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Apparel goods exported to US saw an 8% fall in price

At a time when Bangladeshi apparel makers are gradually recovering from the COVID-19 pandemic, prices of clothing products exported to the United States of America from Bangladesh declined by over 8 percent in August compared to the same period of last year.

Higher freight charge is blamed for the price cut by the US brands and retailers. Due to container shortage, the freight charges went up sharply amid the COVID-19 pandemic.

As per the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) data, Bangladesh saw an 8.04 percent apparel price decline to the US in August 2021, compared to the same period of last year.

Bangladesh-RMG-price-drop-August-2021
Figure: Bangladesh apparel price decline scenario in the USA.

Although Bangladesh saw a rise in prices by 2.46 percent and 0.08 percent respectively in June and July of 2021 but it returned in the negative in August.

In December 2020, Bangladeshi apparel exporters saw the highest decline in prices by 17.92 percent.

As per the data of the Office of Textiles and Apparel (OTEXA), Bangladesh apparel exports to the United States of America posted a 24.11 percent growth to $4.32 billion as of August 2021, which was $3.48 billion in the same period a year ago.

“We worked with our workers hard to ensure timely shipment of goods even amid the pandemic. This is to keep the businesses running for both the suppliers and retailers,” BGMEA President Faruque Hassan told the Textile Today.

Bangladesh apparel exports to the United States of America posted a 24.11 percent growth to $4.32 billion as of August 2021

“In making the supply chain sustainable, we have taken steps and are making investments. While workers are given all kinds of health safety to keep the factory running.”

When the sector is struggling to recover, an 8.04 percent fall in prices of apparel goods exported to the US market raised questions about the responsibility of buyers, said Hassan.

On the other hand, during the COVID-19 pandemic, exporters witnessed massive work orders cancellation, which brought the ethical buying practices into the spotlight, said Hassan.

As per BGMEA data, global retailers canceled work orders of $3.18 billion during the first wave of the COVID-19 pandemic.

However, the US retailers and clothing brands claimed that the rise in freight charges and other costs pushed the business costs up. This might be a reason for the fall in product prices.

“With the rise in freight costs and the other operational expenses, buyers are offering lower prices than the normal time,” a high official of a buying house working with US companies told the Textile Today.

He said the work orders flow is higher than the pre-COVID level but the prices are not the same as it was.

“I am hopeful that the price level will increase if the freight crisis is over and the charges go down,” he added.

In helping the recovery, exporters urged the buyers to increase prices and offer more orders in the coming days.

“We are business partners and for a better economic recovery, we should think about a better relationship,” BGMEA Vice President Shahidullah Azim told Textile Today.

As we are in the recovering stage, it is a call from exporters to the brands and retailers to become more careful about price calculation, he adds.

In keeping factories running, some exporters are taking orders at a price, which does not match the cost of production. So, it would not be sustainable for the supply chain, he claimed.

Meanwhile, economists urged the manufacturers to say no to orders if it does not match with the expected price level.

“Prices of raw materials soar, while the buyers are offering low prices. So, amid the ongoing crisis, the decline in prices is not expected right now, said Khondaker Golam Moazzem, Research Director at Centre for Policy Dialogue (CPD).

“With the lower prices, there is a role from the exporters as they sometimes compromise with prices to capture the orders.”

It could be that the buyers increased order flows but offered low prices. If it is, then manufacturers should say no until the price level reaches the expected level, said the economist.

Moazzem also suggested improving negotiation skills and moving towards product diversification.

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

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