Established in 1980, Orkim Chemicals Inc., located in Izmir – Turkey, has been manufacturing and supplying textile auxiliary chemicals and serving the Turkish domestic and international markets. Orkim enjoyed a steady growth and reputation for all those years and in 2005 decided to reach the foreign markets with its expertise and know-how that is acquired for over 40 years in the domestic arena.
Upon Orkim’s decision to reach Global markets, I have joined the company the same year (2005) as an export specialist to launch widespread export markets. Bangladesh is one of the first markets that ORKIM has entered, thanks to Mr. Faruque Hassan, president of BGMEA whom encouraged us back that time during a meeting which was held back in Istanbul, in 2005.
Since then we have successfully launched business’ in 4 continents, where Bangladesh is one of our top focus market. Until 2019, we were adding value to our export business and breaking records consecutively in exports. The records and growth came to a halt in 2020 due to unprecedented covid-19 outbreak.
Pandemic impact on Chemical Business-
IMPACT-1 (Recession in Export)
By the first Global impact of the pandemic back in April, 2020, Global markets naturally begun panicking. With the rapid spread of global pandemic coronavirus disease 2019 (COVID-19), people around the world expressed panic in various behaviors. Even before Asian Markets felt the wave, Western countries begun strict confinements and administrated lockdowns one by one, where end users changed their consuming behavior and all of a sudden textile goods became non-essential. As a result, Western Garment Buyers either cancelled or postponed their orders to the mills even though they had agreements. Canceled orders resulted in slower production in Asia which impacted textile auxiliary suppliers as well.
For the first few Months of the pandemic, another opportunity arised for the chemical suppliers, where we mostly exported chemicals for PPE (Personal Protective Equipment) production.
When things begun cooling down, PPE production slowed down either. By the time home and fashion textile production came back to normality, than the auxiliary suppliers like us faced another challenge; raw material scarcity and price fluctuations in raw materials. Manufacturing costs increased dramatically by the beginning of 2021. Yet, we can not reflect those costs to our customers easily.
In addition to this the extraordinary cascade of events caused by the pandemic has led to a severe container shortage crisis. This situation can be classified as a global one, as the lack of containers has a cascading effect along all supply chains, fundamentally disrupting international trade.
The Chinese container manufacturers, which dominate the market, are now charging $2,500 for a new container, up from $1,600 last year. In the previous six months, container rental rates have grown by about 50 percent as well.
Until 2020, dispatching a 40’ DC container from Europe to South/South East Asia would cost between $800-$1000. Now, due to the shortage and crisis, the costs have risen up to $3000-$5000 if ever an exporter can find an available empty container. Forwarders do change their schedules often, so estimation of transit times can not be foreseen. Transit times have gone up to over 2 Months from/to Europe and South/South East Asia where it was roughly a Month previously when things were normal.
We observe that the Container crisis has arisen for four main reasons. Firstly, due to a decrease in the number of available containers, secondly, since most of the ports were congested as they suffered from a reduction in labor, thirdly, due to a drop in the number of ships operating, and, fourthly, since significant changes in consumer buying sentiment.
IMPACT-3 (Payment Terms)
Another impact of the pandemic is about payments, many mills around the Globe faced financial crises where payment terms have been changing and suppliers are having trouble to determine accounts receivable.
The pandemic has halted us to travel globally thus we are not able to do our routine country/customer visits and on sight technical assistance/support where in addition we also could not host any of our customers at head office/factory for meetings/training purposes. During this period, we have done our best to utmost care our customers and partners online but lack of face to face meetings still persists.
As a conclusion, even though ORKIM has faced those challenges like any other supplier in International Trade, we have overcome those challenges quickly and took our measures, and adapted to new World order easily. We are still serving our customers with 100% satisfaction. Overall our export business has not fallen, only got into recession, where but our profitability has fallen slightly.
Bangladesh has been the largest garment exporter country in the World after China and was foreseen to take the lead within 5 years if things were in track. However, since the Global demand for clothing declined amid the COVID pandemic and big fashion brands remain reluctant to place big orders, posing a major problem for Bangladesh’s vital textile industry where the country is hugely dependent on the export of textiles for its national income as the industry accounts for more than 80% of overall exports. According to latest statistics*, textile exports in Bangladesh dropped by nearly 17% in 2020. In addition, last year Bangladesh’s textile exports to the EU dropped by nearly 19%, whereas to the US they fell by 16% and to Canada by as much as 25%.In addition BGMEA fears that there hasn’t been any uptick in demand and exports so far in 2021. It appears that exports of the country may continue suffering till the third quarter of this year or even further more if the new mutant variants of the virus hit another wave in the region.
Another long term threat is as the coronavirus pandemic continues to spread unabated in Bangladesh, garment orders from international markets are rapidly shifting towards to rival countries such as Vietnam and Pakistan. However, even though the country is facing these challenges and threats, the country still holds its position being one of the largest garment exporter in the World and we strongly believe the country will take serious measures to overcome those measures and the Government will keep on its subsidies, investments towards the industry commencing with pandemic fight while keeping on the investments in country’s infrastructure.
Bangladesh has always been a core market for ORKIM. ORKIM always had a special interest in the country due to its booming potential and spared majority of our energy to focus on this emerging fast growing country. Consecutively, Bangladesh is by far having the largest share in our Exports in the last 5 years. Also, it is by far most visited country by our marketing team and technicians including myself in the last 16 years. Currently we do have a warehouse and office in the country’s capital, and planning to keep on our investments in the country in the future.