Europe wants to clean up a growing glut of textile waste, fuelled by rising consumption of low-value fast fashion. Some say the market is collapsing under the strain.
On Monday, two major European recycling lobbies put out a stark warning: the sector is facing “an unprecedented crisis, even more significant than during the Covid-19 pandemic,” they said. Since the spring, the price of sorted secondhand garments has been lower than the cost of processing them, according to the groups. Without support, the sector faces “widespread bankruptcy,” they said.
The rag trade is being buffeted from multiple directions. The wars in Ukraine and the Middle East have disrupted key markets and increased logistical costs, wreaking havoc on an industry that runs on razor thin margins; growing regulatory scrutiny is fuelling uncertainty about the industry will be operate in the future; but a key culprit is the growing volumes of low-value ultra-fast-fashion pouring into the system and messing with the delicate economics of the trade.
“It’s the perfect storm,” said Mohammed Patel, business development manager at UK trade group the Textile Recycling Association (TRA).
Skimming the ‘Cream’
Europe’s rag trade has always been a volume game. Traders collect and sort through tonnes and tonnes of material in search of so-called “cream,” the highest-grade, highest-value products. The process is labour intensive, which makes it expensive. And if there isn’t enough cream in the mix, traders can’t recover their costs.
That’s increasingly a problem as the value of clothes coming back into the system declines thanks to the relentless churn of the low-cost fast fashion market.
“Volumes keep going up and the overall value has been going down,” said Francois Souchet, managing director at consultancy Swanstant. “It was just a question of time before we reached a breaking point.”
And it’s not just that there’s less premium product available, traders say the proportion of material coming back into that market that has no secondary market is also increasing. A decade ago, an average of around 67 percent of the material being collected in Scandinavia, Germany, Austria and Italy could be reused, now that proportion is 64 percent, said Karina Bolin, president of secondhand clothing federation Humana People to People in Italy and Bulgaria.
“[There’s now] simply too much of the low quality which [traders] cannot shift,” TRA chief executive Alan Wheeler said in an email.
A Geopolitical Storm
But it’s not just a supply issue that has thrown off the European rag trade’s delicate economic balance.
The biggest market for the high-value products that kept the trade afloat was eastern Europe, but the war in Ukraine means that trade route is now blocked. Surging exports of both new and used clothes from China to markets in Africa is ratcheting up competition in other major markets, traders say. Meanwhile, conflict in the Middle East has pushed up freight rates and shipping times to countries like Dubai — a major sorting hub — and Pakistan, where a lot of products that can’t be reused are ultimately sent for processing.
“We’re a thin margin business,” said Steven Bethell, co-founder at Bank & Vogue, a leading player in the global used clothes market that moves more than four million garments a week. “These things add up.”
The trade itself is also becoming more controversial, with advocacy groups warning that receiving countries have become dumping grounds for rich country’s fashion discards. While exactly how much of the secondhand clothing exported to markets in Africa and Latin America is trash on arrival is the subject of increasingly heated debate, piles of imported fashion waste in Chile’s Atacama desert and tangled textile snarls on Ghana’s beaches have become powerful visual symbols of the high environmental cost of throwaway fashion.
“Whatever the European exporters are feeling today is just a pinch of the devastation [traders in Ghana’s Kantamanto market have] felt for many years as a market at the receiving end of the items that European sorters and exporters could not profit from in their own countries,” said Liz Ricketts, co-founder and executive director of The Or Foundation, a nonprofit that works with the community in Kantamanto, one of the world’s largest secondhand markets.
A Regulatory Wild Card
Amid these complex market dynamics, how Europe’s efforts to crack down on textile waste will play out remain something of a wild card.
Tackling the problem is a major focus for policymakers in the EU, which has identified the sector as one of the most polluting in the bloc. Under incoming regulations, member states will need to have systems in place to collect textile waste by next year and Brussels is working on plans for a so-called extended producer responsibility scheme, that would make brands pay to cover the cost of managing textile waste.
Industry lobbies are calling for more support for the sector, including short-term financial incentives and more investment in recycling technologies and infrastructure, while warning against policies that might interrupt trade or add to the pressure on the market.
But unless regulators also take aim at rising fast fashion consumption, they’ll only be putting a sticking plaster over the problem, advocates warn.
“Fast fashion is a business model of volumes over value and this business model is killing the global secondhand market,” said Ricketts. “If clothing is no longer considered valuable enough for a consumer in Europe to take the time to sew a button back on when it falls off then who are we kidding, there simply is not enough embedded value in that garment to sustain the many steps that are required to recirculate it including collection, multiple sorts, export, washing, marketing and resale.”
