Two years of Covid have disrupted logistics for the fashion & luxury supply chain. The war crisis in Ukraine, which erupted at the end of February 2022, had further turned it into a worrying and critical puzzle that is unlikely, when put back together, to be similar to when the world was entirely different. This is why
Browsing through children’s books, we often find games and exercises in which one figure has to be connected to the next one in a sequential manner using a pencil. This result is winding paths intersecting with each other, all wrong except one. The right one, of course. The same game, or rather the same strenuous exercise, has challenged company managers dealing with supply chains for two years. They discover and choose the fastest and cheapest way to get goods produced in Country B to Destination A. A process that Covid has turned into a complex and expensive puzzle. And since 24 February 2022, the day the conflict in Ukraine broke out, it has reached further critical peaks. So what is happening to the international logistics puzzle of the fashion and luxury industry?
The international logistics conundrum
In the light of these dramatic emergencies, the industry has been forced to find different solutions. In 2021, the coagulation of sea and air transport from Asia to Europe due to Covid, companies, and brands have launched a Plan B, turning to rail transport. To give an order of magnitude, as Brinknews reports, rail operators last year ran more than 1,200 goods trains a month between China and Europe, carrying nearly 1.5 million containers. Attention: many of these trade routes involved transit through Russia, Ukraine, and Belarus. These routes are now impracticable. And air transport has become considerably more expensive as companies have to bypass the Russian skies.
Looking for a Plan C
We need a Plan C. We need it fast because containerised maritime transport is still plagued by port congestion, shipping delays, and container shortages. The result: long delays and record rates for any transportation. Even worse is the situation for raw materials and foodstuffs, for which Russia and Ukraine were not just transit routes but a source of production and, therefore, of exports. As if that were not enough, outbreaks of contagion are occurring in China and Vietnam, which could further complicate the puzzle of international logistics.
The price of absolute interconnection
All this has highlighted the great weakness of a system that (seemed) perfect. Faced with crises of this dramatic nature, the deep interdependencies and vulnerabilities inherent in globalised supply chains are (almost) turning into vices. This is leading companies around the world to rethink their procurement strategies. They are moving towards reshoring or near-shoring solutions and towards Just-in-Case instead of Just-in-Time.
Reconfiguring the supply chain
However, reconfiguring the supply chain takes time, costs and should not interfere with, let alone slow down, business. Everything needs to be reconsidered because of where raw materials are going, where suppliers are coming from, and with the knowledge, that industry alone will not be able to meet many of the current challenges. Governments will have to get involved with investments in ports, airports and other infrastructure, just as in the US. The final result: in 2025, the supply chain of many companies will be different from what it is today. Significantly different. (mas.vi.)