Linen supply chains: Supply and demand

Jan Raycroft reports on the latest in the supply chain challenges faced by linen suppliers

There was a temptation to describe this magazine’s third foray into supply chains – and cotton and textiles in particular – as The NeverEnding Story, but that title has already been taken by a very successful fantasy book and subsequent film series for a mainly young audience. In any case, our ‘magical journey’ has been one for the industry’s grown-ups to grit their teeth through, with plot lines which would seem ridiculous if we didn’t know they’d actually happened.

The NeverEnding Story’s adversary is the Nothing, a dark force aiming to engulf the wonderland world of Fantasia. In real life, for those reliant on international supply chains the draining battle without respite in recent times has been more like tangling with a many-headed monster.

The pandemic – that was the biggie, with some ports across the planet virtually closed. Ships stuck in the wrong place, containers likewise, with many piled up on land to hold emergency supplies or goods waiting months to be shipped. And if you did manage to get linen on a ship the cost was as much as 12 times higher than previously to move it from A to B. In some cotton producing and textile manufacturing countries, such as India, seasonal workers from cities in lockdown could not travel to their usual work in fields or mills. But, frankly, wherever you were, food supply lines, PPE and medical equipment took priority, and the headlines were always going to be about hospital staff’s mask and gown shortages rather than how much it cost to get a duvet cover from cotton in a field to a hotel bed in the UK. Just when we were getting used to Covid (yes, that does sound trite, but the arrival of vaccinations and milder variants gave new hope) war in Ukraine did more than disrupt supplies of sunflower oil from that country. Already weakened economies got the jitters, once again worldwide supply chains were strained and exactly what would happen in the conflict was the great unknown, with NATO countries building armaments supply chains to Ukraine while refugees came the other way. Some 400 plus days in, that one rolls on to an uncertain conclusion, and lurking for a possible spin-off series is The China Factor, with rumbles over the manufacturing giant’s threatening attitude towards Taiwan alongside concern in the West over China’s increasing global influence. Who remembers when all we had to worry about was what was happening in North Korea? And yet, there was more to come in what might now be better billed as The NeverEnding Crisis. Rocketing energy prices was just about the last thing linen manufacturers and suppliers, laundry and linen rental operations, plus hospitality as a whole, needed just as the pandemic faded away and shipping costs levelled out. Inflation, now at a 40-year high, bites right along the linen supply chain from manufacturing through to delivery.

Jan Raycroft reports

The costs for shipping freight have now come down after some extreme peaks in recent years

The cost-of-living crisis is in our faces with every bill or visit to a supermarket and the truth is that linen was undervalued and under-priced long before this latest development. If laundry or linen rental costs are rising, it’s not profiteering but reality. There’s a huge effort right now, led on several fronts by organisations like the TSA and British Cleaning Council. It covers government support for our industry (a tough gig), putting more value on linen, and sustainability initiatives to ensure it has a longer life and doesn’t end up in landfill. But back to supply chains and a cloudy crystal ball as to what the future holds. Firstly, we have to hand it to Vikas Shah, CEO of The Swiscot Group, who over a year ago told us: “There is absolutely no doubt in our minds that we are going to see a sustained period of higher pricing across all periods over the next 12 to 18 months – whether we look at cotton, energy, input materials, freight or any other metric, there are no signs in forward charts of this easing off.” The first few months of 2023 has seen the global cotton and textile industry impacted by various factors, including climate change, labour issues, and geopolitical dynamics, Shah says, citing how unpredictable weather patterns have led to uncertainty in cotton yields globally. Additionally, labour issues, especially in regions where rights are often neglected, pose both ethical and operational challenges. But, he’s still sensing a determination to overcome the issues: “Despite these challenges, we believe there is a sense of hope and optimism in the sector. “Our supply partners have been investing in advanced technology and sustainable practices – alongside which they have been deploying state of the art machinery and techniques in production. Over the past decades we have also been working on consistent improvements in supply chain transparency, traceability, and standards. “For us, concerns remain over supply from countries which simply cannot provide the quality, transparency and sustainability required for this industry – Egypt for example, has seen several (well publicised) instances of fake labelling and quality inconsistency which have plagued its reputation – not to mention deep reliance on disputed water supplies, and political instability.” Among those who live and breathe how raw products and manufactured goods move around the planet is research analyst and author Lora Cecere, the US-based founder of Supply Chain Insights, which delivers independent advice for supply chain leaders. In a recent article for Forbes, Cecere warned that supply chain normalcy is still not yet in sight, even with logistics availability and some costs returning to pre-pandemic levels. Inflation, volatile demand levels and unresolved world tensions mean supply constraints continue, she warns. Those who specialise in this area know all about the Global Supply Chain Pressure Index, produced by the New York Federal Reserve Bank, which provides a comprehensive summary of potential supply chain wrangles using data on ocean shipping and air freight costs, as well as monitoring delivery times and backlogs in significant economies, including the UK. In March it fell to its lowest level for some time, but Cecere told Forbes readers not to ‘exclaim the end of three-years of unprecedented supply chain disruption. I say, ‘Not so fast.’ The supply chain team is attempting to drive uphill, but visibility is low, and uncertainty is high.’ Moving on to cotton prices, the start of the ‘cost chain’ in all this, it’s not surprising that the graphs of recent years look all too familiar, with pandemic and energy price spikes. The raw cotton price rose by 44 per cent in 2021 but by the end of last year had dipped by a third and has remained fairly steady since then. We could do with a quiet global year, but too many variables are still in play. China and India remain the biggest cotton producers, ahead of the US, Pakistan, Brazil, Australia and Uzbekistan, while the US is the biggest exporter. India’s Cotton Association is monitoring a decline in cotton production there and expects the country to soon change its status from a net exporter to importer. Cotton, is not the only commodity where the supply chain is affecting linen costs. The price of oil needed to produce polyester is also a volatile factor. All of this has knock-on effects for those who manufacture and supply linen products in the UK, alongside the linen rental services and laundries. And that’s before we consider the ‘local difficulty’ of inflation in the UK impacting on all production costs, from labour, energy and transport to other raw materials needed in their processes, such as detergents and chemicals.

No wonder the TSA are driving a campaign to get end users to realise the true value of even a single pillowcase. Interestingly, it’s one of the UK-based linen suppliers who weathered best the effects of the pandemic on supply chains where we find a remarkable insight as to what happened as Covid and its restrictions ended that led to such complaints.”

And there was something else… what had happened to some of the linen in hotels and restaurants which had been closed for months. Linen suppliers were now being begged by rental operations for replacement stock long before it would normally have been due pre-pandemic, putting more pressure on supply chains. Vanished stock and misplaced or poorly stored clean linen was just one side effect factor of lockdowns. Alongside this was linen which would never make it to a hotel bedroom or bathroom again. Some bags of dirty linen eventually arriving at laundries had been left damp so mildew had developed, while other items had suffered ingrained chemical damage that might have been dealt with if the linen had gone through a specialist washing process many months previously. Exasperating! And hardly helping with efforts towards a sustainable future. This makes the professional response of laundries and organisations such as the TSA alongside UKHA (UK Housekeepers Association) particularly refreshing. They’ve shared the pandemic ‘war stories’, come to understand what happened and why, and are determined to make best practice the mantra. This is a big topic for laundries serving hospitality, such as CLEAN, where there’s a drive to help hotels improve matters such as their stock-taking accuracy and linen storage methods in tandem with suppliers such as Vision Support Services who are also seeking to see linen far more valued. Ted Walker, head of group marketing at CLEAN, says: “We are all definitely investing far more time and effort into prolonging the life of linen, very much as what should be part of the circular economy. It’s about much more than recycling – the aim must be for linen to last its maximum amount of time. That’s of benefit not just to us in laundries or hotels, but for everyone else and the environment.”

This is a big topic for laundries serving hospitality, such as CLEAN, where there’s a drive to help hotels improve matters such as their stock-taking accuracy and linen storage methods in tandem with suppliers such as Vision Linens who are also seeking to see linen far more valued.

Ted Walker, head of group marketing at CLEAN, says: “We are all definitely investing far more time and effort into prolonging the life of linen, very much as what should be part of the circular economy. It’s about much more than recycling – the aim must be for linen to last its maximum amount of time. That’s of benefit not just to us in laundries or hotels, but for everyone else and the environment.”

Supply chain resilience and sustainability go hand in hand for Stephen Broadhurst, managing director of Star Linen in South Wales. And while he’s happy to talk about world events and pricing, Broadhurst has been shifting much of his supply chain to local businesses and those across the UK.

This is not just about the finances of good business practice, but The Star Way, a sustainability mission encompassing local people, Star employees, the impact of their activities on the planet and being an ethical business. Not that long ago this would all seem a bit lofty, but the practical implementation is impressive. Broadhurst reckons that close to 60 per cent of his business is now fully UK-based as he wouldn’t accept that finishing of products, like filling pillows or stitching, needed to be done abroad. The result is contracts to do that work in towns like Blackpool and Blackburn.

But there are frustrations which are difficult to overcome right now: “The scary thing then was shipping costs. During the worst of it we might be expected to pay a ridiculous $18K to get a shipping container here, and now that is back to around $2K. But road freight costs have jumped enormously, and you start to think it’s going to cost you more to get the goods just from Southampton to South Wales than it did to bring them thousands of miles by sea.”

But back to local initiatives and while Broadhurst might naturally like to keep an eye on the competition, he’s full of praise for an initiative by Richard Haworth, part of the Ruia Group, where those who live nearby the business’s Kearsley Mill at Stoneclough, Manchester have been finding out what goes on inside, and even trying their hand at skills like sewing. Richard Haworth’s marketing manager David Stockton takes up the story: “There are people who pass this impressive building every day but have no idea what happens here. We’ve invited them in and even shown them how to sew a pillowcase. There is a recruitment element to this as two people have come on staff after attending the open day.”

As for the bigger picture, Stockton shares Broadhurst’s cautious optimism: “We’re not out of the woods yet and what happens in the US still washes across the world.” They’ll be keeping an eye on US dollar rates. “It’s hard to predict what’s around the corner with so many unknowns,” says Stockton. “So much has changed in the past three to five years. But by and large from my side we are heading in the right direction now. Mind you, the busy buying team at the sharp end might disagree with that a bit as a lot of the hard work starts with them!”

Lora Cecere, the US-based founder of Supply Chain Insights

Alan McClay, CEO of Better Cotton

That sounds much better

The Better Cotton Initiative (BCI) has become the world’s largest cotton sustainability programme, helping cotton communities survive and thrive, while protecting and restoring the environment.

UK members include Richard Haworth, Vision Linens and Tonrose. With offices in 12 countries and staff and members across the planet, there’s a definite momentum here. A record 410 new members joined last year, and the organisation secured funding of over one million EUR to continue their work for traceable Better Cotton. They’ve also launched their 2030 strategy targets, focused on pesticide use, women’s empowerment, soil health and smallholder livelihoods.

BCI has been piloting innovative traceability technologies from within India’s cotton supply chains to determine the best way to boost transparency. The project’s results will inform the scaled direction of Better Cotton’s traceability system, set to launch later this year. Alan McClay, CEO of Better Cotton: “After consulting with our members across the supply chain and getting to grips with their needs and pain points, we’ve taken those learnings and tested solutions in India to bring traceable Better Cotton to life.”

BCI opposes all forms of ‘greenwashing’ and welcomes the fact that both consumers and lawmakers have caught on to ambiguous claims like ‘zero emissions’ or ‘eco-friendly’ and are taking steps to make sure claims are verified. It’s bound to be a discussion point at this year’s Better Cotton Conference taking place in Amsterdam (and virtually) on 21 and 22 June.

Global tensions remain

Product authenticity in the global supply chain remains a big issue, with traceability technology no doubt having a part to play. In March, US customs officials announced they’d detained nearly $1 billion worth of shipments believed to have links to Xinjiang in China.

There’s been a ban on cotton imports from Xinjiang since last summer, mainly due to the treatment of workers there, including forced labour, something which China hotly denied. Meanwhile in Uzbekistan, monitors found no evidence of government-imposed child or adult forced labour during the 2022 harvest, but isolated incidents of forced labour and extortion were recorded in some districts with a shortage of voluntary pickers.

Add in local officials under threat of penalty if they don’t recruit enough pickers, and farmers vulnerable to exploitative practices and there’s still room for improvement here. Indeed, the Uzbek Forum for Human Rights and Cotton Campaign are calling on the Uzbek government to allow workers and farmers to form elected unions and associations to counter such pressures. Although Uzbekistan has re-entered the world’s cotton market some major brands are still hesitant about using cotton from there. Beyond all the man-made issues, the natural world had a part to play in 2022 and in cotton growing areas this hit supply and impacted on prices until a rebalance saw them drop. In the US droughts led to the worst harvest in a decade, with some Texan farmers actually abandoning production. Meanwhile, too much water was the problem across the world in Pakistan as flooding led to a drop in output there by over a third.

While India has been beset with problems regarding just how much of its supposedly organic cotton is just that, there’s been a major trend here with increased imports of raw cotton for use in the textiles industry. A major beneficiary of all this has been Australia. In 2022 imports from Australia rose fourfold on the previous year, valued at $283.766 million.

In Brazil the cotton price slump was particularly marked, with farmers in need of cash dropping prices as demand for finished cotton products fell. Farmers with lower quality cotton in the 2022-23 harvest were most inclined to accept lower returns while some with higher quality yields dug in for better returns.

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