Fashion brands move supply chains closer to home

Some fashion retailers are moving away from manufacturing centres in Asia following supply pressures and hikes in transport costs.

According to a report by Reuters, Italy’s Benetton is changing the location of its production, bringing its manufacturing to Serbia, Croatia, Turkey, Tunisia, and Egypt.

Massimo Renon, the company’s chief executive, told the news agency that the business has plans to halve production in Asia from the end of next year.

Hugo Boss also reportedly has plans to locate its manufacturing operations nearer to its markets.

Renon explained that rising shipping costs and times driven by strained supply chains had triggered this trend amongst fashion retailers of moving production away from Asia.

"It's a strategic decision to have more control on the production process and also on transport costs," he said, revealing that Benetton has moved over 10 per cent of its output away from Bangladesh, Vietnam, China, and India in 2021. "Today a shipping container that used to cost $1,200-1,500 can cost $10,000-15,000, with no certainty of a delivery date."

In his interview with Reuters, the chief executive said that the huge hike in sea freight fees had been caused by a lack of available ships, as many vessels were idled during the coronavirus pandemic, alongside rebounding consumer demand.

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