Bangladesh And Other Countries Orders Back To China? How Big Is The Impact Of The Red Sea Crisis On China's Textile And Garment Import And Export

As a result of the recent Red Sea-Suez Canal crisis, textile and apparel exporting countries, including those in Asia, now face the additional hurdle of significantly higher freight costs. These countries had expected a better outlook for 2024, but the recent crisis could prolong the slowdown in apparel and textile exports because of the higher cost of shipping goods to their main market, Europe.
The Red Sea situation has brought unprecedented challenges to global textile and apparel imports and exports, with some buyers in Bangladesh now starting to cancel orders, Indian exporters are worried about new orders from major buyers in Europe and the U.S., and spinners relying on imported raw materials for linen are faced with increased raw material costs. So, China's textile and garment import and export and how much will be affected?

1. Buyers began to cancel orders
According to "Business Standard" recently reported that due to the Red Sea crisis, shipping companies to reroute as a reason for the imposition of surcharges, from Bangladesh to Europe and the United States of America's container transport costs have risen by at least 40%, and the future may rise by another 20% to 25%, a number of buyers have begun to cancel the order, the future may be in the global cause of a new round of container shortages.
Bangladesh Garment Manufacturers and Exporters Association Chairman Farooq Hasan said that some buyers have already asked to deliver goods by air, and the Red Sea conflict has already increased the cost of freight transport, which will affect imports and exports if not resolved immediately. It is learnt that about 70 per cent of Bangladesh's exports are shipped through the Red Sea to two major markets, Europe and the US.

2. It is not easy to increase the price of commodities
In addition, Indian garment and textile exporters are concerned about negotiating with buyers to adjust to the increase in freight rates for FOB goods. They are worried about new orders and pricing of commodities. An exporter from Punjab commented that market conditions remain bearish, which means that buyers may not be willing to accept higher prices in the event of a freight hike, and exporters are not in a position to accept more pressure on their margins due to stabilisation of commodity prices.
Overall, apparel and textile exporters, mainly in Asia, are concerned about new orders from their main buyers, Europe and the United States. The Red Sea-Suez Canal is an important route for them to transport their goods and there is concern that freight rates may not return to normal levels even after the crisis subsides in the coming months.

3. Increase in raw material import costs
The tensions in the Red Sea region have led to a sharp rise in global shipping costs have also posed a huge challenge to spinners who rely on imported raw materials for linen. First, the sharp rise in freight rates directly affect the price of linen raw materials imported from Western Europe and Egypt and other major sources to the world. For spinners, this means facing a significant increase in the cost of raw materials, thereby affecting the cost of products and market competitiveness.
Secondly, the prolonged transport time and uncertainty to the spinning mill's supply chain management has brought serious challenges. The instability of the supply of raw materials for flax may lead to delays in the delivery of orders, the production plan is blocked, and may even lead to work stoppages. In this case taking into account the current market conditions, flax spinning mills should consider actively sourcing domestic spot flax raw materials to avoid greater risks in the future.