Apparel brands and retailers are being warned to expect further hiccups across supply chains and increased costs as logistics provider Maersk says it will be avoiding the Red Sea route for the foreseeable future.

Maersk has updated its customers and warns the effects of the situation in the Red Sea are “widening and continuing to cause industry-wide disruptions”.

In its update, Maersk said it is rerouting around the Cape of Good Hope “for the foreseeable future.”

It added “the risk zone has expanded, and attacks are reaching further offshore. This has forced our vessels to lengthen their journey further, resulting in additional time and costs to get your cargo to its destination for the time being.”

Maersk explained the situation is creating bottlenecks and vessel bunching, as well as delays and equipment and capacity shortages.

“We estimate an industry-wide capacity loss of 15-20% on the Far East to North Europe and Mediterranean market during Q2.”

Global apparel sector remains on red alert

Though the Red Sea disruption will impact several industries, European apparel brands and retailers reliant on Asia for supply are expected to be hit particularly badly.

Country * UK   USA   Afghanistan   Åland Islands   Albania   Algeria   American Samoa   Andorra   Angola   Anguilla   Antarctica   Antigua and Barbuda   Argentina   Armenia   Aruba   Australia   Austria   Azerbaijan   Bahamas   Bahrain   Bangladesh   Barbados   Belarus   Belgium   Belize   Benin   Bermuda   Bhutan   Bolivia   Bonaire, Sint Eustatius and Saba   Bosnia and Herzegovina Botswana   Bouvet Island   Brazil   British Indian Ocean Territory   Brunei Darussalam   Bulgaria   Burkina Faso   Burundi   Cambodia   Cameroon   Canada   Cape Verde   Cayman Islands   Central African Republic Chad   Chile   China   Christmas Island   Cocos Islands   Colombia   Comoros   Congo   Democratic Republic of the Congo   Cook Islands   Costa Rica   Côte d"Ivoire   Croatia   Cuba   Curaçao   Cyprus   Czech Republic   Denmark   Djibouti   Dominica   Dominican Republic   Ecuador   Egypt   El Salvador   Equatorial Guinea   Eritrea   Estonia   Ethiopia   Falkland Islands   Faroe Islands   Fiji   Finland   France   French Guiana   French Polynesia   French Southern Territories Gabon   Gambia   Georgia   Germany   Ghana   Gibraltar   Greece   Greenland   Grenada   Guadeloupe   Guam   Guatemala   Guernsey   Guinea   Guinea-Bissau   Guyana   Haiti   Heard Island and McDonald Islands Holy See   Honduras   Hong Kong   Hungary   Iceland   India   Indonesia   Iran   Iraq   Ireland   Isle of Man   Israel   Italy   Jamaica   Japan   Jersey   Jordan   Kazakhstan   Kenya   Kiribati   North Korea   South Korea   Kuwait   Kyrgyzstan   Lao   Latvia   Lebanon   Lesotho   Liberia   Libyan Arab Jamahiriya Liechtenstein   Lithuania   Luxembourg   Macao   Macedonia, The Former Yugoslav Republic of   Madagascar   Malawi   Malaysia   Maldives   Mali   Malta   Marshall Islands   Martinique   Mauritania   Mauritius   Mayotte   Mexico   Micronesia   Moldova   Monaco   Mongolia   Montenegro   Montserrat   Morocco   Mozambique   Myanmar   Namibia   Nauru   Nepal   Netherlands   New Caledonia   New Zealand   Nicaragua   Niger   Nigeria   Niue   Norfolk Island   Northern Mariana Islands Norway   Oman   Pakistan   Palau   Palestinian Territory   Panama   Papua New Guinea   Paraguay   Peru   Philippines   Pitcairn   Poland   Portugal   Puerto Rico   Qatar   Réunion   Romania   Russian Federation   Rwanda   Saint Helena, Ascension and Tristan da Cunha   Saint Kitts and Nevis   Saint Lucia   Saint Pierre and Miquelon Saint Vincent and The Grenadines Samoa   San Marino   Sao Tome and Principe   Saudi Arabia   Senegal   Serbia   Seychelles   Sierra Leone   Singapore   Slovakia   Slovenia   Solomon Islands   Somalia   South Africa   South Georgia and The South Sandwich Islands   Spain   Sri Lanka   Sudan   Suriname   Svalbard and Jan Mayen Swaziland   Sweden   Switzerland   Syrian Arab Republic   Taiwan   Tajikistan   Tanzania   Thailand   Timor-Leste   Togo   Tokelau   Tonga   Trinidad and Tobago   Tunisia   Turkey   Turkmenistan   Turks and Caicos Islands Tuvalu   Uganda   Ukraine   United Arab Emirates   US Minor Outlying Islands Uruguay   Uzbekistan   Vanuatu   Venezuela   Vietnam   British Virgin Islands US Virgin Islands   Wallis and Futuna   Western Sahara   Yemen   Zambia   Zimbabwe   Kosovo  

Industry *   Academia & Education   Aerospace, Defense & Security   Agriculture   Asset Management   Automotive   Banking & Payments   Chemicals   Construction   Consumer   Foodservice   Government, trade bodies and NGOs   Health & Fitness   Hospitals & Healthcare HR, Staffing & Recruitment   Insurance   Investment Banking   Legal Services   Management Consulting   Marketing & Advertising Media & Publishing   Medical Devices   Mining   Oil & Gas   Packaging   Pharmaceuticals   Power & Utilities   Private Equity   Real Estate   Retail   Sport   Technology   Telecom   Transportation & Logistics   Travel, Tourism & Hospitality   Venture Capital  

Tick here to opt out of curated industry news, reports, and event updates from Just Style.  

Submit and download

Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

According to S&P Global Market Intelligence, shipments from Asia by sea that may need to use the Suez or Panama Canals accounted for 51.0% of EU imports of apparel and footwear in the 12-months to 30 November 2023.

While a report from the British Chambers of Commerce, which surveyed 1,087 businesses found some firms saw a 300% hike in prices for container hire, and others experienced logistical delays that added up to three to four weeks to delivery times.

At least half of UK manufacturers and retailers are impacted by the disruption.

Speaking to Just Style, Bob Antoshak, partner at textile management consulting and engineering company, Gherzi Textil Organisation explained costs will rise, and delivery times will be lengthened. The slower pace of deliveries will also affect product roll-outs and sourcing times.

In a recent blog post, Chris Rogers of S&P Global Market Intelligence said: “The seasonality of apparel supply chains means delays will become a bigger factor during the July to September peak season for sales running from back-to-school to Black Friday. Given shipping times that are normally of around five to six weeks have likely increased to at least eight weeks, that would suggest winter peak season shipments need to leave Asian ports from mid-May 2024, requiring purchase and production decisions to be made in April at the latest.”

“Options to tackle the higher costs, delays and uncertainty include absorbing the costs against earnings, changing transportation routes or modes, carrying more inventories, and altering sourcing practices. Comments from other consumer goods industries suggest firms may be willing to offset higher shipping expenses against reduced costs elsewhere.”

What should apparel brands and retailers do to mitigate disruption?

For a while now – in fact since the great pandemic of 2020 – there has been a lot of talk in the apparel sector about diversifying supply chains, specifically out of China.

The most recent events around the Red Sea crisis disrupting supply suggest that shift needs to be accelerated, according to apparel and retail trade organisations.

Maersk has added capacity where possible, leasing an additional 125,000 additional containers.

The surcharges on customer invoices reflect this and the shipping firm explains these are to offset the costs of the longer journeys, increased sailing speed, and additional fuel costs.

It is using 40% more fuel per journey and charter rates are currently three times higher and are often fixed for five years.

The American Apparel & Footwear Association (AAFA)’s SVP of policy Nate Herman noted members have “long been concerned” by growing risks to shipping in the Red Sea, particularly the knock-on effects that extend globally.

“Such adverse impacts unacceptably put sailors lives in danger, and come at a time when we are counting on smooth and cost-effective logistics routes to support renewed demand for our products.”

Meanwhile National Retail Federation (NRF) VP of supply chain and customs policy Jonathan Gold said its members are working closely with their product suppliers and transportation partners to address ongoing supply chain disruptions.

“Retailers continue to seek alternative solutions to mitigate any impacts from the Red Sea disruptions.”

Among the ideas for switching sourcing strategies that can help apparel brands and retailers mitigate supply disruptions are boosting inventories and diversifying supplies but Rogers warned these can add costs and leave them out of favour in a high-cost environment.

Dr Sheng Lu, professor of apparel studies at the University of Delaware, agreed: “The escalation of the Red Sea crisis will continue to raise shipping and insurance costs, delay shipments and squeeze fashion companies and manufacturers’ margins. The crisis has also negatively affected the global used clothing and recycling business, as substantial trade volumes passed through the area.

“While strategies such as diversifying sourcing base and using more air shipping may potentially mitigate the impact, none of these alternatives is cheap and perfect. Ending the Red Sea crisis remains the most critical and essential.”

But Antoshak shared it may be that retailers and brands are left with little option but to diversify in the short term at least: “In turn, the longer these disruptions remain and shipping is adversely impacted, the more likely brands and retailers will have to locate alternative sources of supply to augment their Asian shipments. Diversification of sourcing will become more important, particularly if shipping remains uncertain and costs continue to rise.”

By Just Style