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Demands shock sends Bangladesh apparel exports to US down 16% in 2020

Bangladesh’s apparel exports, the driver of economic growth, to the United States of America, the single largest export destination for exporters, have recorded a 16% decline to $5.07 billion in the just concluded year 2020.

The steep decline was due to the demand side shocks caused by the ongoing Covid-19 pandemic, which hit people’s income as well as hit the supply chain badly.

BD-apparel-export-down
Figure: Bangladesh’s apparel exports to the United States of America have recorded a 16% decline to $5.07 billion in the just concluded year 2020.

According to Export Promotion Bureau (EPB) data, shipments of apparel goods to the US market declined by 16% to $5.07 billion in the year 2020, which was $6.02 billion in 2019.

Exports earnings from woven products have witnessed sharp fall by 22.13% to $4.49 billion, which was $4.49 billion in the previous year.

However, knitwear products posted a positive growth by 2.73% to $1.56 billion, which was $1.52 billion in 2019.

As per the data, apparel exports to the US market declined by 15.83% to $5.07 billion in 2020, which was over $6.02 billion in the previous year.

“The United States of America has witnessed the worst impacts of Coronavirus and recorded the highest death and infection cases. Unemployment rate in the US is higher as businesses such as shops, bars, travel and others had to close because of coronavirus,” Abdus Salam Murshedy, managing director of Envoy Textile told Textile Today.

Since the income of US citizens shrank and they cut expenses, the demands of clothing products as well as consumers goods fell. This hit Bangladesh’s exports to the US markets, Salam explained.

“In the US market consumption had dropped by 16% in November, while prices of products exported to the country declined by over 5%.”

On top of that the demands of woven products as less as people worked from home and they dressed casually, which is knitwear products.

“Bangladesh’s exports to the US market are driven by the woven products, which declined sharply. But knitwear products performed well,” said Faruque Hassan, managing director of Giant Group, told Textile Today.

Knitwear products and sweater products demand were higher as people dressed with casual clothes because of staying at home and working from home, said Hassan.

Since they did not join the office regularly and did not come out from home, demands of formal dress like shirts and pants were slower. As a result, our exports declined, said Hassan, also a former senior vice president of BGMEA.

In addition, production of woven products was hampered due to supply chain disruption during the first phase of covid. Bangladesh needs to import fabrics for woven products mostly from China, he added.

However, experts as well as the manufacturers also blamed longer lead time and sharp negative growth in woven products for the downtrend in US markets.

“Amid the Covid-19 pandemic, lead time was very crucial for the importers and brands as the supply chain was disrupted due to the pandemic. They preferred Vietnam due to their shorter lead time,” Fazlee Shamim Ehsan, a director of Bangladesh Knitwear Manufacturers and Exporter Association (BKMEA) told Textile Today.

Vietnam has a deep sea port and they can easily import fabrics and other raw materials from China, while shipping goods to the US market within a shorter lead time. They had the advantage of shorter lead time and took advantage of it, said Ehsan, the owner of Fatullah Apparels.

According to the US Department of Commerce’s Office of Textiles and Apparel (Otexa) data, during January-October period of 2020, Vietnam exports to US market declined by 8.14% to $10.71 billion, while Bangladesh saw 11.66% fall to $4.50 billion in the same period.

“Higher dependency on single products is risky for sustaining the growth of exports. It is now clearer. So, the manufacturers should focus on products diversification as well as market diversification,” Centre for Policy Dialogue (CPD) Research Director Khondaker Golam Moazzem said.

In growing in the Us market, Bangladesh has to come out from the traditional exporting items and attract foreign direct investment (FDI) in the areas where there are opportunities for manufacturing value added goods, said the economist.

On top of that, we should develop strong backward linkage for the woven sector to reduce import dependency and to increase value addition, he added.

Currently, Bangladesh can meet about 90% demands of knitwear fabrics, while it is about 45% for the woven sector.

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

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