- Clothing reaches Germany up to 30 days later.
- Production and transport delays are only just beginning.
- Fashion industry cancels or postpones production of more than 800 million ordered garments.
(Bochum, 3/31/2020) The consequences of the coronavirus pandemic are increasingly affecting the supply chains of the fashion industry between Asia and Germany. After fashion brands had to process delays in the delivery of clothing from China weeks ago, imports from Bangladesh are now being disrupted. Clothing arrives in Germany up to 30 days later than planned. This is the result of an analysis by the Bochum software house Setlog on March 28th. The company has evaluated the supply chain data of around 100 fashion brands in its software tool OSCA.
According to Setlog board member Ralf Duester, anyone who wants to transport finished goods from Asia to Germany should react immediately. Sea freight rates from Asia to Europe have already doubled in terms of price on the spot market in a very short time. Additionally, there are no direct sea connections from one of the biggest production countries, Bangladesh. All goods have to be transported from the port of Chittagong, for example, via high in demand feeder vessels to Singapore or Colombo. “Whoever can manage short-term changes in the supply chain with all partners via a central, digital platform, in order to have important goods transported with priority, has the advantage,” emphasizes Duester.
The supply chain expert is not expecting the situation to ease. Not only suppliers are expected to suspend production within the next few days. Also the authorities are expected to limit the hours of operation. Duester says that further bottlenecks and even longer delivery times could occur in the export sector.
Since the beginning of the pandemic, the approximate 4,600 clothing factories have had to deal with the import of raw materials from other Asian countries. China has had a similar fate. As a result, production could not start on time in some cases. In the long term, the companies and the 4.1 million employees in Bangladesh already look into a dim future because of the coronavirus pandemic. Bangladesh is the world’s second largest clothing producer.
The buyers of the goods, around 60 percent of which are delivered to European countries, have already cancelled or postponed 828 million garments worth 2.39 billion euros. This affects more than 960 factories, according to figures from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA). In a video message to international buyers, BGMEA President Rubana Huq fears that the current situation is already having a massive impact on companies and workers’ incomes. She appealed to the fashion brands to accept the ordered goods at “normal payment terms”.
Setlog board member Duester expects that the coronavirus crisis in Bangladesh, whose exports consist of 84 percent textiles, may lead to poverty problems. “The minimum wage for textile work is just the equivalent of 95 US dollars per month. The employees, more than three quarters of whom are women, have hardly any money set aside.”, emphasises Duester.
Contact
Nora Breuker, Marketing Lead
Setlog GmbH, Alleestraße 80, 44793 Bochum, Germany
P +49 234 720 285 78, n.breuker@setlog.com, setlog.com
About Setlog
Setlog Holding is a provider of tailor-made Supply Chain Management (SCM) software solutions. The central product is the cloud-based SCM software OSCA®, which is used by over 150 brands in the apparel, electronics, food, consumer goods and hardware sectors. With the help of OSCA®, companies connect their customers with suppliers and service providers to optimally coordinate their supply chain, accelerate processes and manage supply chains efficiently. Setlog GmbH is a wholly owned subsidiary of Setlog Holding AG. Founded in 2001, the company is now a leading provider of SCM software with over 40,000 users in 92 countries. The software company employs 60 people between Bochum (headquarters), Cologne and New York. www.setlog.com