Textile and garment industry maintains growth despite Middle East conflicts

Vietnam’s textile and garment exports in the first quarter of 2026 reached more than 8.8 billion USD, despite disruptions to global supply chains linked to escalating conflict in the Middle East. The figure rose 1.9% year-on-year, reflecting firms’ ability to secure orders early, though cost pressures remain and the sector’s year-end export target of 50 billion USD is still challenging.

Q1 export performance and order outlook

With Middle East hostilities affecting shipping routes, Vietnam’s textile and garment sector still recorded Q1 2026 export value of over 8.8 billion USD. The increase of 1.9% compared with the same period in 2025 points to resilience among exporters that locked in orders ahead of the disruptions.

Many companies have signed orders through the third quarter of 2026. Free trade agreements including the EVFTA and CPTPP continue to support tariff advantages in traditional markets such as the EU and Japan.

How firms are adapting to logistics disruptions

To maintain delivery timelines, companies have adjusted delivery terms, shared transport risks with partners, and diversified transport modes. Some exporters are also leveraging cross-border rail routes to Europe.

In parallel, firms are increasing the use of domestically produced or regional materials to reduce dependence on external supply chains.

Company measures to manage risk and costs

May 10 CEO Than Duc Viet said the company is renegotiating delivery schedules, strengthening risk management, and seeking suitable financial solutions. The firm is also advancing digital transformation and green transformation, while building its own brand to enhance value added.

Industry pressures: longer routes and higher freight

According to the Vietnam Textile and Apparel Association (VITAS), despite positive growth, the industry is under strain from Middle East conflict and Red Sea developments. Carriers have rerouted via the Cape of Good Hope, increasing transit times to the EU and the US by 14–20 days.

Freight costs to the East Coast of the United States have risen by 2,000–4,000 USD per container.

Rising input costs and margin squeeze

Higher oil prices driven by the conflict have pushed up the prices of synthetic fibers and dyes, raising input costs. This has eroded margins as contract manufacturing prices (CMT) remain under pressure from customers.

Vulnerability is also heightened by the fact that more than 70% of materials are imported. Factories face production disruption risk if fabric and accessory supplies from abroad are delayed due to port congestion.

Targets for 2026 and VITAS recommendations

For 2026, the textile and garment sector targets exports of about 49–50 billion USD, up 6% from 2025. To achieve this, VITAS recommends that firms adjust strategies in response to ongoing Middle East conflict.

• Diversify markets and supply sources rather than relying heavily on Red Sea transport routes.
• Accelerate development of intra-ASEAN markets and neighboring countries to reduce logistics costs.
• Invest in ESG standards and traceability to access higher-end markets such as the EU.
• Use AI and automation to optimize productivity and offset rising transport costs.
• Increase domestic upstream materials by investing in concentrated textile and dyeing parks to raise domestic content and reduce import dependence.
• Improve flexibility in negotiations, including renegotiating shipping terms (such as shifting from CIF to FOB) or sharing freight costs with partners.

Value-added focus amid slower global demand

VITAS Vice President Truong Van Cam noted that global demand for textiles grows only about 2–3% annually, with intense competition among exporting nations. He said Vietnam’s industry cannot rely on volume growth and must increase value added.

“What is important is to focus on growth quality; first develop domestic upstream materials, then upgrade products and increase value,” he emphasized.

Outlook: adaptation and coordinated support

VITAS described 2026 as a year of flexible adaptation and a turning point for the sector. While short-term orders remain stable, firms are preparing for challenges from geopolitical tensions and order-shifting driven by tariff competition.

The association said reducing reliance on imported inputs is not only important for production cost optimization, but also a prerequisite to meet origin rules under new-generation free trade agreements—helping maximize tariff advantages.

VITAS called on regulators to stabilize energy and fuel supply to reduce input costs. It also urged Vietnam’s overseas trade offices to provide timely market information, particularly in regions with geopolitical volatility, to help firms build flexible shipping and production plans.

Hang Tran, Vietnamplus (17:24, 05/04/2026)