Strait of Hormuz Crisis Drives Apparel Production Costs Up 15% as Shipping Collapses

Quick Facts

Global textile production costs are rising 10-15% as shipping delays continue through the Strait of Hormuz
Commercial vessel traffic dropped 97% in April with just 191 ships crossing compared to the usual 3,000 monthly
Shipping rates from India, Pakistan and China increased 18% as cargo reroutes around Africa add 20-25 days

The ongoing conflict in the Strait of Hormuz has caused a near-complete collapse in commercial shipping traffic, driving apparel production costs up 15% for global fashion brands that rely on the critical waterway.

Commercial vessel traffic through the strait dropped 97% in April, with only 191 ships recorded crossing the entire month compared to the usual 3,000 vessels. Iran has imposed new rules requiring applications to its Persian Gulf Strait Authority along with tolls, while the U.S. threatens sanctions on companies that comply.

Cost Surge Hits Fashion Supply Chains

Global textile production costs are rising 10-15% as delays continue. The United Nations Conference on Trade and Development expects shipping costs alone to increase 30-50%. Shipping rates from India, Pakistan and China have shot up 18%, while air freight rates from Southeast Asia to Europe climbed 6% to $3.82 per kilogram.

Insurance costs for vessels have spiked from less than 1% of goods value to 3-10% during the conflict. Cargo ships now divert around Africa via the Cape of Good Hope, adding 20-25 days to transit times.

Durai Palanisamy, Chairman of the Southern India Mills Association, said exporters face “increased freight costs, order cancellations and pressure to sell goods at discounted prices due to the disruption.”

Fashion Brands Face Seasonal Squeeze

Apparel hubs in India and Bangladesh produce clothing for Tommy Hilfiger, Gap, Zara and H&M. These companies depend on the Strait of Hormuz to ship products to European Union and Middle East markets.

The month-long delays from African rerouting create timing problems for seasonal merchandise. In fashion, a month can mean the difference between selling products at full price and marking down out-of-season inventory.

Supply chain expert Bahl noted the “primary risk retailers face is uncertainty around lead times” as unstable shipping routes “disrupt replenishment schedules and create stock imbalances across sales channels.”

Energy Disruption Compounds Problems

Approximately 30% of global seaborne oil trade and 20% of liquid natural gas trade has been disrupted since the conflict began. Crude oil prices surged 26% while bunker fuel costs doubled. All four major container lines suspended operations through Hormuz.

Fatih Birol, head of the International Energy Agency, called the crisis “the largest supply disruption in the history of the global oil market.”

Global stocks have fallen 5.5% since the war began, with Asian markets hit hardest. Oil and gasoline price spikes are weighing on inflation-weary consumers worldwide.

Long-Term Recovery Uncertain

Even if the strait reopens and fighting stops, experts expect months before oil markets resettle and shipping returns to normal. Roland Berger analysts recommend companies “identify supply chain vulnerabilities, secure critical materials, and increase safety stocks where risks are highest.”

For an industry employing tens of millions across South and Southeast Asia, the implications extend beyond corporate balance sheets to worker livelihoods as production schedules face continued disruption.