The disturbance of geopolitical conflicts on the supply chain of fabric trade is like putting an “obstruction factor” into the originally smooth blood vessels of global trade, and its impact penetrates into multiple dimensions such as transportation, cost, timeliness, and corporate operations.
1. “Breakage and detour” of transportation routes: Looking at the chain reaction of routes from the Red Sea crisis
The fabric trade is highly dependent on maritime transportation, especially the key routes connecting Asia, Europe, and Africa. Taking the Red Sea crisis as an example, as the “throat” of global shipping, the Red Sea and the Suez Canal bear about 12% of the world’s trade transportation volume, and are also the core channels for Asian fabric exports to Europe and Africa. The tense situation in the Red Sea caused by the escalation of the conflict between Russia and Ukraine and the intensification of the conflict between Lebanon and Israel has directly led to a surge in the risk of merchant ships being attacked. Since 2024, more than 30 merchant ships in the Red Sea have been attacked by drones or missiles. In order to avoid risks, many international shipping giants (such as Maersk and Mediterranean Shipping) have announced the suspension of the Red Sea route and chose to detour around the Cape of Good Hope in Africa.
The impact of this “detour” on the fabric trade is immediate: the original voyage from China’s Yangtze River Delta and Pearl River Delta ports to the European Port of Rotterdam via the Suez Canal took about 30 days, but after detouring the Cape of Good Hope, the voyage was extended to 45-50 days, increasing the transportation time by nearly 50%. For fabrics with strong seasonality (such as light cotton and linen in summer and warm knitted fabrics in winter), time delays may directly miss the peak sales season – for example, European clothing brands originally planned to receive Asian fabrics and start production in December 2024 in preparation for new products in spring 2025. If the delivery is delayed until February 2025, the golden sales period of March-April will be missed, resulting in order cancellations or discounts.
2. Soaring costs: chain pressure from freight to inventory
The direct consequence of the route adjustment is a surge in transportation costs. In December 2024, the freight rate for a 40-foot container from China to Europe soared from about $1,500 before the Red Sea crisis to more than $4,500, an increase of 200%; at the same time, the increased voyage distance caused by the detour led to a decrease in ship turnover, and the global capacity shortage further pushed up freight rates. For the fabric trade, which has a low profit margin (the average profit margin is about 5%-8%), the surge in freight costs directly squeezed the profit margin – a fabric export company in Shaoxing, Zhejiang, calculated that the freight cost of a batch of cotton fabrics shipped to Germany in January 2025 increased by 280,000 yuan compared with the same period in 2024, equivalent to 60% of the profit of the order.
In addition to direct freight, indirect costs also rose simultaneously. In order to cope with transportation delays, fabric companies have to prepare in advance, resulting in inventory backlogs: in the fourth quarter of 2024, the inventory turnover days of fabrics in major textile clusters in China will be extended from 35 days to 52 days, and inventory costs (such as storage fees and interest on capital occupation) will increase by about 15%. In addition, some fabrics (such as high-end silk and stretch fabrics) have strict requirements on the storage environment. Long-term inventory may cause fabric discoloration and elasticity reduction, further increasing the risk of loss.
3. Supply chain disruption risk: “butterfly effect” from raw materials to production
Geopolitical conflicts may also trigger chain disruptions in the upstream and downstream of the fabric industry chain. For example, Europe is an important production base for chemical fiber raw materials (such as polyester and nylon). The conflict between Russia and Ukraine has caused fluctuations in European energy prices, and some chemical plants have reduced or stopped production. In 2024, the output of polyester staple fibers in Europe will fall by 12% year-on-year, pushing up the price of global chemical fiber raw materials, which in turn affects the cost of fabric production companies that rely on this raw material.
At the same time, the “multi-link collaboration” characteristics of fabric trade make it extremely demanding on the stability of the supply chain. A piece of printed cotton cloth exported to the United States may need to import cotton yarn from India, dye and print in China, and then be processed into fabric in Southeast Asia, and finally transported through the Red Sea route. If a link is blocked by geopolitical conflicts (such as the export of Indian cotton yarn is restricted due to political turmoil), the entire production chain will stagnate. In 2024, the cotton yarn export ban in some Indian states caused many Chinese printing and dyeing companies to stop production due to raw material shortages, and the order delivery delay rate exceeded 30%. As a result, some overseas customers turned to alternative suppliers such as Bangladesh and Vietnam, resulting in long-term customer loss.
4. Corporate Strategy Adjustment: From Passive Response to Active Reconstruction
Faced with the supply chain disturbances caused by geopolitics, fabric trading companies are forced to adjust their strategies:
Diversified transportation methods: Some companies increase the proportion of China-Europe trains and air transport. For example, the number of China-Europe trains for textile fabrics from China to Europe in 2024 will increase by 40% year-on-year, but the cost of railway transportation is three times that of sea transportation, which is only applicable to high value-added fabrics (such as silk and functional sports fabrics);
Localized procurement: Increase investment in the domestic raw material supply chain, such as increasing the utilization rate of local raw materials such as Xinjiang long-staple cotton and Sichuan bamboo fiber, and reducing dependence on imported raw materials;
Layout of overseas warehouses: Set up forward warehouses in Southeast Asia and Europe, reserve commonly used fabric varieties in advance, and shorten delivery cycles – At the beginning of 2025, a fabric company in Zhejiang has reserved 2 million yards of cotton cloth in its overseas warehouse in Vietnam, which can quickly respond to urgent orders from Southeast Asian clothing factories.
In general, geopolitical conflicts have profoundly affected the stability of fabric trade by disrupting transportation routes, pushing up costs, and breaking supply chains. For enterprises, this is both a challenge and a force for the industry to accelerate its transformation towards “flexibility, localization, and diversification” in order to withstand the impact of global uncertainties.
Post time: Jul-26-2025