The trend: War in the Middle East is upending the apparel supply chain, increasing both costs and uncertainty for manufacturers, brands, and retailers.

Rising costs: For manufacturers, rising crude oil prices have pushed up the cost of chemical fibers like polyester and acrylic by more than 10%, Chinese factory owners told Bloomberg. The volatility in crude costs is causing suppliers to adjust pricing once or twice per day, increasing the margin pressure on manufacturers already stretched thin by tariffs and China’s sluggish economy.

Those costs are likely to be pushed onto the consumer fairly soon.

• Two Shein suppliers told Bloomberg they are negotiating with the retailer to pay for roughly half the increase in chemical fiber prices for new orders.
• Huang Lun, a sales manager for a Guangzhou apparel company that sells in the US, said that price increases could be passed on within days.

Supply chain disruptions: The war is also disrupting companies’ ability to get products to customers. Garment shipments are piling up in airports across Bangladesh and India due to suspended operations in Dubai and other transit hubs, per Reuters. With few alternatives, companies must either accept skyrocketing air cargo costs—assuming they can secure a spot with the few airlines operating—or wait (and hope) for a lull in the conflict.

The upheaval will be most keenly felt by fast-fashion brands like H&M, Inditex, and Primark that depend on garment manufacturers in Bangladesh, India, and Pakistan for much of their inventory. Given that their businesses rely on timely shipments, any extended wait could result in lost sales or excess leftover inventory.

Implications for apparel brands and retailers: The events of the past six years—including the pandemic, tariffs, and now an expanding war in the Middle East—have made it clear that flexibility is a must for brands’ and retailers’ supply chains.

To minimize disruption, companies need to diversify their manufacturing bases and move their mindset from “just in time” to “just in case.” While stocking up on inventory earlier could reduce retailers’ ability to chase trends, potentially ending up with excess inventory is more preferable than having empty shelves.

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