As the crisis in Ukraine continues to unfold, here is an update on the latest news on the impact to the global sewn products industry.
Small factories are part of the backbone of Ukraine’s industrial economy, providing food, textiles, and other goods, along with the equipment and materials that support the country’s sprawling agricultural sector. This article explores how Ukraine’s industrial economy is trying to keep assembly lines working amid materials shortages and logistics barriers.
The U.S. Could Suspend Trade Relations with Russia. Here's What it Means for Supply Chains. - Supply Chain Dive The House of Representatives approved a bill March 17th to suspend normal trade relations with Russia as well as Belarus, subjecting the countries to tariff rates reserved for non-favored trading partners. The legislation, which still needs Senate approval, is expected to be signed into law by President Biden. Removing its "most favored nation" status might appear mostly symbolic at first. But it sets the stage for broader U.S. sanctions against Russia’s entire economy, rather than against specific individuals, companies, and exports.
Where is Apparel Trade Most Likely to Be Disrupted by the Russian-Ukraine War? - Just Style Just Style and GlobalData break down the impact of the Russian-Ukraine war by industry sector and region.
Tearing the Fabric of Unity: Russo-Ukraine War Disrupts Fashion Sector - The Miami Hurricane This article comes from the University of Miami student newspaper. We’re including it for this paragraph alone: “The string of fashion is plait to the string of independence. Geopolitical conflicts like the current war pose a threat to the creative and cultural commons between nations. But, in the wake of Russian attempts to tear a fabric of unity, Ukraine and its allies continue to sew the colors of resistance.”
Russia-Ukraine Conflict: Impact on Logistics and Textiles-Apparel Industry - Fibre2Fashion Fibre2Fashion provides an easily understandable look at the current conflict’s impact on ocean, air, and rail freight, as well as on the textiles and apparel industries in Asia.
Messe Frankfurt Excludes Exhibitors from Russia and Belarus - Press Release Trade show and event organizer Messe Frankfurt has decided not to admit exhibitors from Russia or Belarus to its events until further notice.
Russia Looks to Retailers from Turkey, China, India and Brazil as European Brands Exit - Business of Fashion The Russian Union of Shopping Centers is reportedly in negotiations with retailers from Turkey, China, India, and Brazil to open new stores in the country’s shopping centers, replacing the European brands that have recently closed stores. Until recently, Western brands occupied 34 percent of leasable space in Moscow’s main shopping centers.
What Russian Sanctions Mean for Fashion - Business of Fashion Russian sanctions are creating a growing compliance challenge and fresh reputational risks for brands and retailers. With new restrictions added almost every day, staying on top of sanctions requires “constant vigilance and flexibility.”
European Fast Fashion Retailers Struggle amid Inflation and Russia-Ukraine War - ModernRetail Inflation, Covid-19, and the Ukrainian invasion affected end-of-year profits for many European fashion retailers, and will continue to do so in 2022. Modern Retail rounded up comments from Zara and H&M executives to look at the headwinds facing these retailers in 2022 — and how they hope to overcome them with price hikes and online sales.
As Trade With Russia Halts, Countries Turn to Canada - The Wall Street Journal Canada produces many of the same commodities as Russia and countries are lining up to broker deals.
How the War in Ukraine Is Further Disrupting Global Supply Chains- Harvard Business Review The invasion of Ukraine by Russia and sanctions imposed on it for doing so along with new pandemic-related shutdowns in China are the latest events to rock global supply chains. Combined with the China-U.S. trade war and other pandemic- and climate-related disruptions, it is certain to accelerate the movement by Western companies to reduce their dependency on China for components and finished goods and on Russia for transportation and raw materials and to lead to more localized, or regional, sourcing strategies.
Global Factory Activity Slows as Ukraine Crisis, Inflation Bite - Reuters Global factory activity slowed in March as Russia's invasion of Ukraine tightened supply chain bottlenecks, dampened demand, and whacked confidence, while soaring energy costs drove a broader surge in prices. Uncertainty caused by the invasion, combined with an intensifying cost-of-living crisis, suggest the eurozone's manufacturing industry could slide into a recession this quarter.
Russia’s Manufacturing Activity Shrinks as Sanctions Over Ukraine Bite - The Wall Street Journal Russia’s factories cut production and jobs in March after the U.S. and its allies adopted some of the most severe economic sanctions ever taken against a country. Reuters also reports Russian manufacturing activity shrank in March at its fastest pace since the early stages of the Covid-19 pandemic, dragged down by sharply rising delivery times and shortages of materials.
From Behind the Seams March 2, 2022:
Russia-Ukraine War and the Apparel Sector: A Summary Dr. Sheng Lu, Associate Professor, Department of Fashion & Apparel Studies at the University of Delaware, breaks down the situation in his Global Apparel & Textile Trade & Sourcing blog.
EU Extends the Scope of Sanctions on Russia and Belarus - Fibre2Fashion Building on the wide-ranging and unprecedented measures the European Union has been taking in response to Russia’s invasion of Ukraine, the member states of the European Commission have agreed to adopt further targeted sanctions in view of the situation in Ukraine and in response to Belarus’s involvement in the aggression.
Detailing the Luxury Export Sanctions on Russia - Women’s Wear Daily Business groups tend to resist any kind of restriction to trade — even on principle — as so many companies today are not just big, but global and looking to expand everywhere. But the war in Ukraine, which has displaced millions and brought the post-Cold War world order to the brink, has business and government moving in lockstep. Read the March 11th White House announcement of additional sanctions here.
Russia Bans Wide Range of Exports in Response to Western Sanctions - Supply Chain Dive Russia will ban exports of over 200 products, including vehicles, agricultural machinery, electric equipment, and "technological, telecommunication and medical equipment," the government said.
Facing Economic Calamity, Putin Talks of Nationalizing Western Businesses - The New York Times Besieged by an onslaught of sanctions that have largely undone 30 years of economic integration with the West in the space of two weeks, President Putin has opened the door to nationalizing the assets of Western companies pulling out of Russia and exhorted senior officials to “act decisively” to preserve jobs.
Ukraine War to Sully Clothes Sales from Levi to Ralph Lauren - Reuters American clothes firms' European businesses were just recovering from two years of pandemic restrictions. But war-related Western sanctions on Moscow, airspace bans, and shipping route changes have put new squeezes on East-West supply chains. Analysts see particular exposure to Calvin Klein and Tommy Hilfiger owner PVH; Levi Strauss; Ralph Lauren; Michael Kors owner Capri Holdings; and Nike, companies that get roughly 25-40% of their sales from Europe.
How Retailers are Reacting to the Invasion of Ukraine - Retail Dive As companies halt shipments to Russia and shut down their e-commerce sites in the country, Retail Dive is tracking what retailers are doing in response.
Russia-Ukraine Crisis Replaces Covid as Top Risk to Global Supply Chains, Moody's Says - CNN Business Moody's warned that the Russia-Ukraine crisis will "only exacerbate the situation for companies in many industries," especially those reliant on energy resources. Europe, in particular, will feel the most pain from the energy price spike, because it is dependent on Russia for natural gas. The Russia-Ukraine conflict also could pile further pressure on the worldwide computer chip shortage.
How Ukraine’s Fashion-Tech Community Is Adapting to War - The Business of Fashion Ukraine’s strength in technology and creativity has led to a burgeoning fashion-tech sector, the future of which is now at risk as numerous industry leaders and workers flee to safer regions. However, many companies continue operating and Ukrainian workers are taking on other duties in an effort to support their country however they can.
Ukraine’s Printing Industry Stands Strong - WhatTheyThink Igor Agarkov, publisher of Print+ magazine, Polygraphy of Ukraine directory, and administrator of the social network of printers, shares his experience, views, and request to the world, and those of some of his colleagues.
Global Fashion & Footwear Brands Suspend Operations in Russia - Fibre2Fashion Several global fashion and footwear brands including Nike, Mango, Zara owner Inditex, H&M, Marks & Spencer, Under Armour, Canada Goose, Puma as well as home furnishings brand Ikea have suspended operations in Russia following its invasion in Ukraine.
Related: Uniqlo parent Fast Retailing originally announced it would continue to operate in Russia even as international pressure to isolate the country for its invasion of Ukraine saw waves of companies pull out. However, after just a few days and a tsunami of social media backlash, the company announced it would temporarily suspend operations in the country.
Global retailers are facing an unprecedented challenge: How to respond to the Russian invasion of Ukraine. More than 300 brands have ceased doing business in Russia in protest, but what about the ones that are still there? The Robin Report discusses the collateral damage from the Russian war on Ukraine — to global brands, consumers worldwide, and the Russian people.
After Early Silence, More Luxury Brands Edge Away from Russia over Invasion of Ukraine - Retail Dive Overall, Russia's sales are about 5% of the global luxury market, and have been growing for two decades. In recent days, more haute couture brands are finding their voices.
Ukrainian Designers Join War Efforts - But How Long Can Their Brands Stay Afloat? - The Cut For many Ukrainian designers, the first several days of the invasion were spent dealing with immediate safety issues as Russian troops invaded. Then, they repurposed their teams to support war efforts, from raising and donating money to volunteering in the army.
From Behind the Seams March 2, 2022:
All eyes are on Ukraine this week and the ongoing conflict in the region. As we watch the horror unfold and pray for those directly affected, we also wanted to provide an overview of the latest news on the impact on the global sewn products industry and help our readers stay informed as best we can.
Dr. Sheng Lu, Associate Professor of Fashion and Apparel Studies at University of Delaware, summed it up well in Just Style: “While Russia and Ukraine play a minor role in apparel production and trade, it doesn’t mean the apparel industry is immune to the ripple effects of the military conflict.”
Among other things, the global apparel, textile, and sewn products industries could see rising costs to raw materials, rising energy prices, additional sanctions, even worse supply chain issues, heightened geo-political tensions around the world, and slower global economic recovery.
U.S. Apparel Industry Prepares for Impact of Ukraine-Russia War - Just Style As the United States announces a broad range of restrictions and sanctions on exports to Russia following the country's invasion of Ukraine, the U.S. apparel industry reveals it is taking measures to ensure operations are fully compliant.
Countries around the world have imposed an unprecedented array of economic and other sanctions on Russia, targeting its finance, energy, and military-industrial sectors as well as individuals and sporting events. This article breaks down many of the measures adopted by the United States, European Union, United Kingdom, Japan, Taiwan, Australia, and New Zealand. A White House Fact Sheet on the sanctions is available here. Related: Visa and Mastercard Block Russian Banks from Their Networks After Sanctions
Ukrainian Invasion Adds to Chaos for Global Supply Chains - The New York Times The conflict is setting off a scramble among global companies as they cut off trade with Russia to comply with the most far-reaching sanctions imposed on a major economic power since the end of the Cold War.
Russia's Invasion of Ukraine Throws Another Wrench into Supply Chains - Supply Chain Dive A growing list of companies, including A.P. Moller-Maersk, FedEx, and UPS are halting operations in the region in response to the escalating conflict. This article explains why the attack on Ukraine and Western sanctions on Russia could prompt key materials shortages, material cost increases, demand volatility, logistics and capacity constraints, and cybersecurity breaches, in other words “War is a worst-case scenario for supply chains.”
Freight disruptions are emerging in Europe and Asia as the impact of Russia’s invasion of Ukraine ripples across the region, causing delays to the movement of goods and sparking warnings of higher shipping costs. Forwarders have suspended some services and shifted others from land to ocean or air to avoid restrictions, disruptions.
Dirk Vantyghem, Director General of the European Apparel and Textile Confederation (Euratex), notes the European textile and apparel industries, already affected by the rise in energy prices, might not be able to face a further increase in costs. Moreover, Russia is the 5th main customer for European textile and apparel exports and, since the main products sold are technical and defense textiles, Euratex expects that these companies will be affected by sanctions. An extended analysis is available here from Just Style.
UK manufacturers are facing a sharp rise in costs as the Russian invasion of Ukraine undermines the progress made towards fixing global supply chains before the conflict broke out. Experts say the conflict will hit firms across Europe and drag down industrial production over the coming months.
Beyond the U.S. Government Sanctions on Russia, members of the U.S. House of Representatives have introduced legislation to end the U.S. policy of treating Russia as a most favored nation, a key principle of the World Trade Organization that requires member countries to guarantee equal tariff and regulatory treatment to other members. If passed, the initiative could significantly increase tariffs on imports from Russia.
Ukrainian Conflict Will Lead to More Supply Chain Woes - Freight Waves Russian import bookings declined 40% over the past week and will likely continue to fall as the country faces sanctions (and anger) from trading partners around the world. This article breaks down the latest data from the U.S. Census Bureau, noting that geopolitical risk has become one of the biggest threats to supply chains.
This developing article highlights fashion industry brand and retailer responses to the current crisis in Ukraine, including the cancelation of Fashion Week Russia, due to take place in Moscow later in the month.
Current stock prices indicate that investors are currently not expecting Russia’s attack on Ukraine to impact sellers of high-end fashion much more or less than the broader market. However, luxury analysts have indicated that the conflict could have a broader impact on business, as the associated shock to the global economy risks cutting short the sector’s recovery from the Covid-19 pandemic.
The Ukrainian fashion community is using its international connections to support the information campaign to spread awareness about the impact of the Russian invasion. The country’s designers and agencies are doing what they can to connect with relatives and colleagues trapped in besieged cities and to lobby for harsher sanctions on Russia.
Russian Invasion of Ukraine to Further Strain U.S. Chip Supply for Auto, Tech Industries - CNBC The U.S. neon supply, which is used for lithography processes for chip production, comes almost entirely from Ukraine and Russia. Russia and Ukraine are also critical suppliers of palladium used to produce semiconductor chips.
War. What Is It Good For? Absolutely Nothing in the Supply Chain - National Law Review Beyond the obvious impacts, this brief focuses on the negative consequences war and political tension will have on global supply chains and manufacturing operations.
Stocks Recover from Early Losses as Russia Sanctions Rattle Markets - The Washington Post Markets loathe uncertainty, and volatility is likely to rage as investors grapple with the lack of an immediate resolution of the Ukraine-Russia conflict on the horizon. Industry specific information related to equity market rebound is available here from Sourcing Journal.