Blog: Leonie BarriePort disruption could cost $37bn over two years

Leonie Barrie | 20 February 2015

As the threat of a US West Coast port shutdown looms, analysts already estimate the ongoing disruption could add an eye-watering US$36.9bn to costs over the next 24 months. And retailers are being advised they must investigate new supply chain options, including more near- and on-shoring.

Denim giant Levi Strauss & Co says the “volatile” and “unpredictable” port delays could adversely affect its supply chain and product availability if they continue. While the disruption has not yet had an impact on its business, the company has contingency plans in place such as air freight, diverting shipments, and/or transiting product for early deliveries.

Changes taking place in global supply and demand are also putting pressure on the apparel industry to rethink its supply chain, according to speakers at the World Sports Forum. Sourcing trends, updates on emerging markets, and demographic changes likely to impact the sector in coming decades were all discussed.

The potential Trans-Pacific Partnership (TPP) trade deal could reshape the industry, new research suggests, although the extent of any benefits will depend on the fine print of the agreement. While Vietnam’s apparel sector would receive a major boost, the negative effects on other apparel manufacturing countries could reverberate well beyond Asia.

The UK textile and clothing industry is worth nearly GBP9bn (US$13.71bn) to the country’s economy and is experiencing year-on-year export and domestic growth, according to a new report. But while some 20,000 new jobs could be created by 2020, it also acknowledges that barriers to further growth remain.

And growing pressure from activists and governments to make Western laws apply to alleged non-compliance in developing country garment factories could instead mean that countries will simply be blacklisted with no effort to improve standards.

And in other news on just-style last week, around 2,000 workers from five Myanmar garment factories took part in strike action calling for higher salaries and better working conditions. Wearable technology was identified as a likely avenue for Under Armour over the next two to four years. And the US challenged the Chinese Government over its extensive export subsidy programme, which benefits manufacturers of a number of products including textiles, apparel and footwear.

We’ve also teamed up with global garment industry expert David Birnbaum who’s agreed to share his advice and opinions on any industry-related questions submitted by just-style readers. Maybe there’s a topic you’d like to learn more about, or a strategic issue that’s affecting your own business. It might be to do with a specific country, a specific product, or a wider sourcing and supply chain concern. Please click here to email me and I’ll pass the message on.

To get the ball rolling, we’re kicking off with David’s feedback on operating a small and medium size factory in an industry dominated by multi-national giants.

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