The fast-fashion giant Inditex, owner of Zara, has significantly increased its reliance on air freight to transport goods from factories in India to its logistics hub in Spain. This shift, driven largely by disruptions in global shipping routes, highlights a broader tension between maintaining business efficiency and meeting ambitious sustainability goals.

Rising Reliance on Air Freight

Air freight usage by Inditex has surged, with the company shipping 3,865 consignments by air from India in the 12 months leading to August 2024—marking a 37% increase compared to the previous year. Notably, 70% of these shipments from India were transported by air in the first eight months of 2024, a sharp rise from 44% in 2023. Similarly, shipments from Bangladesh by air rose to 31% from 26% during the same period.

These changes were partly triggered by geopolitical instability in the Red Sea, a critical shipping route, which has pushed many retailers, including Inditex, to seek alternative transport methods. Air freight, while faster and less prone to delays, is significantly more carbon-intensive than shipping, raising questions about its impact on climate targets.

Climate Goals Under Pressure

Inditex has committed to cutting its Scope 3 (indirect) emissions, which include those from transport, by 50% by 2030 compared to 2018 levels. However, transport-related emissions increased by 37% in the 12 months ending January 2024. Transport emissions now account for 12.1% of Inditex’s total greenhouse gas emissions, up from 8.4% in 2022.

While Inditex argues that air freight is used only under “exceptional circumstances,” critics contend that its increased reliance undermines its sustainability promises. The company has emphasized measures such as optimizing transport routes, increasing vehicle occupancy rates, and exploring alternative fuels to mitigate its emissions. However, the rise in transport emissions may compel Inditex to seek more aggressive reductions in other areas, such as raw material sourcing and manufacturing processes.

A Balancing Act Between Profitability and Sustainability

For Inditex, the decision to ramp up air freight usage is rooted in the economic realities of the fashion industry. Speed is critical in fast fashion, where delays in delivery can lead to excess inventory and significant markdowns. Investors supportive of Inditex’s strategy argue that maintaining profitability and operational efficiency should take precedence, provided the company remains committed to reducing overall emissions.

“In the short term, we would rather Inditex do what’s necessary to continue supporting the profitability of the business,” said Nick Clay, portfolio manager of the Redwheel Income Strategy in London.

However, environmental groups and some shareholders are pressuring Inditex for greater transparency and accountability. At its annual shareholder meeting in July 2024, investors from the “Shareholders for Change” network urged the company to disclose detailed data on air freight emissions and present concrete plans to reduce its reliance on air transport.

Logistics Hub in Zaragoza

Most of Inditex’s air freight from India arrives at Zaragoza, Spain, which serves as a critical logistics hub for Zara. The local airport has seen a 39% increase in cargo activity in January-September 2024 compared to the same period in 2023. Zara’s dominance in cargo traffic at this airport reflects the brand’s central role in Inditex’s operations.

This rise in air freight at Zaragoza is mirrored by broader trends. Data from the Spanish Trade Agency indicates a 28% increase in the value of fashion goods transported to Spain by air in the year leading to September 2024 compared to the same period in 2023.

The Broader Implications for Fashion Retail

Inditex’s shift to air freight is indicative of a broader challenge faced by the fashion industry: balancing the need for speed and responsiveness with growing consumer and regulatory demands for sustainability. As one of the world’s largest fashion retailers, Inditex’s strategies set a precedent for others in the industry.

Fast fashion thrives on its ability to quickly adapt to trends and restock popular items. However, these operational imperatives often clash with sustainability goals. While companies like Inditex are investing in alternative fuels and supply chain efficiencies, achieving a meaningful reduction in emissions while maintaining competitive agility remains a significant challenge.

Future Directions

To meet its emissions targets, Inditex will likely need to make substantial investments in greener logistics solutions. This could include increased use of biofuels for air transport, transitioning to low-emission shipping options, and further localizing production to reduce the need for long-distance transport.

The fashion industry as a whole is under increasing scrutiny to align its practices with global climate goals. As consumer awareness grows, companies that fail to demonstrate genuine progress toward sustainability may face reputational and financial risks. For Inditex, striking the right balance between operational efficiency and environmental responsibility will be crucial in maintaining its market leadership.

Inditex’s increased reliance on air freight underscores the complexities of navigating disruptions in global supply chains while staying committed to sustainability. While the company has taken steps to mitigate its environmental impact, its growing transport emissions highlight the need for more aggressive and transparent action. As Inditex works to balance profitability with its climate commitments, its strategies will serve as a bellwether for the broader fashion industry’s efforts to transition toward a more sustainable future.

(Adapted from Reuters.com)