Impacts of the Red Sea attacks on the global textile and apparel trade: A summary from the media
US retailers/importers: 1) “40 percent of shipments from Asia go to the U.S. through the Panama Canal” and “with access to the Suez Canal also now limited, vessels carrying goods to the East Coast of America will now take longer to deliver their shipments.” 2) “Companies that depend on inventory supplies from Asia will be impacted…These include things like sneakers, apparel and consumer electronics from countries such as China. Companies may be forced to pay more to get their inventory delivered, the costs of which could be passed on to consumers pushing up prices.”
EU retailers/importers: 1) “the rates for shipping goods from Asia to northern Europe have “more than doubled” since the start of December 2023.” 2) some EU fashion companies say “the crisis has delayed stock deliveries “by three to four weeks” and increased delivery costs by 20%” 3) some fashion retailers are “keen to avoid flying stock from Asia to Europe due to the significant amounts of carbon emissions caused by air freight.” 4) many EU fashion brands and manufacturers “expressed concern that they will have to shoulder the financial burden of the delays.”
China producers/exporters: 1) “Customers involved in China-European trade now face additional costs and a delay of seven to 10 days in such cases” 2) “Some Chinese exporters are shifting to China-Europe Railway Express services to ensure timely delivery of their goods and avoid staggering operational costs if they navigate around the Cape of Good Hope. However, “Some rail freight platform companies have proposed price increases for their railway services to Europe.”
India producers/exporters: 1) “Exports to the US west coast are intact, shipments to Europe, North Africa, and the Middle East have been affected. India exports goods worth $110 billion to the three regions.” 2) “The cost of freight and insurance has risen due to ships being compelled to avoid the region and take a longer route around the Cape of Good Hope. 3) Shipments are being held back by exporters, because they are feeling a pinch of additional freight cost. “Containers could face delays of 12-14 days in their turnaround time, although there is no shortage of containers.”
Bangladesh producers/exporters: 1) “over 70 percent of Bangladesh’s export-laden containers, which are destined for the EU, US East Coast and Canada, cross the Red Sea.” “Meanwhile, “8 to 10 percent of the country’s imports come through the route.” 2)Bangladeshi exporters and importers are having to pay higher freight charges to the US and Europe.” According to the Bangladesh Textile Mills Association (BTMA), the freight charge has already increased by $700 to $800 per container in case of import-laden vessels. The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) expects Bangladesh’s domestic garment suppliers “will have to ultimately bear the freight cost.”
Pakistan producers and exporters: Textile and apparel shipments are facing stress. On the one hand, Pakistani textile and apparel producers are “highly reliant on timely raw materials and machinery imports. Any disturbances in shipping schedules could lead to production slowdowns and increased costs for manufacturers.” Meanwhile, “There have been “delays in fulfilling orders due to higher lead times and freight charges.” “Exporters have been incurring losses as they were honoring orders when they had assumed freight charges of $750.” However, as of mid-January, “shipping companies have jacked up freight charges to around $1,800, a massive 140% hike.”
(Note: This blog post will be updated as new information becomes available. Industry professionals are welcome to leave comments and share insights.)
FASH455 Global Apparel & Textile Trade and Sourcing 