Escalation of war in the Red Sea affects footwear: it is one of its main supply routes

Elche. The fashion sector is traditionally one of the sectors that suffers the most during certain crises or periods of economic instability as essential goods are left in the background. This has been the case for footwear in 2023, which has been characterized by inflation, and the beginning of the year has now seen an increase in the war in Gaza, as the United States, England and Houthi rebels begin to confront each other. Is done. Red in the other sea; one of the world’s major trade routes, Also for footwear sectorWho already notices it.

Through this route, shoe exports go to China and the Asian continent in general, and from here also come the raw materials for manufacturing. A situation that is beginning to affect companies in the sector, precisely because new collections are now being shipped. This means that as the conflict expands, companies begin to look for alternatives that either involve higher costs or greater delays in their orders. And this second option also represents an increase in costs, “because delivering the product twenty days later is already increasing costs, plus the complexity of keeping them in containers for that time,” he explains. . marion cano

Chairman of Avekal.

Product that must fall in the seasonal calendar and there is no scope for negotiating prices

In this sense, as a fashion sector, footwear has very specific deadlines and the product has to reach the customer within the established schedule. Furthermore, “the prices are the same as those agreed at previous fairs, so there is no longer any room for maneuver,” says Cano, referring to the fact that this delay cannot be compensated for by revising the price. . In Asia it is exported to China and Japan, although to a lesser extent, as some companies have managed to enter that market.

But the import of raw materials of Asian origin may be a more relevant problem in the short and medium term. “Especially with replacements, which are common,” says the association president, “although this will depend on each supplier and how they manage it.” Of course, he warns that “if this isn’t resolved in the short term, we’re waiting to see how it might impact the next collection.” For now, the few companies that can afford it have opted for planes, which involve higher costs, or for trains like the Chinese Silk Road, which brings direct traffic from Madrid, along with other products. And leaves from there. , But in general, companies with the largest presence in Asia resort to freight forwarding because this is where the bulk of goods fit. At the moment, the price of containers is already increasing manifold. Moreover, in a market where there are very few and large shipping companies, and therefore there are few options in this transportation. In previous similar situations, attempts were made to group demand into containers to maintain prices, but the current situation is a complex one.

decline in exports

To all this we also have to add the trend of 2023. Footwear exports in the first ten months of the year have reached 2,750.6 million euros with 134.4 million pairs. A 6.6% increase in value, but also a 1.7% decrease in the pair compared to the same period in 2022, The above mentioned exposure of the fashion sector to situations like generalized inflation and lower consumption.

Entering 2023, given how 2022 is ending, the trend was already seen, and now with regional exports declining, these serve as a thermometer for the entire region at the national level because The shoe industry is concentrated in the Vinalpo region, especially Elche and to a lesser extent Elda. “It went unnoticed in the first quarter but we knew it was coming,” explains Cano, “as inflation reached practically all markets in Europe.”

With that being the case, this weekend Riva del Garda Fair, where 19 companies from Elche will be present, they already know that complex months will come and expect small order books. Apart from the national market, there has also been a decline in other markets like the US, Canada or Israel for obvious reasons. “We will continue to try to maintain investment and willingness to continue working,” says the employer representative, adding that he hopes that at the national level “the rules of the game will not be changed further, which would allow us to do more “Competitiveness will be lost.” , that we can negotiate outside the negotiating table. Finally, on the political side, they call for public policies that support greater liquidity and generate more disposable income for households. “We have to promote consumption and not increase taxation.” Finally, and trying to look on some positive side, Cano believes that maybe there could be a company in this situation that is considering shifting production, similar to what has happened with Covid.