Buy Fabric Fabric News Are orders from Bangladesh and other countries returning to China? How much impact does the Red Sea crisis have on my country’s textile and clothing imports and exports?

Are orders from Bangladesh and other countries returning to China? How much impact does the Red Sea crisis have on my country’s textile and clothing imports and exports?



Textile and apparel exporting countries, including those in Asia, now face the additional hurdle of significantly higher freight rates due to the recent Red Sea-Suez Canal crisis. …

Textile and apparel exporting countries, including those in Asia, now face the additional hurdle of significantly higher freight rates due to the recent Red Sea-Suez Canal crisis. The countries had expected better prospects in 2024, but the recent crisis may prolong the slowdown in apparel and textile exports as goods cost more to ship to their main market, Europe.

The Red Sea situation has brought unprecedented challenges to global textile and apparel imports and exports. Some buyers in Bangladesh have begun to cancel orders. Indian exporters are also worried about new orders from major buyers Europe and the United States, and rely on imported linen. Raw material spinning mills are faced with the dilemma of increasing raw material costs. So, how much impact will my country’s textile and clothing imports and exports have?

Global textile and apparel import and export are facing challenges

A cargo ship travels on the Suez Canal in Ismailia Governorate, Egypt. Source: Xinhua News Agency

Buyers start canceling orders

According to a recent report by Business Standard, due to the Red Sea crisis, shipping companies have imposed surcharges on the grounds of diversion. Container transportation costs from Bangladesh to Europe and the United States have increased by at least 40%, and may rise by another 20% to 25% in the future. %, some buyers have begun to cancel orders, which may cause a new round of container shortages globally in the future.

Farooq Hassan, chairman of the Bangladesh Garment Manufacturers and Exporters Association, said that some buyers have requested goods to be shipped by air. The Red Sea conflict has increased freight costs and will affect imports and exports if not resolved immediately. It is reported that about 70% of Bangladesh’s exports are shipped to the two main markets of Europe and the United States through the Red Sea.

It is not easy to increase the price of goods

In addition, Indian garment and textile exporters expressed concerns about negotiating with buyers to adjust rising freight rates for offshore cargo. They worry about new orders and pricing of goods. An exporter from Punjab commented that market conditions remain bearish, which means buyers may not be willing to accept higher prices amid rising freight costs, while exporters may not be able to accept more margins as commodity prices are stable pressure.

Overall, apparel and textile exporters, mainly in Asia, are worried about new orders from major buyers Europe and the United States. The Red Sea-Suez Canal is a vital passage for them to transport goods, and there are concerns that freight rates may not return to normal levels even after the crisis subsides in the coming months.

Increase in raw material import costs

Tensions in the Red Sea region have led to a sharp rise in global shipping costs, which also poses a huge challenge to spinning mills that rely on imported flax raw materials. First, the sharp increase in freight costs has directly affected the price of flax raw materials imported from major producing areas such as Western Europe and Egypt to the world. For spinning mills, this means facing a significant increase in raw material costs, which affects the cost and market competitiveness of products.

Second, the extension and uncertainty of transportation time have brought serious challenges to the supply chain management of spinning mills. Unstable supply of flax raw materials may lead to delays in order delivery, disruption to production plans, and may even lead to production shutdowns. In this case, taking into account the current market conditions, flax spinning mills should consider actively purchasing domestic spot flax raw materials to avoid greater risks in the future.

How much impact will it have on our country?

As for my country’s textile and clothing import and export, the industry generally believes that the impact of the Red Sea crisis on my country’s cotton and cotton textile industry is “short-term and long-term”, and there is limited optimism. The reasons are as follows:

Some orders from Bangladesh and other countries are returning to China

The Red Sea crisis not only caused a great impact on the export of textiles and clothing from Southeast Asian and South Asian countries to Europe, but also reduced the volume of Brazilian, American cotton, African cotton, etc. purchased by some countries in Hong Kong. As a direct result, clothing companies in Europe, the United States and other countries , retailers place orders directly to Chinese processing companies. Some export orders from Bangladesh, Indonesia and other countries also had to be returned to China due to raw material problems and transportation problems. For export companies in Southeast Asia and South Asia, if they go around the Cape of Good Hope, not only will freight prices rise sharply and profits will drop significantly, but there will also be great uncertainty in delivery time.

The European market’s proportion of my country’s exports continues to decline

Although the Red Sea crisis has also had a certain impact on China’s textile and clothing exports to Europe (the routes in Europe and the Middle East have already experienced empty flights), but…On the one hand, China-Europe freight trains are a strong substitute for sea transport. The space on China-Europe freight trains has been fully booked in advance, and freight rates in January have increased by 10-20% month-on-month. On the other hand, the proportion of the European market in my country’s textile and clothing exports continues to decline. (Accounting for 14.4% in 2022, from January to October 2023, my country’s cotton knitted and woven clothing to the EU dropped by 30.9% and 20.7% respectively).

Overall, since my country will roll out more than 880,000 tons of cotton reserves in 2023 (imported cotton accounts for a large proportion), and the port cotton inventory is sufficient (US cotton and Brazilian cotton transportation are not significantly affected by the Red Sea crisis), domestic cotton, The supply of imported cotton is sufficient, and there is sufficient confidence to accept export orders (including traceability orders).

The medium to long term is not conducive to my country’s cotton consumption and cotton textile and apparel exports

The Red Sea crisis has led to container shortages and port congestion. The shortage of empty containers may spread to Asian ports as soon as mid- to late January. Empty containers needed for China’s export peak season may be trapped elsewhere, which will affect textile and clothing exports, cotton The supply of imported containers is insufficient, and ships in Asia will also face the challenge of having no containers available.

Affected by tensions in the Red Sea region, freight rates in North American routes, Persian Gulf routes and other markets will continue to rise across the board, and the costs of my country’s textile and clothing exports and cotton imports will rise. The China-Europe freight trains only temporarily serve as an alternative to the Red Sea route, and the carrying capacity is still not comparable to that of sea transport.

At present, the January and February cabins have been fully booked by European customers in advance, but at the same time, it has restricted the export demand of textiles and clothing to other countries and regions, making it more difficult to fulfill contracts.


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