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Demand weakens but brighter future beckons

As higher energy costs, inflation and the economic downturn pose challenges to global trade, European businesses are gaining from the strong dollar.

The high cost of energy, rampant inflation rates and the effect of currency exchange rates are all common themes being experienced by businesses across the global used textiles trade. In Europe, businesses are reporting that collections of clothing are down across the board, with some suggesting that this is by as much as one third. With energy prices and inflation soaring, householders are doing what they can to keep their costs down.

Keeping warm and buying food take priority over buying the latest fashionable item and it therefore makes sense that they are keeping their clothing for longer. Hence fewer items are being put in the clothing/textile collection banks and so on.  

This downturn in collection rates has the effect of pushing up overall collection costs, which is also been compounded by the increased wages that businesses now have to pay in order to attract and keep staff. But many are still reporting chronic staff shortages. With virtually full employment in many countries, people naturally want to find the best jobs with good wages. It is incredibly difficult for our sector to compete in this area.

Dollar boost

However, one area that has been reported as being a positive development in recent months by European businesses is not shared by their American counterparts. The high value of the US dollar which has seen it reach parity with the Euro and almost parity with British Pound means that used clothing from European countries has become relatively more affordable. 

Whilst European businesses are saying that demand from their key African and Eastern European markets is quite firm at the moment, businesses in North America are reporting a drop in demand from Central and South America with whom they do a lot of trade, because of the increased costs for the importers. 

Some suppliers in North America are reportedly holding onto their product for longer, even though the winter season is approaching, in the hope that buyers in Central and South America will then agree to maintain the higher prices they need to charge.

North Americans are also reporting that, in some cases, their buyers are looking to switch to supplies of clothing that have come from Europe because they are more affordable. With regards to the market for recycling grades going into Pakistan and India, this is remaining firm with demand for wipers high, although delays and the cost of freight are a constant concern.

Exciting times

Despite the continuing complexities that the used textiles sector faces, it is important it keeps an eye on the future, particularly in relation to the establishment of new policies and legislative drivers that are set to overhaul our industry. 

As one European trader put it, we are now in exciting times and we have the chance to establish a new circular textile re-use and recycling economy with the right support and infrastructure in place to deliver this within Europe. We need to work with our partners from across the clothing and textiles supply chain to deliver this and to work in a positive and pro-active manner to achieve these goals.

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