“There will never be a dull day in the fashion industry ", a popular adage that underlines the industry's resilience over the decades.

However, everything changed during the COVID-19 pandemic in 2020 and early 2021, when production cycles were temporarily halted, disrupting global supply chains and bringing the transportation industry to a standstill.

Major raw material exporters, including China, Bangladesh, Vietnam and India, have been temporarily locked down, and international logistics have been disrupted, hampering the flow of raw materials, finished goods and non-essential retail goods, resulting in billions of orders being delayed and cancelled, and post-pandemic payments delayed.

In dealing with so many uncertainties and challenges around the world, supply chain and logistics changes in the fashion industry are inevitable.

As the turmoil of the pandemic passes, supply chains are gradually restarting, shifting fashion logistics from shipping to air, a change that brings spin-offs such as decentralized inventory, digitization, sustainability, and slow fashion.

Is air cargo changing the fashion industry?

Christoph Scheithe, lead account manager and host of the PlanetLogistics platform and the "Joy of Logistics" podcast, said online shopping has grown significantly during the pandemic, leading to an increase in decentralized warehousing. Because freight rates have become lower through a combination of different modes of transport, and the "death of distance" means that distance is no longer a key factor, small/local brands have grown and even challenged the big brands.

Scheithe explained that in order to satisfy customers, merchants no longer need to keep all their inventory in multiple stores in one country, but simply keep logistics infrastructure open between them, including fulfillment centers and smaller warehouses in a certain region. In addition, "bulk orders" (that is, orders for a certain number of clothes, colors, sizes, etc.) can be delivered directly to the customer's home address, eliminating the need for customers to go out. It has also enabled startups and small brands to rapidly expand their markets with international parcel services, through which they are able to send a small bag of clothing around the world. In this context, air cargo becomes an important and reliable option for the fashion industry, the preferred mode of transport for sudden surges in demand, time-sensitive, high-value and delayed orders.

Ed Gillett, director and co-founder of CharterSync, a digital air freight rental company, said air freight proved its value to fashion logistics by providing shippers with speed and reliability due to port congestion and other maritime issues during the pandemic. While the return of sea freight has led to a return to normal cargo flows and a reallocation of patterns between sea and air freight, air freight has had a lasting impact on faster consumer goods cycles as a supply chain solution during the pandemic. With the normalization and strong recovery of the global supply chain, fashion goods have resumed shipping by sea.

The return of sea freight means retailers are moving goods back into containers. Leading specialty retailer Victoria's Secret, for example, has switched from air freight to sea freight to reduce supply chain costs, and while prices for both air and sea freight will fall in 2023, many industry stakeholders are opting for shorter term freight commitments and contracts.

The International Air Transport Association (IATA) has predicted that global air cargo volumes will fall by 4% in 2023, and by 8.1% in 2022. Revenue is expected to reach $149.4 billion, $52 billion less than in 2022 but still higher than in 2019. As the passenger market recovers and belly capacity increases, air cargo revenue will fall significantly. However, the air cargo sector will continue to benefit from the growth of e-commerce, which has witnessed a record surge in online shopping during the pandemic.

During the pandemic, the fashion industry faces challenges such as fluctuating demand and fluctuating production. Akhil Duggar Jain, executive director of Jain Amar Clothing Pvt Ltd, which owns suit brand Madame, said that in order to transfer goods, produce them in time and shorten the lead time, air freight has become a reliable and practical solution. But after the pandemic, inflation made the cost of production much higher. So, to make air freight a viable option and integrate it into the supply chain, freight costs need to be reduced in line with demand. In addition, if fashion companies are able to follow the fast fashion cycle and deliver products to customers in a timely manner through air freight, then air freight could become a key factor in fashion logistics.

According to Brendan Sullivan, Global Head of cargo at the International Air Transport Association (IATA), the global e-commerce value is expected to reach $5.7 trillion in 2023 and $7.3 trillion by 2025. Global online retail sales reached 21 percent in 2022, he said, and overall sales are expected to continue to grow even as overall consumer spending declines.

High-value goods like gemstones and jewelry, which are an integral part of the fashion industry, remain inextricably linked to air cargo for security reasons.

Bhavik Chinai, CEO of BVC Logistics, India's largest security logistics company, said just-in-time orders have become the norm for small businesses and order sizes have been decreasing as retailers now want to stock only a week's worth of inventory and want to get more designs to consumers in the Indian market as soon as possible. 95% of the world's jewelry is transported primarily by air.

Fashion brands will continue to use air freight

Ed Gillett believes that as belly capacity increases, the price of air cargo may become more competitive. Time-sensitive supply chain companies have adopted air cargo as the preferred method of transportation, but this is not necessarily reflected in the retail fashion industry, as the normalization of sea shipping schedules will lead to a reduction in air cargo volumes.

However, the speed and reliability of air cargo has helped some operators stay in business for the long term and ensures that operators achieve predictability in the operation of their supply chain, as evidenced by the number of bookings made by freight forwarding customers on digital charter platforms. The success of digitization in the booking and management of air cargo during the pandemic has also made other modes of transport less attractive in terms of visibility and flexibility of response.

At busy times of the year, scheduled flights and sea transportation can struggle to cope with the volume and strict time requirements required by retailers. Therefore, during busy periods, such as the peak season between November and December, air charter becomes the most viable option for fashion retailers.

As the fashion industry is a price-sensitive one, the cost of air freight is a disincentive, even for big brands.

Scheithe says smaller batches can be shipped by air, and there is also the option of a hybrid solution to do both. In the last new season or when the latest clothing is introduced in the market, retailers will still arrive early by air. As ocean freight rates drop significantly in 2023, a large amount of inventory is shipped by sea, however, brands like SHEIN and Gymshark continue to use air freight, which is a benefit for integrated service providers such as UPS, DHL, FedEx, which can provide services through their own network.

Scheithe further mentioned that the air cargo industry could develop its own "hanging garment container" or "dedicated garment container" solution. Ideally, he said, these containers could be placed at suppliers, where they could be loaded and shipped directly to importers' warehouses or fulfillment centers, which would greatly improve transportation efficiency.

This article comes from: cross-border e-commerce logistics Bai Xiaosheng