Talking strategy: apparel supply chains hit by perfect storm as costs rise on multiple fronts
Description
Talking strategy: apparel supply chains hit by perfect storm as costs rise on multiple fronts
Global apparel supply chains are under pressure. Finished goods have been taking longer to reach their destinations as shortages of containers and outbreaks of COVID-19 have halted operations and caused delays at ports. Prices of cotton and other textile materials are rising, energy costs are soaring and costs of freight are escalating. Moreover, the passing into US law of the Uyghur Forced Labor Prevention Act (UFLPA) in December 2021 places the onus on importing companies to ensure that “goods mined, produced, or manufactured wholly or in part with forced labour … are not imported into the United States”. The Act was signed following allegations that Uyghur Muslims were being subjected to serious human rights abuses in Xinjiang province, China, and companies seeking to continue importing goods made in Xinjiang must provide “clear and convincing evidence” that the goods were not manufactured with forced labour. As such, the Act shifts the burden of proof away from customs officials. In order to ensure compliance with the Act, companies may be forced to introduce comprehensive supply chain mapping and intensify their due diligence processes if they wish to continue sourcing from the region. Reluctance by companies to do so could take a huge proportion of the world’s cotton supply off the market as Xinjiang province accounts for around 90% of the cotton produced in China and 20% of the cotton produced worldwide.
Global apparel supply chains are under pressure. Finished goods have been taking longer to reach their destinations as shortages of containers and outbreaks of COVID-19 have halted operations and caused delays at ports. Prices of cotton and other textile materials are rising, energy costs are soaring and costs of freight are escalating. Moreover, the passing into US law of the Uyghur Forced Labor Prevention Act (UFLPA) in December 2021 places the onus on importing companies to ensure that “goods mined, produced, or manufactured wholly or in part with forced labour … are not imported into the United States”. The Act was signed following allegations that Uyghur Muslims were being subjected to serious human rights abuses in Xinjiang province, China, and companies seeking to continue importing goods made in Xinjiang must provide “clear and convincing evidence” that the goods were not manufactured with forced labour. As such, the Act shifts the burden of proof away from customs officials. In order to ensure compliance with the Act, companies may be forced to introduce comprehensive supply chain mapping and intensify their due diligence processes if they wish to continue sourcing from the region. Reluctance by companies to do so could take a huge proportion of the world’s cotton supply off the market as Xinjiang province accounts for around 90% of the cotton produced in China and 20% of the cotton produced worldwide.
Table of Contents
6 Pages
- SETTING THE SCENE
- DELAYS AT PORTS
- RISING COSTS OF FIBRES AND OTHER TEXTILE MATERIALS
- IMPACT OF THE UYGHUR FORCED LABOR PREVENTION ACT(UFLPA)
Pricing
Currency Rates
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