What effects do the tensions in the Middle East have on the fashion supply chains?

With the intensification of the military tensions between Israel and Iran, world trade with concern looks at a possible escalation.

At the center of concern is the street of Hormus, one of the most important sea routes for the global energy market. About a third of the oil traded worldwide passes this passage. If it is blocked or seriously disturbed, the consequences would be far -reaching – also for the fashion industry, which has so far rarely been at the center of geopolitical considerations.

Oil-dependent sector

The fashion industry is often associated with creativity, lightness and internationality. But her value chain is closely linked to fossil fuels. The entire supply chain is dependent on oil from the production of polyester, a fiber obtained from oil, to sea container transport: both as a raw material and as a logistical basis.

A blockade of the Hormus street would lead to a sudden increase in prices for crude oil and liquid gas (LNG); With direct effects on production, transport and sales costs. The production of clothing would become more expensive. Delivery to Europe and the USA would become more expensive and slow.

Supplier under tension

Since the Covid 19 pandemic, the supply chain of the fashion industry has never really found its balance. Trade tensions, the war in Ukraine, the rampant inflation in 2022 and recently. The new threats in the Middle East add another degree of uncertainty. You could extend the delivery times, force the freight forwarders to change route changes and drive the costs to a critical level.

“Any disorder in the street of Hormus would have a quick impact on the European production sector, which is already weakened by its dependence on catarical liquid gas and hydrocarbons in general,” warned Marco Forgione, General Director of the Chartered Institute for Exports and International Trade.

Raw materials and logistics under pressure

The textile industry is globalized and largely dependent on imports. Cotton, polyester, viscose: These raw materials come from different regions. However, polyester is linked directly to the oil price. An increase in crude oil prices would therefore not only affect the costs of synthetic fibers, but also to the costs for the chemical dyes that are used to color fabrics.

In addition, a large part of the clothing and textile components are produced in Asia (India, Bangladesh, Pakistan, China) and transported through sea routes, which are now exposed to geopolitical dangers. In the event of a disorder in the street of Hormus, the freight forwarders would have to avoid the area. As the media company Koha stated, this would significantly extend the delivery times and cause considerable additional costs.

Small and medium -sized companies at the forefront

Most major international brands have sufficient security stocks and financial resources to at least temporarily cushion logistical shocks. This is not the case for small and medium -sized companies (SMEs), young brands or digital native vertical brands (DNVBS), which are often very susceptible to cost fluctuations and the slightest disruption of the international flows of goods.

“It is certain that the business leaders are tearing their hair, especially the managing directors: inside of the SME, small and small and medium -sized enterprises,” said Forgione. “This is another episode of uncertainty and upheavals, in addition to the announcements of the United States about tariffs and the current unrest in the Red Sea and in the Suez Canal.”

For these actors, any container delay or increase in freight can jeopardize their financial balance. Some companies have also started moving part of their production to the Mediterranean pool (Tunisia, Türkiye, Greece) as part of a near-nut approach. However, this strategy could also be questioned if geopolitical instability should expand to the entire region.

“If you know, everyone who is involved in a supply chain is really tense and tries to deal with enormous complexity. It is like four -dimensional chess to play and try to manage all the complexities and pressure to which you are exposed,” continued Forgione.

Redefinition of the logistical routes?

In view of this threat, Europe will probably have to accelerate the diversification of its supply routes. Greece could become an important logistics platform for goods from Central Asia and Turkey, if it has massively invested in its port and railway infrastructure.

However, such a transformation would require profound modernization: digitization of customs procedures, optimization of the railway networks, improvement in port capacities. At the same time, the reaction -fastest fashion brands could increasingly invest in the automation of their European warehouse and expand regional distribution centers in order to reduce their dependence on the most susceptible global turnstile.

Uncertainty spreads

Three scenarios seem possible at this stage. A persistent escalation of the Israeli-Iranian conflict would lead to a continued increase in energy prices, considerable disorders of the value chains and a persistent inflation of clothing prices. A short but intensive crisis would have temporary logistical effects, with tensions at the delivery dates and margins, but a quick adjustment by detouring the flow of goods. Finally, a return to diplomacy would avoid a larger crisis and at the same time strengthen the awareness of the companies for the ongoing fragility of their supply chains.

The fashion industry stands in front of its energy

The Israeli-Iranian conflict, as far as it may also appear from stylistic questions, is reminiscent of a structural truth: the fashion industry still depends heavily on the oil. From synthetic fibers to sea transport, the black gold runs through the entire value chain.

This dependence calls on the companies in the industry to fundamentally rethink their supply chains and to make them closer to diversified and less carbon -intensive. A strategic imperative, but also an economic and ecological necessity.