Shipments of clothing from Bangladesh are a source of concern due to the intensifying tensions between Iran and Israel. The ongoing crisis in the Red Sea and the Gaza conflict are already putting further stress on the world supply chain.
Local apparel exporters worry that if the tensions escalate into a full-fledged conflict, operating expenses will increase significantly. This is because increased shipping costs and disruptions to Middle Eastern oil transportation could lead to a jump in global petroleum prices.
Providers are already being requested to fulfill orders as swiftly as possible since purchasers have been extending the time to transport products by an additional 15 days since the Red Sea crisis in October.
Prior to the Red Sea crisis, which had an impact on the Suez Canal, which links Asia and Europe, becoming the focal point of global turmoil, it normally took thirty days to carry goods from Chattogram to European ports.
Due to the strain, carriers were forced to reroute ships around the Cape of Good Hope in South Africa. This resulted in an extra 3,500 kilometers of travel and higher operating costs, which may cause delays of up to three weeks.
In order to prevent supply chain interruptions, a number of apparel retailers and brands are also near-shoring—that is, moving some of their orders from Bangladesh to Turkey or Vietnam.
The main sector in Bangladesh that generates foreign cash is attempting to recover from the devastation caused by the Covid-19 outbreak and the Russia-Ukraine war at the same time as the absence of orders.
Because many businesses compete in the same markets, having a shorter lead time has become essential for countries looking to boost their competitiveness in the world apparel industry.
According to exporters, international companies not only cover the cost of transportation but also absorb any additional expenses by passing the cost on to suppliers directly or indirectly.
Since they trade using the freight-on-board technique, buyers pay the freight fee in over 95% of situations. When trading under the freight-on-cost system, suppliers are responsible for fewer than 5% of shipments.
