Red Sea crisis hits trade

Longer journey times, shortages of vessels and potential port congestion challenge a sector already under huge financial pressure.

The unfolding shipping crisis in the Red Sea presents a real challenge for the global textile recycling trade. The most obvious implication is the additional 10 to 14 days it now takes to ship goods which are being diverted around Africa rather than taking the much shorter route between Europe and the Middle and Far East via the Suez Canal and Red Sea.

The longer journey times are resulting in escalating fuel charges and underlying costs. Reports indicate that these augmented costs have more than doubled within recent weeks, creating a domino effect that freight customers are grappling to manage, inevitably passing on the financial burden to sellers of used textiles globally.

In addition, shipping companies are warning of a ‘bullwhip effect’ resulting in port congestion as facilities that do not usually handle large amounts of traffic experience increased activity. 

Under pressure

Furthermore, there could be a potential for a shortage of vessel space, with empty containers stuck in the wrong ports. This could exacerbate delays and potentially extend their impact to other shipping routes beyond those connecting Europe, East Africa and Asia.

All this is putting businesses that trade in second hand clothing and textiles under huge financial pressure. From the collection and sorting markets of the global north to the traders in the global south, the economic fallout is being felt by all involved.

It has been suggested that the sector cannot expect the situation to be resolved within the first quarter of 2024, which is bad enough, but if it were to go on for longer this could spell the end for a number of businesses.

Changing markets

On top of this, Dubai has now become the world’s largest textile sorting hub. Because of its location on the Arabian Peninsula, shipments from Europe face the arduous journey around Africa. This is neither financially nor practically viable. This is also a big issue for the large quantities of lower-value recycling grades destined for markets such as Pakistan and India.

Read the full textiles market update in our latest issue >>