Apparel Industry Thought Leaders Weigh in on COVID-19’s Impact to Shipping & Logistics

“The closest I’ve seen to our current situation was in 2008-2009 during the Great Recession. We were previously at 2016 levels, but now every single increase has gone down, and we need to take the long view. I don’t think anyone believes even half a sense of normalcy at the end of March. We’re looking at this being the situation of the new normal through April and into May. I’m looking at Hong Kong and China, it hasn’t been six months—it’s been four to six weeks. They have taken decisive action and are seeing a shift and a pivot. So why would we be any different?” 

“The apparel industry has been delivered a double blow with the coronavirus— COVID-19—on the one hand, creating logistics bottlenecks, and elevated sourcing costs out of China, on the other hand, due to heavy tariffs on apparel. The American Apparel & Footwear Association joined numerous other business associations urging President Trump to consider emergency measures to mitigate the economic harm of COVID-19 by suspending tariffs against Chinese-origin goods and other tariffs paid by U.S. importers.”

“The Bear Market is a major influencer for retailers and apparel/textile manufacturers right now. The stock market, coupled with the timing of 2020 being an election year, leaves uncertainty in the minds of consumers as well as business leaders. It is a time that consumers are likely to feel uneasy about spending money—and they will be inclined to focus on basic needs, including supplementing savings if possible, rather than spending on the ‘frivolity’ of fashion.”   

“It’s tough to predict how the next several quarters will pan out, because so much depends on the progression of COVID-19 through the population and the devastation it wreaks. IDC has set forth three scenarios—optimistic, probably and pessimistic. The probable scenario, put forth several weeks ago, suggests impacts on supply chain and economy well into Q2. But as more time passes, we are moving farther from probable and closer to the pessimistic, which predicts, among other things, factories finally getting back to full capacity in June. With the pessimistic scenario, the outbreak lasts longer than expected, continuing into the Q3 of the year, with travel control measures also not lifted until then.” 

“The economic crisis due to the coronavirus is deepening in the U.S. and worldwide. It is not clear how severe the economic impact will be, but the potential for economic damage is very real. According to IHS Markit, ‘This is both a demand-side shock—with damage to travel, tourism, and any activities involving large crowds—and a supply-side shock, with major disruptions to supply chains. Some have referred to the supply-side effects as a ‘human credit crunch.’ This will be a U-shaped rather than V-shaped cycle, with a sharp reduction in growth, followed by slow recovery.”

“Unfortunately, I believe the industry is in for an extremely rough year, not just one to two quarters. It is likely that the consumer psyche will be forever changed, or at least changed for one to two years, as this pandemic plays out. In the short term, consumers will revert to the most basic level of Maslow’s Hierarchy of Needs, and that will not be that new blouse or pair of designer shoes.”