Red Sea Houthi attacks: How our company Bags of Ethics is coping

The father and daughter run sustainable packaging firm is experiencing supply chain challenges due to rocket attacks
BizAge Interview Team
Dr. R. Sri Ram and daughter Smruti Sriram
Dr. R. Sri Ram and daughter Smruti Sriram

Supreme Creations/ Bags of Ethics is the world's largest manufacturer of reusable bags, eco-friendly packaging and merchandise run by father and daughter duo Dr. R Sri Ram and Smruti Sriram. They have been successfully running their sustainable textile company for 25 years helping the world’s biggest brands in the fashion, lifestyle and beauty sectors including Dior, Nike, Google, London Fashion Week, Selfridges, Harrods Co-op and Sainsbury’s to navigate the sustainability landscape and to make responsible sourcing decisions.

Headquartered in London with a factory in Pondicherry in India, the company has been responsible for the reduction of more than 30 billion single-use plastic bags in its 25-year history. When the plastic bag ban was implemented in 2005, the company produced the first Fairtrade cotton shopping bag for Co-op and pioneered Tesco's “Ladybird Jute Bag”.  

Business Age asked Dr Ram how the Red Sea attacks by Houthi rebels are affecting their firm.

Hi Dr Ram! How are you coping with Houthi Red Sea terror attacks?

The past three months have presented significant challenges for us. About 90% of our sea shipments have been impacted by the red sea crisis, affecting exports to Europe, Australasia, and Africa.

Our factory is located in Pondicherry, South India and relies on the nearby port of Chennai, a prominent global hub for both sea and air shipments. Currently, we are witnessing delivery delays of up to 4-5 weeks as ships have had to reroute via the southern tip of Africa.

These delays aren't limited to exports alone; our imports to India are also affected. We import advanced, high-tech machinery from Germany, essential for manufacturing our refined and luxury goods. Unfortunately, we are experiencing similar delays of 4-5 weeks for these imports as well.

Do you have a mitigation plan in place for your shipments?

We are fortunate to maintain a close relationship not only with our clients but also with our logistics providers. Through constant updates from our partners on the ground, we stay well-informed about the latest situations, enabling us to communicate effectively with our clients and plan ahead as much as possible.

Our tightly integrated supply chain plays a crucial role in circumstances like this. With quality, design integrity, and intellectual property all managed under one roof, we can swiftly adapt our supply chain and respond quickly to challenges. As part of our proactive approach, we have begun to ramp up production volumes and increase the frequency of shipments by sea. This ensures a higher stock availability in the UK, allowing business operations to proceed smoothly with minimal disruption to our clients.

How are you managing the rise in costs?

Up to this point, we've absorbed the expenses internally, to shield our customers from any undue distress or financial burden. To provide context, air freight rates have surged by 150%, while the demand for sea freight distribution from India has skyrocketed by 80%. These increases are significant and place substantial strain on our operations.

Should these conditions persist, we may need to transfer some of the associated costs to our clients. However, we remain committed to minimizing any potential impact on them to the best of our abilities.

What is the plan going forward?

In this vastly changing environment, we need to be agile. Before the disruptions in the Red Sea, we encouraged our customers to plan ahead as much as possible. Encouraging them to schedule orders well in advance to facilitate transportation via land and sea, rather than relying solely on air freight. We collaborate closely with our clients to prioritise shifting items to sea and land shipments, given its lower cost and more environmentally friendly nature.

Currently, we are employing a hybrid approach of air and sea freight to manage the situation effectively. However, our ultimate goal is to revert back to land and sea transportation, which aligns more closely with our eco-conscious values. We remain hopeful that such a transition will be feasible in the near future.

Written by
BizAge Interview Team
March 20, 2024