Looking back on 2023, we saw the fashion industry face challenges due to natural disasters, high inflation, worker protests and increased sourcing diversification, with brands reducing reliance on China and looking to create a more transparent supply chain.
Looking to 2024, we see continued supply chain turmoil ahead. And new legislation in both Europe and the U.S.—covering sustainability and forced labor—sits on the horizon, WWD reported.
Analysts agree that one key area for the industry moving forward will be supply chain resilience and transparency.
The latest McKinsey & Company State of Fashion 2024 report revealed that 70 percent of top procurement officers believe that improving transparency with suppliers is critical in navigating market turmoil. And more than half of industry executives, responding to the McKinsey survey, said they expect to increase reshoring or nearshoring in 2024, with many noting that they plan to source from multiple countries.
However, even as the report claims that companies need to keep a “firm grip” on costs, it also highlights how consumers are discovering new styles, tastes and priorities—heralding in opportunities and presenting routes to value creation.
After the U.S. government enacted the Uyghur Forced Labor Prevention Act (UFLPA) in 2022, traceability has become one of the most important factors for fashion brands when looking to source apparel manufacturers.
The National Council of Textile Organizations (NCTO) has urged for aggressive oversight of UFLPA customs enforcement, including increased penalties, to crack down on illegal trade.
Sustainability issues have also been a major theme in recent years, with this trend set to continue into the new year.
“There has been a huge shift in the demand for sustainable fabrics and clothing. Driven by new technologies and the demand for sustainable fashion, materials and fabrics are undergoing a significant change,” said Chung. “There are lower-impact circular synthetic fills, certified ethical down and feathers, animal wool alternatives and plant-based fiber insulations. Sustainability will continue to evolve as consumer demand for eco-conscious choices and ethical practices grows.”
Traceability and sustainability’s impact
After the U.S. government enacted the Uyghur Forced Labor Prevention Act (UFLPA) in 2022, traceability has become one of the most important factors for fashion brands when looking to find apparel manufacturers.
The National Council of Textile Organizations (NCTO) has urged for aggressive oversight of UFLPA customs enforcement, including increased penalties, to crack down on illegal trade.
Sustainability issues have also been a major theme in recent years, with this trend set to continue into the new year, WWD reported.
“There has been a huge shift in the demand for sustainable fabrics and clothing. Driven by new technologies, and the demand for sustainable fashion, materials and fabrics are undergoing a significant change,” said Chung. “There are lower-impact circular synthetic fills, certified ethical down and feathers, animal wool alternatives and plant-based fiber insulations. Sustainability will continue to evolve as consumer demand for eco-conscious choices and ethical practices grows.”
Supply chain challenges as high-inflation bites
With bases in seven different countries—Guatemala, Haiti, Indonesia, Myanmar, Nicaragua, the U.S. and Vietnam—Hansae is well placed to see trends in the supply chain.
In the coming year, noted Chung, the industry will face supply chain challenges in three shipping categories: upstream, midstream and downstream. In 2024, the demand volume would be still under supply by carriers, but most will try to increase freight from the second quarter.
Due to unstable fuel prices for domestic trucking, there are expected increases in costs for trucking. However, the cost for customs brokerage in 2024 will be similar to 2023.
Demand by U.S. buyers will increase as they strive to reduce costs. Ocean freight from Asia to the U.S. coasts via Trans-Pacific can fluctuate by carriers and blank sailing (canceled orders). However, fixed orders, volumes and long-term price contracts with carriers will be better than using the current premium Freight of All Kinds (FAK), a pricing tool used by most small freight carriers.