Climate change is exacerbating fashion supply chain challenges

Monsoon rains began in June. By the end of the summer, vast areas of Pakistan were completely flooded. More than 1,500 people died as a result of the devastating floods, and hundreds of thousands of people were left homeless. Water has started receding in the worst-hit southern province of Sindh this week, officials said.

The disaster wiped out crops across the country, dealing a critical economic blow to the world’s fifth-largest cotton producer and a major textile producer. Almost half of the country’s cotton fields have been washed away, Planning Minister told reporters.

The situation in Pakistan is the deadliest in a wave of extreme weather conditions linked to climate change, contributing to extreme volatility in fashion supply chains. for now cotton is at the epicenter of upheavals.

“With climate conditions becoming more volatile, there is a serious risk to cotton supplies,” said an expert at Textile Exchange, a non-profit organization focused on sustainable fiber.

In India, the world’s largest producer of cotton, rainfall and pests have caused supply to fall so much that the country has had to turn to imports. In the United States and Brazil—the world’s third and fourth largest producers of cotton, respectively—drought has devastated crops.

The problems are not only related to climate change. The US law, which took effect this summer, strengthened a ban on imports from China’s cotton-producing region of Xinjiang.

India, China, Pakistan, Brazil and the United States together make up the top five cotton producers. The convergence of problems in each region means unprecedented disruption for the textile industry.

Preparing for the Unknown
According to the Fontoura Textile Exchange, the shortage will not be felt until 2024.

But retailers can prepare today by stocking up early, strengthening relationships with suppliers, using data to better forecast demand, and investing in the circular economy to reduce reliance on new manufacturing. This is happening throughout the supply chain, where the forces hitting cotton are part of a wider climate of uncertainty.

For example, Inditex, the owner of Zara, told analysts on an earnings call on Wednesday that it would temporarily ramp up production to mitigate possible supply chain disruptions in the next six months.

The Chief executive did not specify a specific segment in the supply chain, but said the decision involves manufacturing in Asia, the Financial Times reported.

In the case of cotton, experts do not yet know the full impact of this summer’s climate disasters or restrictions on imports from China. The European Union offered its own ban on products produced under duress work this week.

Broader global instability is contributing to the climate of uncertainty. Fluctuations in oil prices as a result of Russia’s invasion of Ukraine, for example, kept demand for polyester low. This could in turn put more pressure on demand for cotton during a period of tight supply.

However, there are ways to account for the unknown. Using data analytics to better plan and manage inventory is one solution, but a product that can predict the future on all fronts of the supply chain does not exist yet.

“Improving flexibility and maneuverability should be a priority this year,” said the assistant professor of fashion and apparel at the University of Delaware.

The University of Delaware recommends, for example, cultivating strong relationships with suppliers and vendors so that even in the event of disruptions, brands can count on their partners to be able to handle them.

“In the long term, it’s about making the industry more sustainable,” the University of Delaware said.

Source: The Business of Fashion; Industry Update

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