infrastructure (why they are caused, what are their consequences, examples). From an industry perspective, you will identify and comprehensively discuss one important challenge and one important opportunity that the supply chain disruption represents for a specific industry in Vietnam. You should inform your analysis with concepts learned in class and actual examples (using trustworthy sources academic andor nonacademic). Importantly, you will not choose your specific industry. The lecturing team will assign to you your specific industry on Monday of Week 9 from the following list (you can refer to the MSCI Global Industry Classification GICS MethodologyLinks to an external site.) : Automobiles (GICS 251020): Manufacturers of cars, trucks and motorcycles (e.g., Tesla) Textiles, apparel and luxury goods (GICS 252030): Apparel, shoes, watches, jewelry, luxury bags (e.g., Nike) Food products (GICS 302020): Agricultural products (e.g., coffee) and packaged (milk) (e.g., Nestle) Household personal products (GICS 3030): Producers of detergents, diapers, toilet paper, cosmetics (e.g., PG) Health care providers and services (GICS 251020): Distributors of products, and health care facilities (e.g., any hospital) Technology, hardware and equipment (GICS 4520): Routers, (smart)phones, personal computers, elect. components (e.g., Apple) From a country perspective, you will analyze what technologies could be implemented in Vietnam for: facilitating exporting and importing processes (for example, verification of documents). strengthening its trade corridors andor freight hubs for the management of traded commodities. overcoming or alleviating one additional challenge that Vietnams logistical trade is currently facing (you need to identify the challenge) When engaging with each of the previous requirements, you must consider the effects from the Covid19 pandemic and the RussiaUkraine war.

TABLE OF CONTENT

I INTRODUCTION 4

II GLOBAL PERSPECTIVE 4

III INDUSTRY PERSPECTIVE 5

IV COUNTRY PERSPECTIVE 5

V CONCLUSION 5

VI REFERENCES 5

Household and Personal: H&P

Vietnam Cotton and Spinning Association: VCOSA

Vinh Phuc ICD Logistics Center: VPP

Automatic Container Code Recognition: ACCR

Vehicle License Plate Recognition: ALPR

Automated Guided Vehicles: AGVs

Artificial Intelligent: AI

Vietnam Logistics Association: ALA

Warehouse Management System: WMS

EXECUTIVE SUMMARY

In recent years, supply chains have become increasingly complex In addition, theoperational activity of supply chains was influenced by global changes like the COVID-19pandemic, the Russia-Ukraine war, and its consequences, as well as significant shifts inconsumer and supplier behavior These global changes included the dynamic development oftechnology and production organization In this report, the first part “Global Perspective”presents one of the biggest challenges that the global is facing is supply chain disruption in manycountries and across many industries around the world The supply chain disruption mainly can

be aggravated by supply chain shortages, including the shortage of raw materials and supply

delays The shortage of raw materials lessens the manufacturing of many industries,causing product supply chain disruption Besides, the supply delays induce delivery time totransport raw materials or final products to customers on time in a period of time, whichcontributed to a temporary supply chain disruption Further, port congestion due to lack oftechnological support, a worker shortage, Covid-19, and the Russia-Ukraine war, whichprolonged the shipping turnaround and waiting time lengths, caused supply delays thatexacerbated the supply chain disruptions.

The part of “Industry Perspective” displaces the challenge and opportunity the globaldisruption presents in the “Household and Personal Products” industry in Vietnam (GICS 3030).Vietnam's supply chain for both goods and inputs is sensitive and vulnerable in the event of adisruption in the global supply chain due to the country's heavy reliance on raw materialsimported from foreign suppliers, particularly China and the United States Due to global supplydisruptions, Vietnam's H&P industry has experienced disruptions in raw material supplies due toits dependence on importers for inputs Vietnam's production of H&P products suffers shocks as

a result

The part of “Country Perspective '' presents the ways technology facilitates exporting andimporting in Vietnam, strengthens the trade freight hub, and overcomes the challenges of highlogistics costs in Vietnam Their many technologies such as IoT, AI, and WSM arerecommended to apply to help Vietnam's trade and logistics industry enhance their operations,

facilitate the faster movement of freight, prevent supply delays that have an impact onmanufacturing, increase security, and further restricts human contact to prevent the Covid-19pandemic from being contagious.

I INTRODUCTION

This report will be presented in three parts Part one “Global perspective” analyses anoverview of global supply chain, how supply chain shortages and port congestions contribute tosupply chain disruptions ‘Industry perspective” part clarifies the challenge and opportunity thatsupply chain disruptions presented on H&P industry in Vietnam (GICS 3030) “Countryperspective” mentioned technologies use to facilitate export/import processes, and freight hubs,and solve high logistics costs challenge

II GLOBAL PERSPECTIVE

OVERVIEW

Recently, global supply chains have become increasingly unpredictable, volatile, anddisrupted Complexly intertwined factors including a shortage of inputs and workers, supplydelays, weak production capacity, logistic bottlenecks, low port efficiency, and extremephenomena such as the Covid-19 outbreak and Russian-Ukraine political conflict haveaggravated global supply chain disruption (Grzybowska & Stachowiak 2022)

Many different parts of the world have experienced supply chain disruptions The globalsupply chain of intermediate inputs, semiconductors, electronic components, chips of machines,

computers, and appliances is seriously disrupted because Asian countries, especiallyChina, which are the main manufacturers have implemented border control, mobility restrictions,production scale contraction, or even factory closure to prevent Covid-19 pandemicconsequences (Aboagye et al 2022) Hence, automobile, electronics, and household appliancessupply chains in Asia, Australia, U.S, and Europe are interrupted by the disruption of Asian inputsupply chains (Aboagye et al 2022) Africa, North America, Latin America, Asia, and Europeconfronted an unbelievable supply chain disruption of consumer products, textiles, apparel,aluminum, plastics, construction materials, and notably food (WorldBank 2022) Aside from thelockdown, UK, and Brexit imposed policies on reducing the number of drivers to increase theircompetitiveness, resulting in a severe driver shortage that aggravated supply chain disruptions inmeat, medicine, and household products (Portes 2022) Further, the Russia-Ukraine warexacerbated food, raw material, and energy supply chain disruption, particularly in Europe (Igan

et al 2022)

1 Supply chain shortage

Supply shortage means the case where the amount of supply of inputs, goods/servicesacross regions or nations becomes insufficient (Ivanov & Dolgui 2022) The globe was facingsupply chain shortages of raw materials or intermediate inputs Last two years, shortages ininputs mainly arose from Corona lockdowns and travel restrictions, labor shortages, and logisticsdifficulties that disrupted input supply chains worldwide (Grzybowska & Stachowiak 2022)

Further, Russia and Ukraine’s export of agricultural commodities, fuel, and gas in theworld account for 10-20% of global exports (OECD 2022) However, Russia-Ukraine politicaltension to stop or curtail some raw material exports, resulting in input supply shortages Inputshortage impaired manufacturing capacity, leading to insufficient products to meet demand,which exacerbates global supply chain disruptions (Islam et al 2019)

For example, China's pursuit of the "Zero Covid-19" policy which limits exports, causedshocks to textiles, apparel, household appliances, and electronics industries in Vietnam,Thailand, and Malaysia which disrupted their supply chains (VNS 2022) Russia-Ukraine wardisrupted palladium, nickel, and neon gas supplies (inputs to produce semiconductor chips),leading to chip shortages and causing an 11.3 million production unit loss in the globalautomobile industry, which worsened the world’s car supply chains (Ebbers 2022)

Besides, supply delay is the failure to make delivery of raw materials or products to theirdestination on time, resulting in goods shortages in a certain period (Awaysheh et al 2021) TheCOVID-19 pandemic, lockdowns, worker shortages, and global port congestion pressure due toRussia and Ukraine political tension that slowed port turnaround times, contributed to cargoshipping delays, prolonged time delivery of raw materials and goods to businesses or customers,thus, reflecting temporary supply disruptions (Kamali & Wang 2021)

Figure 1: Supply delivery times in U.S and EU (Adapted from Port of Seattle 2021)

For instance, U.S ports have a long averaging around 21 days of wait time for cargo loading andunloading, U.S suppliers’ delivery times are considerably longer (Figure 1), implying a supplydelay for importers, disrupting their supply chains (Brown & LaTonja 2021)

causing a temporary worker shortage (Nguyen 2021) Due to lower staffing,load/unloading activities have slowed, prolonged ship waiting and turnaround times, and causedport congestion Russia-Ukraine conflict force both economies lose their ports that pressuredmany ports in others, suddenly overloaded their cargo handling capacity, also lead to portcongestion (Jacobs 2022) Therefore, port congestion extended delivery times of shipping,caused supply delays, and reflected supply chain disruptions in certain periods Due to Covid-19pandemic hit, Shanghai port (China) and Los Angeles port (U.S.) faced congestion that had longturnaround times of 11-12 days, causing semiconductors, food, and oil supply disruption forMiddle Asia and Europe (LaRocco 2022).

III INDUSTRY PERSPECTIVE

“Household and personal product” industry (GICS 3030)

industry has faced disruptions in raw material supplies due to global supply disruptions.

As a result, there are shocks in the production of H&P items in Vietnam (VNS 2022)

Vietnam imports 14,276 shipments of chemical pulp to produce toilet or towel paperfrom 85 global suppliers, mainly from China and U.S annually (TrendyEconomy 2021) Due tosupply chain disruption, high demand as toilet papers and towel papers are necessities in Covid-

19 pandemic that forces many suppliers to stop or limit chemical pulp exports, stockpiling fortheir domestic use (OECD n.d) Policies of restrictions or bans on raw material export can beviewed as trade barriers to Vietnam’s toilet paper production

Some Vietnam H&P enterprises (Green Cross or F5B) are outsourcing partners ofThailand and Korean cosmetic brands Due to disruptions in the supply chain, Vietnam lacks rawmaterials for cosmetics, toilet paper, tissue, and shampoo, forcing foreign businesses to shift toin-house production or seek other outsourcing options (Santarek 2022) This decreasedproduction values and competitiveness in Vietnam's H&P industry

Further, Vietnam continues to be a net importer of cotton, with a domestic supplyestimated to be less than 5% of total market demand (Vo 2021) 55% of cotton is imported fromChina (Pham 2022, Figure 2) China's pursuit of a "zero-Covid" approach that dramaticallyreduced cotton exports to Vietnam, caused significant shocks to domestic production of diapers,cotton pads, and swabs This depreciates the efficiency of Vietnam's cotton global sourcingwhich forces Vietnam to discover other global sourcing alternatives such as Brazil, or India (Vo

2021, Figure 3) However, according to VCOSA, cotton import prices from India andBrazil both increased by 0.87%, higher logistic costs, compared to sourcing in China (Pham2022) This increased production costs and H&P item prices in Vietnam Global supply chaindisruption loses Vietnam's global sourcing process efficiency, challenging Vietnam H&Pproduction.

Figure 2: Vietnam’s Yarn Imports from Worldwide Markets (TMT) (Adapted from Pham 2022)

Figure 3: Cotton import of Vietnam by TMT (Adapted from Vo 2021)

2 Opportunity

Global supply chain disruption creates opportunity for the H&P industry in Vietnam Theinformation about foreign supply chain disruption, and factory closures, shelter-in-place inresponse to the coronavirus pandemic, encourages the psychology nervousness and panic-buying

of Vietnam consumers toward necessities (toilet paper, tissue, soap, or hand sanitizers), whichdramatically push domestic demand (Nguyen 2021) Regarding Figure 4, Vietnam's domesticconsumption of H&P items increased to 40.18%, placing it in the top 3 products with the highestdomestic demand in 2020 (Nguyen 2021) Thereby, domestic production of H&P products isfocused to be seriously promoted, increasing Vietnam’s H&P industry competitiveness Further,supply disruption support Vietnam's H&P products do not need to compete with foreignproducts Generally, the Vietnam H&P industry achieved the remarkably surging domestic

demand for toilet paper, toilet paper, diapers, hand soap, and hand sanitizer Based onthe “Demand condition” factor implication in Porter’s diamond (Porter 1990), heighteneddomestic demand for H&P items implies an opportunity for Vietnam’s H&P domestic industryand a competitive advantage for Vietnam in manufacturing H&P products against other foreignsuppliers amid global supply chain disruption

Figure 4: Main products that were purchased more often online during coronavirus (COVID-19) in Vietnam 2020 (Adapted from Statista 2021)

Besides, Vietnamese government conducts ‘self-sufficient’ manner, encourages supportsfrom other industries such as agricultural, wood, or chemical industries to supply domestic rawmaterial for H&P production (Luong 2020) Based on Porter's diamond ‘Related and supportiveindustries’ factor (Porter 1990), the Vietnam H&P industry gains other industries' support fordomestic raw material supply, which is considered more successful and competitive than others

Further, supply chain disruptions strengthened Vietnam’ domestic H&P companies’production and management capacity.

IV COUNTRY PERSPECTIVE

1 Facilitating exporting/importing process

Vietnam's export/import processes are challenged by many manually complex paperprocedures, long-time processes, inconsistency in collecting and managing information fromvarious stakeholders, shortcomings in monitoring the correct number of goods, and lack of safety

in stock (Nguyen 2021)

Internet of Things (IoT) can be an ideal solution to facilitate Vietnam’s export/importprocesses IoT is a system of connected digital, mechanical, and computing devices that cansummary and transfer data without human interaction (Madakam et al 2015) IoT helpsexporters/importers connect and share information with different stakeholders, benefits customsauthorities to increase the variety of data, improved risk management, greater the customsclearance process, and better analytics (Figure 5) IoT tracks the integrity of transshipment cargomovement between entry and exit control points, standardizes procedures for traders' benefit,speeding up the loading and unloading of cargo in port regions, connects potential creativesolutions, and streamlines manual operations to increase (Kumar & Dash 2017) For example,

QR Codes for transit and barcode readers; automated license plate readers; RFID antennas tomonitor freight delivery times, e-seals to ensure traceability of goods and means of transport,

usage of e-lock, GPS tracking, X-ray scanners, and CCTVs interconnected with customs

to automatize border crossing procedures, guarantee security at ports (Varese et al 2021) As aresult, IoT helps the faster movement of freight, avoiding supply delays affecting manufacturing,more security, further, limiting human contact that can avoid the Covid-19 pandemic contagious

Figure 5: Benefit of IoT (Adapted from WTO n.d)

2 Strengthening freight hubs

Vietnam has applied IoT and AI to facilitate seaport operation efficiency to reduceprocedure times and port management inconsistency (Nguyen 2021)