Why Fixing Reverse Logistics is Critical for Fashion Circularity

If the fashion industry wants to tackle circularity, it must first grapple with its reverse logistics problem.

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Freight is designed to traverse in one direction, wending its way through a labyrinthine but well-trafficked system of ships, planes, trains and trucks to haul goods from suppliers to warehouses to stores to someone’s front porch. Moving things in the other direction, say in the case of customer returns , is already a painful upstream challenge because it doesn’t come intuitively. Doing anything else has been positively Herculanean.

But not, as a new report from Global Fashion Agenda and Maersk proposes, impossible. The Danish sustainability think tank and cargo juggernaut say that integrating what is currently a fragmented landscape of solutions is nothing short of imperative if brands and retailers wish to squeeze the most value out of the products they put out into the world and fend off the deluge of upcoming legislation involving eco-design and extended producer responsibility .

In an improved reverse logistics workflow, no usable product would go to waste (read: head to the landfill) but be recaptured for resale, repair, remaking or recycling. This isn’t something only tree-huggers should be clamoring for: The Ellen MacArthur Foundation estimates that changing over to a circular system can help fashion unlock a $560 billion economic opportunity. And in a survey that Global Fashion Agenda and the United Nations Environment Programme conducted earlier this year, 45 percent of brands and retailers said they plan to derive at least 10 percent of their revenue from circular business models by 2040. In other words, thriving businesses and a thriving planet don’t have to be mutually exclusive propositions, said Federica Marchionni, Global Fashion Agenda’s CEO.

“In the end, there is no other way; you have to do it,” she said.

Still, doing it is easier said than done. For one thing, there is a distinct lack of coordination among the multiple stakeholders that choreograph different parts of the supply chain, from manufacturers to retailers to recyclers to technology providers to regulatory bodies. Spawning pathways where they didn’t exist before will be resource-intensive and costly, if not without its rewards, since many apparel purveyors have set ambitious sustainability targets that can be a struggle to meet.

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“We know that roughly 80 percent of the average emissions when producing a garment occur in the production phase,” said Kaisa Tikk, senior global sustainability advisor at Maersk. “That means if you really want to reduce your overall impacts, the longer you can keep the item in circulation, then that can be one direct measure to address your environmental footprint.”

The report boils down what needs to happen next to three “essentials”: an effective network design that can keep previously squandered resources in a closed loop, clear financial business models that demonstrate the viability of a rejiggered system, and a way to consolidate collection volumes to allow economies of scale.

If that sounds simple enough—in theory, if not in practice—then that’s completely on purpose. Making the task ahead more digestible and less daunting is a necessity when the global circularity rate, as measured by the Circle Economy Foundation, has fallen from 9.1 percent in 2018 to 7.2 percent in 2023, Marchionni said. Clothing production is also projected to triple to some 160 million metric tons in 2050. If not now, then when? At a minimum, she hopes that the report will at least spark some interest among supply chain actors to start engaging in the issue. Besides Maersk, the Ellen MacArthur Foundation, the Circle Economy Foundation, H&M Group, Nike, Puma and The North Face parent VF Corp. contributed their insights.

Tikk sees enhancements in reverse logistics coalescing, if slowly. Maersk, too, is plotting a few pilots of its own. She said that she can draw parallels between this and nascent discussions about supply chain decarbonization a few years ago. It has only been through pre-competitive collaboration, nudged along by policy and what she describes as a “solid business case,” that efforts are beginning to bear fruit.

“It came from the same starting point: Companies had the goals and ambitions [but] there were no concrete plans for how to address this yet,” Tikk said. “I would expect something similar to happen in the circularity space. I guess we are just in the beginning of that.”

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