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The impact of the container crisis on the textile industry

From 2020 onwards, the world has been plagued by events that caused significant complications for supply chains in many industries globally. Delayed shipments, inaccessible raw materials, and other supply chain mishaps are part of a new reality.

The gridlock in globalized supply chains has created a situation where a problem in one area is capable of triggering several additional problems for other sectors in the future. The textile supply chain has not been the exception to this logic, and it is facing important challenges.

From a supply chain perspective, the Covid-19 pandemic has created complications from day one. Initially, many shipments from the textile industry were redirected or stopped at ports because authorities were concerned about transmission of the virus through various items, including textiles.

Other distribution channels were fully booked as everyone urgently needed medical supplies, leading to delays and a large backlog of orders, putting textile supply chains under serious pressure everywhere. Following the initial wave of the virus, some countries have managed to recover slightly, while many others have not yet.

This discrepancy, coupled with a shortage of available containers, continues to create problems in the textile supply chain around the world. At Grupo Karim’s, the leading company in the textile sector, with a presence in Honduras, Guatemala, Mexico, and the United States, we keep a watchful eye on changes in the situation of trade and the textile industry.

The main challenges posed by the container crisis to the textile sector

Increasing bottlenecks globally have led to record container shipping rates. Today, the cost of shipping a 20-foot container from Asia to the United States has risen in some cases to more than $20,000. In addition to excessive costs, experts also point to the following challenges:

Raw material shortages: Rising barriers and climate-driven crises have dramatically affected the efficiency of supply chains and the sourcing of raw materials. The textile supply chain is not immune to such shortages.

Regulatory changes: As a consequence of the pandemic, many regulations have been approved to control the proliferation of contagion epicenters. For that reason, it is difficult and costly for companies in the textile sector to keep track of and comply with numerous regulations that are continuously updated.

Port congestion: The combined effect of these challenges has caused a serious bottleneck in various ports around the world. The congestion is helping to increase demand for fabrics and put even more pressure on companies’ finances, as well as adding days and weeks to an already long timeline.

Possible solutions to the container crisis for the textile industry

The events responsible for the supply chain challenges are only the most obvious, but we do not have the means to predict what to expect in the long term, although it does appear that this will be the new reality for the foreseeable future. The challenge at the business level is to move from a tactical approach to a more strategic one. Some solutions are:

buy surplus

It is possible to implement a policy of buying more raw materials than necessary as soon as they are available. This approach allows a company to prepare for any kind of shortage in the future without compromising the overall quality and speed of its services to customers.

Development of alternative distribution channels

If we talk about a company that has been in the textile market for a long time, it is a fact that it will be able to develop various distribution channels throughout the world. In the current scenario, where several ports are not ready to receive shipments, a large company can rely on its partners to ensure timely delivery through trucks or other transportation routes.

Transparency and effective communication with clients

It is advisable to implement a policy of keeping all clients informed so that they can plan according to the situation as it develops. It is always possible to report possible delays or other problems immediately if you have good communication with customers. This will minimize the overall damage to both parties, and strengthen the relationship.

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