Reuters :
Fashion brands like Benetton are increasingly turning away from globe-spanning supply chains and low-cost manufacturing hubs in Asia, in a shift that could prove a lasting legacy of the COVID-19 pandemic.
Italy’s Benetton is bringing production closer to home, boosting manufacturing in Serbia, Croatia, Turkey, Tunisia and Egypt, with the aim of halving production in Asia from the end of 2022, Chief Executive Massimo Renon told Reuters.
Renon gave an insight into the economics driving a trend affecting much of the industry as strained supply lines have driven up shipping costs and times, undermining a business model that’s proved popular for the past 30 years. “It’s a strategic decision to have more control on the production process and also on transport costs,” he said, adding the group had already shifted more than 10 percent of output out of countries like Bangladesh, Vietnam, China and India this year.
“Today a shipping container that used to cost $1,200-1,500 can cost $10,000-15,000, with no certainty of a delivery date.”
The tenfold jump in sea freight costs has been driven by a scarcity of available vessels, as many were idled during the pandemic, coupled with rebounding consumer demand, said Renon, whose company makes most of its sales in Europe but has shifted production to lower-wage countries since the early 2000s.
This shipping quandary is roiling several companies in the clothes, and wider consumer, industry. Hugo Boss is also looking to bring manufacturing operations closer to its markets, for example, while more immediately Lululemon, Gap and Kohl’s say they’ll rely more heavily on far costlier air freight to avoid running out of stock during the holiday season.
