As global trade recovers from COVID-19, apparel sourcing – the garment supply chain – still faces a barrage of challenges: demand instability, logistics gridlocks, increasing costs, and more.
And it’s clear that supply-chain disruptions—in particular, the price of shipping and raw materials and strains on capacity—are here to stay, 71 percent of apparel and fashion brands are planning to surge their nearshoring share by 2025, says the latest report by McKinsey & Company.
In order to attain speed and flexibility, 50% of brands have started a major transition.
“Harbor shutdowns, port congestion, container shortages, and capacity challenges in the sea and air freight are putting the fashion sector under huge strain,” says Karl-Hendrik Magnus, Senior Partner, McKinsey in Germany, who leads the Apparel, Fashion & Luxury practice. For the first time, delivery delays are becoming the most important pricing factor.”
The largest cause, according to 82 percent of sourcing executives polled, is rising freight prices. Only 21% think increased labor costs in source nations are a significant driver, compared to the prior top drivers.