Red Sea crisis threatens textiles and auto industries, but could be an opportunity for footwear

Tensions in the Red Sea are delaying shipments in areas such as computer electronics, textiles and cars, as well as increasing transport costs to Portugal, but industries such as footwear see an opportunity in the crisis.

Speaking to Lusa, the director general of the Portuguese Association of Distribution Companies (APED) rules out for now problems of product shortages, whether in grocery or specialty retail.

However, Gonzalo Lobo Xavier reports that the average delivery delay for some categories of products and components is two weeks on average, “mainly related to consumer electronics, information technology, and textiles and fashion.”

In the food sector, he mentions delays in the supply of “some frozen fish” but says that “in most cases it has already been replaced by other suppliers and other routes.”

According to APED’s CEO, the impact is already being felt “throughout the entire value chain”, increasing freight transport costs and increasing “about 20-30%” of containers worldwide. In addition, the cost of transport insurance on this route “also increases significantly.”

“There is a search for alternative, slower and more expensive routes, which will definitely affect product prices,” says Gonzalo Lobo Xavier, predicting that “this impact, if the situation continues, will certainly be felt more strongly within three years.” four weeks.”

Also suffering from the effects of logistics restrictions in the Red Sea are industries such as the automotive and textiles/apparel industries, with the former reporting a decline in orders from international manufacturers, especially in Germany, and the latter reporting delays in the supply of “materials, raw materials and materials required for production clothes.” to manufacturing” (such as threads, threads, fabrics, meshes, chemicals and accessories), calling into question the “response time” of this industry.

“The information we have received from our clients who are builders or first-line manufacturers for builders is that there is a process of reducing logistics management activities and in some cases we know that plans may already be in place to reduce logistics management activities. the cessation of one shift, which will have an impact on the Portuguese industry,” said Lusé, president of the Automotive Industry Association (AFIA).

According to José Couto, “In Germany there were builders [automóveis] it slowed down a lot and there were some plants that were strategically closed.”

“In Portugal, at least, our partners have not yet felt the need to completely stop, but they have significantly reduced their activity,” he said, emphasizing that the route through the Red Sea is “very important for the European automotive sector”, which “does not have habit of making large “reserves”, everything produced is delivered to the customer’s line in a day or two.”

The executive director of the Portuguese Textile and Clothing Association (ATP) emphasizes that “in an industry as competitive and global” as this sector, “price increases always have negative consequences and lead to a loss of competitiveness.”

And if “while the rise in prices is mainly due to the increase in the cost of transportation on these routes,” Ana Dinis expects that “there will naturally be a shortage of supplies of some types of raw materials on the market (caused by delays in deliveries), prices for these goods will rise even more – even with trying to find alternative suppliers or alternative raw materials.”

“The truth is that, as we have seen in the recent past, there are many dependencies that cannot be easily replaced quickly,” he admits, noting that “companies are trying to manage the situation by delaying orders and managing the supply of more goods.” urgent orders, but if the problem continues, the consequences could be more devastating.”

The Portuguese footwear industry seems to be going against this cycle, which, taking into account the “cluster” logic, which it considers one of its “greatest competitive arguments”, continues to be able to “respond quickly to market demands”.

“The Red Sea crisis could even be an opportunity for European manufacturers such as Portugal,” the director of public relations for the Portuguese Association of Shoes, Components, Leather Products and Substitutes (APICCAPS) told Lusa, stressing that “there are very capable suppliers ” soles, other components and tanneries in Portugal, and this allows international clients to look to Portugal as a privileged business partner.”

Pointing out that Asia’s share of global footwear production is “about 90%”, Paulo Goncalves believes that “some episodes like this in the Red Sea, although unfortunate in nature, can contribute to a new world order and send a message to consumers that they should diversify their supplier base.”