Inditex, the parent company of Zara, has dramatically increased its reliance on air freight from India to Spain’s logistics hub, partly as a response to disruptions to global shipping routes. But such dependence, especially across such a significant distance, hassparked questions about whether the fast-fashion giant is making sufficient strides toward reaching its sustainability goals. Let’s have a look at Zara’s increasing dependency on India as a manufacturer.
India’s growing importance in Zara’s supply chain
India, alongside Bangladesh, remains one of Zara’s major supplier countries, providing a substantial share of its apparel. Inditex sent 3,865 consignments by air from India in the 12 months ending in August 2024, a 37% increase compared to the previous year, according to data analysed by Reuters. This shift was particularly pronounced after attacks on container ships in the Red Sea disrupted traditional shipping routes.
In the first eight months of 2024, air freight accounted for 70% of Zara’s shipments from India, up from 44% in the same period last year. For Bangladesh, the share rose to 31% from 26%. These figures underscore the growing reliance on air transport to ensure timely delivery, cementing India’s pivotal position in Zara’s global operations.
The cost of speed: Air Freight vs Sustainability
While air freight ensures faster delivery, it comes with a significant environmental cost. Air transport generates substantially higher carbon emissions compared to sea freight. In the past year, Inditex’s transport emissions surged by 37%, now accounting for 12.1% of its total emissions in 2023, up from 8.4% in 2022.
Inditex has committed to halving its Scope 3 emissions, which include transportation, by 2030 compared to 2018 levels. However, its 2023 emissions stood at 16,418,450 metric tons of CO2 equivalent, a marginal 0.2% increase from 2018, highlighting the challenge of balancing operational efficiency with sustainability goals.
Why Inditex is turning to air freight
The decision to increase air freight is driven by the need to avoid shipping delays that could disrupt Zara’s just-in-time inventory model. This model depends on quick turnarounds to keep up with fast-changing fashion trends and minimise excess stock. Delays could lead to unsold inventory, forcing Zara to resort to discounts that would erode profitability.
Some investors back Inditex’s approach, prioritising short-term operational efficiency over immediate sustainability gains. “In the short term, we would rather Inditex do what’s necessary to support profitability and generate cash, as long as they can still reduce overall greenhouse gas emissions,” said Nick Clay, portfolio manager at Redwheel Income Strategy.
Zaragoza: The heart of Zara’s logistics network
Most of Inditex’s air consignments from India arrive at Zaragoza, a key logistics hub for Zara in Spain. The airport saw a 39% increase in cargo movements in January-September 2024 compared to the same period in 2023, with Zara accounting for nearly two-thirds of its cargo activity.
This surge reflects a broader trend. Spanish Trade Agency data shows a 28% increase in fashion goods imported by air in January-September 2024 compared to the same period last year, signalling the growing importance of air freight in maintaining supply chain resilience.
Balancing profitability and sustainability
Inditex faces a delicate balancing act. To meet its emissions targets, the company will need to offset rising transport emissions by making deeper cuts in other areas, such as material sourcing and production processes. At its annual shareholder meeting in July, investors urged the company to provide detailed data on air freight emissions and outline strategies for reduction.
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Meanwhile, Inditex is exploring alternative measures like optimising routes, using alternative fuels, and increasing load efficiency to mitigate the environmental impact of air transport.
India’s role in Zara’s supply chain has never been more critical, as evidenced by the brand’s increased reliance on air freight from the country. While this strategy ensures operational efficiency and timely delivery, it comes with environmental trade-offs. Inditex’s ability to balance profitability with its long-term sustainability goals will determine how successfully it navigates these challenges in the years ahead.
