Washington, DC — Shipping problems are once again plaguing the cotton and textile industry, although not nearly to the degree the supply chain suffered through during the Covid pandemic. Finished goods will be affected more than raw cotton, making the situation particularly painful for merchants and mills.
Geopolitical unrest in the Red Sea area has driven shipping prices significantly higher in recent months, with trade routes between West Africa and Asia and between Europe and Asia being impacted the most. Other negative impacts include:
- Longer delivery times due to the rerouting of ships could lead to order delays and cancellations.
- Higher shipping costs will add to the already-high inflation.
- Products will take longer to reach the markets — an especially big problem for seasonal textiles and apparel.
- If high shipping costs spread to other regions, the entire cotton trade will be affected.
There are two silver linings in this dark cloud, however:
- The cotton and textile industry has experience in overcoming logistical problems, as it did during Covid and the blockage of the Suez Canal.
- Despite the challenges, global cotton trade is up more than 10% over last season.
Price Projections
The Secretariat’s current price forecast of the season-average A index for 2023/24 ranges from 81.02 cents to 103.61 cents, with a midpoint at 90.88 cents per pound.