The fashion industry continues to face significant challenges due to shipping delays, influenced by various geopolitical factors.
- The Iran-backed Houthi movement’s attacks have forced rerouting of ships, impacting shipping routes.
- Container shipping costs have surged, leading to increased expenses for retailers and suppliers.
- Retailers are cautious, affecting stock availability and leading to out-of-stock situations sooner than expected.
- The situation may persist, impacting pricing and stock schedules well into the coming seasons.
The disruption in the fashion industry’s supply chain arises largely from geopolitical tensions. On 19 October, the Iran-backed Ansar Allah, also known as the Houthi movement, conducted attacks on commercial vessels in the Red Sea, triggering significant changes in shipping routes. As a result, container ships are now taking the longer route around the Cape of Good Hope instead of the more direct Suez Canal, significantly adding time and cost to shipments.
According to Drewry’s World Container Index, a barometer of sea freight costs, the price of shipping a 40ft container rose by 4% to $4,226 (£3,310) as of the week ending 30 May. This has compelled fashion supply chains to adjust, with many companies opting for land or air freight, or factoring additional weeks into their shipping schedules. Paul Alger from the UK Fashion & Textile Association noted that these issues particularly affect companies involved with the Red Sea, forcing them to order earlier for peak trading periods, despite a tepid UK market.
The increase in shipping costs has been dramatic, with one footwear supplier reporting prices tripling over a recent six-week period. Shipping costs from Asia to the UK, previously marked at $2,500 (£2,000) in early April, have soared to between $7,000 (£5,900) and $7,500 (£5,500). The supplier pointed out that shipping lines cite Red Sea tensions while allegedly taking vessels out of service to manipulate prices. This escalation is anticipated to lead to higher retail prices as businesses pass increased costs on to consumers.
Steve Sinclair of The Regatta Group expressed concerns over the inflationary impact these shipping cost hikes might have, noting that even as inflationary pressures ease, landing costs will rise. He anticipates that current shipping costs and delays are unlikely to improve before September, predicting continued challenges into the following year. This situation has led some retailers to reassess their logistical strategies, like switching from sea freight to rail for shipments from Asia, despite traditionally higher rail costs now becoming comparable to sea freight.
Andrew Pace, director at Panda Sourcing, highlighted the need for suppliers to manage client expectations around delivery timelines. Previously operating on a six-week schedule for deliveries, changes in shipping times now necessitate at least an eight-week lead time, potentially extending to ten weeks by spring 2025. Buyers’ reluctance to order prematurely compounds these scheduling challenges, forcing suppliers to accelerate production by two weeks.
James Lakeland, a womenswear retailer, experienced delays firsthand, waiting two months for a shipment of kaftans expected in March, which only arrived at the end of May. While weather conditions aligned fortuitously this time, he had to cancel other orders due to similar delays, pivoting procurement from China to Italy where costs are now comparable due to shipping price hikes. This strategic sourcing shift reflects broader industry efforts to mitigate the impact of ongoing freight disruptions.
The persistent challenges in global shipping, exacerbated by geopolitical issues, continue to necessitate strategic adjustments in the fashion industry.
