20/11/2024
Inditex Ramps Up Air Freight to Sidestep Shipping Delays Amid Red Sea Crisis
Inditex, the parent company of Zara, has significantly increased its reliance on air freight to transport clothing from factories in India to its logistics hub in Spain, according to new trade data. This shift comes as the fashion giant faces disruptions in global shipping routes caused by instability in the Red Sea, but it raises concerns about the company’s environmental commitments.
Key Changes in Supply Chain Strategy:
Increased Air Freight: Over the past year, Inditex has sent 3,865 shipments by air from India—a 37% increase compared to the previous year. By August 2024, 70% of shipments from India used air freight, up from 44% in 2023.
Bangladesh Also Affected: For shipments from Bangladesh, the share of air freight rose from 26% to 31%.
Zaragoza as a Hub: Most shipments arrived at Zaragoza airport, where Zara's logistics operations dominate cargo activity.
Climate and Emissions Challenges:
While air freight ensures timely delivery, it produces significantly higher carbon emissions than sea transport. Inditex, which aims to cut its Scope 3 (indirect) emissions by 50% by 2030, saw its transport emissions rise by 37% in the year ending January 2024.
Transport emissions now account for 12.1% of the company’s total emissions, compared to 8.4% in 2022. This increase complicates Inditex’s sustainability goals, forcing the company to offset rising transport emissions by making deeper cuts in other parts of its supply chain.
Balancing Profitability and Sustainability:
An Inditex spokesperson emphasized the company’s commitment to reducing emissions through measures like optimizing routes, using alternative fuels, and improving cargo efficiency. However, some investors prioritize maintaining profitability during shipping crises.
Nick Clay, portfolio manager at Redwheel Income Strategy, stated, “In the short term, we would rather Inditex do what's necessary to support business profitability, provided they continue reducing overall greenhouse gas emissions.”
Broader Trends in Spain:
The rise in air freight by Inditex mirrors a broader trend in the Spanish fashion industry, where air imports of clothing surged 28% in the first nine months of 2024 compared to the previous year.
As Inditex navigates this delicate balance between speed, profitability, and sustainability, its ability to adapt its operations while addressing climate concerns will be closely watched by stakeholders.
