After four weeks from its beginning, the conflict between the US and Israel against Iran—adding up to two ongoing ones between Russia and Ukraine, and Israelis versus Palestinians—continues to spread insecurity globally.
Furthermore, it exacerbates challenges in an already critical industrial and commercial landscape, as well as for the global fashion and jeanswear sectors.
The blockade of the Strait of Hormuz has highlighted just how important waterways are for the transport of oil (about 20 million barrels daily) and goods. According to estimates by Shield (SDA Bocconi), 70% of global trade, when measured by value—which equals 80% when measured by volume—occurs by sea.
Recent naval blockades are causing delays of 10–15 days for goods traveling from Asia to other continents, throwing business models and delivery times based on the just-in-time concept into crisis.
The difficulty in sourcing fuel, along with rising fuel and gas prices—and consequently electricity prices—is becoming increasingly pronounced. Similarly, the costs of raw materials have also risen significantly, particularly for petrochemical derivatives, impacting production costs, especially for manufacturers of accessories and chemicals used in dyeing and finishing. Situations of uncertainty, instability, and volatility appear to be on the rise, adding new challenges to a market that is already struggling.
Against all odds, a solution is possible
Though when big turmoils happen and some functioning models and balances seem to be shaken, also new possibilities and solutions can stand out.
Giving for granted that the war with Iran has caused price increases, scarcity of raw materials, and delays in deliveries, a prolonged period of uncertainty could result in a temporary contraction in demand, especially in segments most sensitive to costs and delivery times.
Along with that, while some countries, often considered as productive hubs for many market segments, are suffering to different degrees, some others could become bearers of a solution for the conflict.
Can Pakistan play a role for peace?
For Marco Marcora, consultant for various global companies, including MK Group, a garment manufacturer from Pakistan, at present the situation is under control, until it doesn’t prolong.
“I was in Pakistan when the U.S. attacked Iran, and I saw how local companies reacted to it. Those that produce for large groups, especially fast fashion brands, have not suffered particularly from the situation, nor do they expect much change in the short term,” he said.
“So far, these are difficulties we can live with, until they don’t last for too long. Moreover, Pakistan could play a significant role in mediation alongside the U.S. and Arab countries because it is home to a large Shia community, the second largest in the world after Iran’s,” he said a few days ago, anticipating a piece of news circulating now that sees Pakistan as the country that could play a key role in hosting negotiations.
An uneven scenario
Facing unstable situations has become almost a daily routine for European and Asian countries, even if at different levels and from different perspectives, as explained by Alice Tonello, R&D and marketing manager of technology manufacturer Tonello.
The Italian manager and entrepreneur sees a clear message coming from global garment manufacturers. “Margins are under pressure, planning is more difficult, and uncertainty has become part of the everyday business environment; however, the overall sentiment remains cautious. The current situation is manageable in the short term, but it requires constant adaptation and a careful balance between cost, speed, and demand,” she added.
The scenario of Asian manufacturing countries appears uneven. Some of the production hubs in South Asia are experiencing more pressure. India, Pakistan, and Bangladesh are facing energy challenges, logistical constraints, and softer demand in certain segments, even if Bangladesh had already solved some major logistical problems before, as explained by Mostafiz Uddin, managing director of the garment manufacturing company Denim Expert Ltd. and founder & CEO of the Bangladesh Apparel Exchange association.
“Well before the war, over a year ago, a Yemeni Iran-aligned movement, the Houthis, attacked periodically on ships, mother vessels carrying Bangladesh’s apparel goods. Therefore, they started following the Atlantic route from Singapore through the Cape of Good Hope. So, the US-Iran war did not have any implication on our transportation route and delivery,” said Uddin.
Obviously, since the country’s energy supply is based upon fossil fuels, due to the oil crisis, Bangladesh’s industrial areas are experiencing some load-shedding power cuts, which the factories are managing by running generators.
“The good thing is the government did not increase the price of oils and assured that there is no crisis in the stock of oils. So I think these are temporary hiccups that will be healed with time,” added Uddin.
In parallel, Southeast Asia is also feeling indirect effects of disruptions in global transportation routes, which can extend lead times and reduce flexibility.
“Rather than a uniform slowdown, we are seeing a more complex and uneven scenario, where certain regions are more exposed than others. This could lead to a gradual rebalancing of production across different areas,” sums up Tonello.
A new map of sourcing
Within this unclear global situation, markets with longer and more complex supply chains and higher exposure to logistics disruptions may face temporary challenges. Though, at the same time, this could lead to a broader rebalancing of the global sourcing landscape.
“Almost the entire system is experiencing delivery delays and some cancellations. However, the market was already prepared for possible consequences of this kind, so the impact shouldn’t be too significant,” said Panos Sofianos, expert industry insider and consultant for the German textile trade show Munich Fabric Start.
“In any case, there are always alternatives. For example, brands could start nearshoring and start working more frequently with supplier countries such as Algeria, Egypt, Turkey, Portugal, Bulgaria, and Greece,” he underlines.
Working with nearer countries has certain advantages but also requires higher costs. “By nearshoring, companies take on less risk, though prices will be higher. Obviously, the current situation demands a change in mindset and exploring new paths,” Sofianos pointed out.
For other insiders, the process has only accelerated a change that was already in the air. “I believe these tensions are accelerating a clear-cut polarization between two distinct worlds. On one hand, we have ‘evolved’ denim, where the authentic DNA remains intact but is reimagined through innovation, research, and a forward-thinking vision. On the other hand, we see standardized denim driven by volume-based logic, which is currently struggling with overproduction and shrinking margins,” explained Paolo Gnutti, creative director, Isko Luxury by PG.
From his point of view some manufacturers are shifting from a volume-driven to a value-driven model, doubling down on innovation and high-end quality. Differently, the mass market is undergoing a drastic “filtering” process.
“That’s how companies are under immense pressure due to deadstock, a significant drop in orders, and increasingly compressed margins,” added Gnutti.
In this transformation, there are countries that can take advantage of the situation. “Türkiye stands out with its strategic location between Europe and Asia, its strong and integrated manufacturing ecosystem, and its ability to combine speed, quality, and sustainability,” commented Eray Karaduman, general manager of the denim manufacturer Calik Denim.
“In addition, its long-standing denim expertise, creativity in fit development, trend-driven washing capabilities, and increasingly digitalized and integrated production systems create a unique value proposition for brands seeking both agility and innovation,” he added, stressing further that the shift that is occurring is less about a slowdown and more about a redistribution of sourcing priorities.
Betting on flexibility
Facing a volatile market situation where changes occur fast, every player needs to adapt and speed up in offering new solutions. As a result of the overall market uncertainty, brands are becoming more cautious, for instance, by tightening inventory levels, placing orders closer to the season, and prioritizing flexibility over volume.
“Garment manufacturers are becoming significantly more agile. We see a clear shift toward more flexible production planning and closer collaboration across the value chain, particularly with fabric suppliers. Speed, reliability, and transparency are now as critical as cost,” continues Calik’s Karaduman.
Reacting fast is a must today for many. “We are taking a flexible, multi-level approach,” said Andrea Venier, managing director, of the chemical specialist Officina 39.
“Internally, we are working on a more dynamic planning process. However, the situation is constantly evolving. In such an unstable environment, it is difficult to fully pursue alternative paths. We will adapt quickly on a day-to-day basis,” he added.
For the Italian label manufacturer Vivolo, it is important to rely on a short supply chain that can react faster and more efficiently. “In response to this scenario, two particularly critical areas have emerged: market volatility and logistics. This requires brands to exercise extreme caution in their operational planning and to rely on the strength of the short supply chain,” said Luciana Vivolo, chief product officer, Vivolo.
“That is why we are investing heavily in improving the efficiency of our production processes. It is a necessary step to ensure that price increases are not passed on entirely to the end customer,” she added, pointing out that they are watching most closely the US market, where they see an ongoing transformation where the mass market is becoming more premium, but they also noticed that companies tend to make orders based on actual sales, making it impossible to obtain reliable forecasts.
Avoiding risk aversion’s consequences
Therefore, many ongoing negative consequences need to be avoided, as, for instance, risk aversion can lead to a paralysis in some specific market areas. “Beyond the spike in fuel and energy overheads, the real risk for the global market is a psychological one: risk aversion,” said Melissa D’Innella, export sales manager, Xlance.
“A fearful industry tends to freeze investments in R&D, leading to a dangerous stagnation of innovation on the market. In Italy, where excellence is driven by constant evolution, this lack of investment could slow down the transition toward more advanced textile solutions,” she summed up.
Luca Braschi, marketing and technology manager, at Soko, shares a similar opinion. “It is clear that geopolitical instability fuels uncertainty and erodes consumer confidence. This downward trend in sentiment typically leads to a reduction in spending, potentially resulting in a decline in order books and production volumes in the coming quarters. Specifically for Italy, inflationary pressures and a potential uptick in interest rates toward the year-end could further tighten the market.”
Managing alternative energy supply can make the difference
He also recognizes that for nations where the textile industry is a cornerstone of the economy, rising energy prices pose a serious threat to global competitiveness, as this sector is notoriously energy-intensive.
For other manufacturers, despite no one being immune to geopolitical shockwaves, there are some ways out that can help them face extreme situations. For a key manufacturer of Bangladesh, Pioneer, part of Badsha Group, they have set up some solutions. “Although the energy situation has been affected by long-standing tensions, we are structured to cushion such circumstances, and our use of renewable energy sources like solar panels and biomass boiler installations is tangibly helping us mitigate this impact,” said Christian Reca, worldwide marketing & merchandising manager at Pioneer Denim.
“For Bangladesh, the Ready-Made Garment sector remains the backbone of the national economy. Despite the turbulence, the country is demonstrating maturity, evolving toward increasingly sustainable and technologically advanced production. The challenge will be to continue investing in infrastructure and energy independence to protect the national industry from fluctuating international scenarios, consolidating its role as a privileged, secure, and innovative partner for the global denim and apparel market,” he added, underscoring that constant monitoring of the current geopolitical landscape will be essential.
A business model change is vital
The overall market situation, once again after COVID, is asking to take on new solutions in order to face extreme situations. At present, supply chains are becoming less predictable, and companies are rethinking their strategies with a stronger focus on flexibility, diversification, and risk management.
For Pioneer, for instance, many industry players are accelerating the adoption of digital technologies for more precise planning, seeking, for instance, to balance the need for speed with inevitable rising transportation costs. Though, they are aware that they have to continue monitoring the overall situation.
As the industry operates as a whole, everyone must be watching and remain connected to the other, though strengthening one’s own action—despite this not happening yet.
“We are operating in a highly interconnected world, where disruptions in one region quickly have an impact elsewhere,” commented Alice Tonello, stressing her vision about how the business needs to change its pace.
“This situation reinforces the importance of building more resilient and balanced production models. It is not only about responding to the current challenges but also about preparing the industry for a future that will likely require greater adaptability and closer collaboration across the entire value chain,” the entrepreneur summed up a step the global value chain has to take for everyone’s sake.