One battle after another entered the vernacular as an Oscar-winning film but it could easily sum up the last few years of the apparel supply chain. With each new shock, the apparel industry is being forced to confront long-entrenched weaknesses that can no longer be ignored.
In the case of the war in Iran, shortages and price hikes are forcing fashion to finally adopt some urgency related to the energy risks that threaten productivity, sustainability and margins. With multiple production hubs reliant on oil and gas imports from the region and oil shortages impacting man-made fiber production volumes and prices, a protracted conflict could throw the entire value chain into crisis.
Here, six sourcing and retail experts explain where energy typically ranks in the larger sourcing matrix, how that’s likely to change now and what the industry must do to avoid similar crises in the future.
Steve Trayner
President of Sales
CFL, a supply chain management operating across 13 countries
Before the war, to what degree did energy factor into sourcing decisions?
It always mattered. It just wasn’t on anyone’s scorecard.
Brands obsess over CMT [cut, make, trim], fabric cost, lead time. Almost nobody asks their factory what they’re paying per kilowatt-hour — or how many hours of grid power they lost last month. But energy is baked into every quoted price. Dyeing, finishing, washing — wet processing alone accounts for over half the thermal energy in a textile plant. If your factory runs on coal or imported LNG [liquified natural gas], that cost is in your garment. You’re just not reading it.
I’ve been in factories in Bangladesh losing 4 to 10 hours of power a day. Diesel generators at double the grid rate — or machines sitting idle while your delivery deadline doesn’t move. Vietnam, same story. In 2023, a drought knocked out 11 hydropower plants and factories went dark for 26 hours straight.
The issue was never that energy didn’t matter. It’s that most brands never modeled it. They looked at unit cost and assumed everything behind it was stable. It wasn’t.
“When that chokepoint closed in February, factories didn’t just get more expensive — they went dark. The brands that win will treat energy reliability the way they treat quality and lead time — as a non-negotiable.”
—Steve Trayner, CFL
How will energy shape the future of sourcing?
The Strait of Hormuz just made energy the defining variable for the next decade.
Bangladesh imports 72% of its LNG through that strait. Pakistan, 99%. When that chokepoint closed in February, factories didn’t just get more expensive — they went dark. Manufacturing costs across Asia are up 10 to 20 percent in 2026, and energy is the biggest driver. Not labor. That’s a structural shift.
The old model of chasing the lowest CMT in the most energy-fragile country is breaking. The brands that win will treat energy reliability the way they treat quality and lead time — as a non-negotiable. What’s your energy mix? Do you have backup generation? What happens to my production when the grid drops?
If your supply chain depends on uninterrupted energy in countries that import most of theirs through volatile maritime chokepoints, you don’t have a supply chain. You have a bet.
Rohit Joshi
Chief Operating Officer and Vertical Head
Impulse International, a sourcing company based in India
Before the war, to what degree did energy factor into sourcing decisions?
The whole supply chain from yarn to finished garment requires energy that is both regular and in increased supply.
Textile and apparel is one of India’s largest energy-consuming manufacturing sectors. Out of the 20% to 25% cost factored in the total garment costs as overhead, energy is one of the largest components.
The south has undertaken massive investment in solar and wind energy and so has other parts of India, however this is still 30% to 35% share of total energy consumption overall in India and 15% to 20% in this sector.
MSME [micro, small and medium-sized enterprises] specifically having traditional set ups are very dependent on traditional energy sources. Efforts are being made that in new apparel zones and new investment in this sector, the energy source is less dependent on traditional and is using renewable energy more.
“The high reliance on imports, however, cannot be reduced in the short or mid-term. The long-term strategy is to find renewable alternatives and reduce process loss.”
—Rohit Joshi, Impulse International
How will energy shape the future of sourcing?
The Iran/Middle East conflict has been influencing the apparel and textile business negatively at the moment with escalating costs, uncertainties and fluctuations in raw material prices. Impacts include:
- Rising processing costs due to industrial LPG [liquified petroleum gas] shortages and regulation in supply and escalating prices.
- Polyester, spandex and other related products cost increases. Polyester prices have gone up by 25% and dyeing cost as well is up by 25%. Also, other processing costs are up by 15%.
- Increased logistic costs and import costs on accessories, Australian cotton, U.S. cotton, performance properties, including Teflon, wicking, odor resistant, Lycra, etc, from Huntsman/Dupont etc.
- Absenteeism has increased due to labor moving away from metro areas due to the rise in costs.
- Dyes and chemical costs have increased due to logistical and import cost increases.
Factories are currently not asking for an upcharge on the prices, however if this were to persist there would be an inevitable rise in prices.
Factories are currently working on some projects to increase utilization of renewable energy, on energy optimization and preventing loss/mapping in each process.
The high reliance on imports, however, cannot be reduced in the short or mid-term. The long-term strategy is to find renewable alternatives and reduce process loss.
Avdhesh Sharma
Group CEO
Asmara International, a sourcing firm with operations in 13 countries
Before the war, to what degree did energy factor into sourcing decisions?
Honestly, it’s too large a factor to be influenced by small and moderate-sized companies like us. Not just energy reliability and cost, our overall strategy takes into account most macro-economic factors, even before we establish a new operation. We are present in most Eastern hemisphere sourcing hubs, thereby helping us across most macro-economic factors.
“When such events transpire, these factors gain even higher significance for customers/ brands. More than cost, it’s the reliability of supply that becomes critical.”
—Avdhesh Sharma, Asmara International
How will energy shape the future of sourcing?
When such events transpire, these factors gain even higher significance for customers/ brands. More than cost, it’s the reliability of supply that becomes critical. Under the current circumstances, China and Vietnam were least affected by ongoing disruptions. Therefore, we foresee sourcing consolidating around Vietnam and China, due to material supply reliability in spite of the disruption. Vietnam’s proximity to China implies limited and faster cross-country material movements. Countries with better logistics infrastructure will get precedence over countries with substandard logistics infrastructure. We also foresee Latin America gaining importance in short to medium term for these very reasons.
Ranjan Mahtani
Founder & Executive Chairman
Hong Kong-based Epic Group, which operates production facilities across Sri Lanka, Jordan, Ethiopia and India
Before the war, to what degree did energy factor into sourcing decisions?
Energy reliability and cost have been integral to how we design and operate manufacturing facilities. Our early approach to green buildings (with LEED certification) was to ensure energy efficiency. These initiatives, along with rooftop solar and continuous investments in energy efficiency across the last decade, have helped us mitigate the impact of energy price volatility. We do have backup generation, but these do not fully insulate us from the type of disruption we are facing now, as supply of all fossil fuels are constrained.
The price and availability exposure varies in different countries, with Bangladesh having a larger exposure compared to India and Ethiopia. However, these risks are inherent to the national grid and fuel infrastructure and sourcing approach of the country, and as manufacturers, we have little ability to influence them. This variability reinforces why geographic diversification must now include energy infrastructure assessment as a core criterion.
Our factory in India, Trimetro Garments, is designed as a net zero facility with rooftop solar, battery storage and solar PPAs [power purchase agreements] to cover full electricity use, coupled with sustainable biomass for thermal energy needs, which significantly insulates us from price and availability challenges. This approach also provides cost predictability that allows us to offer more stable pricing to our brand partners over multi-year contracts.
“Energy resilience has become a primary driver behind sourcing decisions—not just as a way to control costs but also to ensure smooth operations.”
—Ranjan Mahtani, Epic Group
How will energy shape the future of sourcing?
The recent energy crises have exposed just how vulnerable manufacturing countries are to supply shocks, especially in regions reliant on imported coal, gas and oil. This has forced manufacturers and brands to rethink how energy factors into their long-term strategies.
Energy reliability and cost will play a much bigger role in shaping the future of fashion manufacturing. For one, countries with high energy independence will see fewer price and availability challenges. Factories with strong investments in renewable energy infrastructure (and countries that allow programs such as renewable energy PPAs) will increasingly outpace those that remain dependent on volatile, imported fossil fuels. For example, India has become a key market for us because of its Open Access programs that support renewable energy targets and a growing, diversified energy mix, which provides greater long-term stability and security.
Brands and manufacturers must also maintain sufficient geographical diversification based on structured risk analysis that factors in energy security alongside trade/tariff risks, geopolitical stability, logistics, climate resilience and social stability.
Energy resilience has become a primary driver behind sourcing decisions—not just as a way to control costs but also to ensure smooth operations. Facilities that can incorporate renewable energy systems or source energy locally will have a clear competitive advantage. At Epic, we’re already thinking this way. A project like Trimetro, which integrates renewable energy into its core design, isn’t just about cutting emissions—it’s about building a facility that future-proofs operations while meeting evolving brand expectations around both sustainability commitments and supply chain reliability.
It’s clear that energy security and resilience will be among the primary factors shaping where and how the industry operates in the coming years.
Nitin Gupta
CEO & founder
Maavi Global, a sourcing advisory
Before the war, to what degree did energy factor into sourcing decisions?
Energy reliability and cost is definitely a supply chain factor but it’s historically been very low in the scheme of things to plan for. I always say the fashion supply chain is the most complex piece of planning on the planet; anything and everything that can go wrong does go wrong.
In all of my years of global sourcing and production destination decisions, it probably was only Pakistan or Egypt that had been historically badly affected by a highly unreliable electric grid, where we had to specify to factories that a diesel generator was a must.
Similarly, about 25 years ago some factories in Bangladesh also faced electric issues and we had to ensure our physical inspection of the factories covered this aspect. Bangladesh then managed to secure enough electricity due to the prime focus on apparel as an economic vehicle of growth. Pakistan still struggles. The other countries have never been an issue on the energy front. The Suez Canal shutdown was another wake-up call on sea transit — not an energy issue but how a bottleneck on the high seas can affect a whole chain.
“After the tariff shocker, the energy shocks into the system will ensure higher costs of manufacturing going forward. It is now virtually impossible for the makers to keep absorbing the increased costs.”
—Nitin Gupta, Maavi Global
How will energy shape the future of sourcing?
China was the smartest country, which set up hubs in cities so components didn’t have to travel across the length and breadth of a country using up precious fuel. Even then, it is now one of the most affected countries. Almost all of Asia is heavily dependent on petroleum and gas coming in from either the West/West Asia or Russia. And it’s how most processes are run, from yarn to apparel. None of these countries have proven resources inland, so they will continue to be heavily import driven.
After the tariff shocker, the energy shocks into the system will ensure higher costs of manufacturing going forward. It is now virtually impossible for the makers to keep absorbing the increased costs. Retailers have to increase costs, reduce markdowns and train the consumer to pay more. They have to adapt more efficient ways of running their business and P&Ls. On a recent visit to both Zara and Uniqlo, one notices that retail prices have been increased. The $30 linen shirt at Uniqlo is now $50. The $59 cotton sweater at Zara is now $79. And these are probably the best run fashion companies. The others have to do the same or face financial ruin.
The other problem I always mention is that every shock to the supply chain keeps pushing back the focus on sustainability. When costs are being constantly directed at firefighting, who has the money and bandwidth to build a new house altogether?
Sustainability and product integrity always suffers when the costs are under strain. And the fashion world just keeps on getting up, brushing their clothes off and carrying on like before. The “learning” part invariably doesn’t happen.
Murali Gokki
Managing Director & Retail Performance Improvement Co-Lead
BRG, a global consulting firm
Before the war, to what degree did energy factor into sourcing decisions?
The global trade environment has become increasingly challenging, with disruptions from tariffs and ongoing geopolitical events piling on complexities for supply chains worldwide. The reality is that most existing systems and processes just weren’t designed to handle this level of turmoil. Leading organizations have set up crisis management task forces and “situation rooms” to try to keep pace, but even these efforts are being stretched thin.
Regarding energy reliability and cost, even prior to the latest conflicts, these factors played a significant — if sometimes underappreciated — role in sourcing decisions. Since the pandemic, energy prices had been relatively stable and were even trending downward until the recent escalation of tensions in the Gulf region. Energy expenses don’t just affect production and transportation; they also impact raw materials, especially those that are petroleum-based. Still, many companies rely primarily on supplier should-cost models and broad market tracking tools to manage these costs.
“With a multi-tiered value chain, today’s systems aren’t sophisticated enough to proactively identify bottlenecks or pinch points, leaving sourcing teams to manage with limited options.”
—Murali Gokki, BRG
Given that many key production countries depend on energy imports, the recent back-to-back disruptions caused by conflicts have made the landscape even more volatile. The impact is complex. Beyond just cost considerations, an unreliable energy supply can cause production downtime and raw material shortages. With a multi-tiered value chain, today’s systems aren’t sophisticated enough to proactively identify bottlenecks or pinch points, leaving sourcing teams to manage with limited options — be it adjusting lead times, expediting production or transportation, prioritizing which items to produce or switching suppliers where possible.
Ultimately, I believe that almost every aspect of supply chain strategy needs to be revisited to meet the demands of this highly strained environment.
