War on Iran is about to make clothes more expensive. Here’s why

People shop for clothes at a market in Jakarta, Indonesia, on March 16.

Photo: EPA Planning to update your wardrobe this summer?

Industry insiders have some advice: do it soon.

By the time autumn collections hit the racks, the aftershocks of war on Iran may have quietly picked your pocket.

Clothing manufacturers and industry analysts are warning consumers to budget for price increases of 10 to 15 per cent as South Asia’s US$50 billion garment export industry reels from a cascade of war-driven shocks.

Iran’s blockade of the Strait of Hormuz has choked natural gas supplies to the subcontinent, sending power bills rocketing for the factories that stitch together much of what the world wears.

Workers make clothing in the sewing section of a garment factory in Gazipur, Bangladesh.

Photo: Reuters Meanwhile, Iranian drone and missile attacks targeting Gulf airports, Dubai’s in particular, have pushed air freight rates for fast-fashion orders up by as much as 70 per cent, making the route, in the words of one analyst, “far less viable”.

The full pain has yet to reach shoppers.

Orders placed months ago at fixed prices mean South Asian manufacturers are currently absorbing much of the higher energy and logistics costs themselves.

But that buffer is finite and once current inventories are depleted, price rises will follow.

Before the war, Gulf petrochemical plants were South Asia’s primary source of the raw materials used to make synthetic fibres – polyester, nylon and acrylic – that nearly two-thirds of clothing manufactured worldwide contain.

Yet the subcontinent’s garment factories can no longer easily obtain the petrochemical feedstocks derived from fossil fuels like crude oil and natural gas that go into creating these man-made materials.

Lahore-based manufacturer Cotton Web, which produces some 1.2 million garments a year for Western brands, hedges against swings in yarn and fabric costs, but rising utility and transport bills are a different matter entirely. “Not only do we fear loss of [profit] margin on the already placed orders for autumn-winter, this will put us in a difficult position as compared to other regional peers with more stable logistics for next season,” said company CEO Waseem Akhtar Khan, a former chairman of the Pakistan Readymade Garments Manufacturers and Exporters Association.

How much of the increased costs are passed onto customers, and how fast, depends largely on where a brand sits in the market.

Customers shop for cloth

原文链接: 南华早报