Textile News, Apparel News, RMG News, Fashion Trends
News & Analysis

Price drop in US market puts damper on apparel export

The fallouts of the pandemic COVID-19 have an unprecedented impact on the global economy and very badly impacted the price level of apparel items to the US markets, the world’s largest garment importing nation. The apparel exporting countries to the USA like Bangladesh, China, Egypt and Pakistan have been facing a stiff price war to the American markets in the time of the pandemic.

apparel-Price-drop-US-market-apparel-export
Figure 1: The apparel exporting countries to the USA like Bangladesh, China, Egypt and Pakistan have been facing a stiff price war to the American markets in the time of the pandemic.

The supplying countries have been witnessing a drastic price fall in the US markets and also a drop in the import of goods due to slower demand by the consumers.

For instance, the price of imported apparel in the US declined to $2.60 per Square Metre Equivalent (SME) in February this year against $2.95 per SME in February 2020, according to data from the US Department of Commerce.

The USA imported $5.39 billion worth of garments in February this year as against $5.91 billion in the same month of 2020.

Last year, during the pandemic time, prices of Bangladeshi-made t-shirts declined in the US markets although the prices of the same t-shirt made in Vietnam were almost double those of Bangladesh to the American markets.

In the US market, the price of a dozen Bangladeshi T-shirts made from cotton fell by 20 percent to $17.99 in 2020 from $22.43 in 2019 while the price of the same product made in Vietnam declined by 17 percent to $31.9 in 2020 from $38.2 in 2019.

USA-import-scenario

The US is the single largest export destination for Bangladesh and of the total export to the American markets in a year nearly 90 percent includes apparel items. In fiscal 2019-20, Bangladesh exported goods worth $6.04 billion to the US markets, $6.5 billion in fiscal 2018-19 and $5.98 billion in fiscal 2017-18, according to data from the Export Promotion Bureau (EPB).

So, given the effect of lockdowns in Europe and the USA and their impact on retail and demand, the worst ever Christmas sales the world has seen, and most of all the effect of price decline, which is around 5 percent since September 2020, it was a dark year for the industry, said Rubana Huq, immediate past President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

As the uncertainties and stresses caused by the second wave persist coupled with the relatively poor administration and unavailability of a vaccine, and the impact on the global economy it would leave, this downtrend in export will probably continue till April of this year, Huq also said.

International retailers and brands are asking for deferment of payments. The vaccination hasn’t had pace in the west. Therefore, we need west to start up, without which we won’t pick up business.

As much as we understand that brands are delayed with payments, the reality of insolvency at our end persists. Regularly ask for discounts, deferment of payment are critical issues for the sector to deal with, Huq said.

Not all the retailers and brands have cleared the full due payments yet and it is a constant negotiation process.

positive-vibe-Bangladesh-apparel-USA-market
Figure 2: Some positive vibe for the BD apparel industry.

Buyers are following now a “go slow” approach and placing their orders in small slots instead of bulk amount.

Since the western market is yet under strict lockdown, their retail sales have plummeted, the request for payment deferment is always there. We have been negotiating with each of the buyers as best as we can.

Some 90 percent of the previous orders have been reinstated and we are trying for the rest. However, it is complicated since a good number of the dues are caused by bankrupted buyers and we don’t have any legal protection against such non-payment.

Since the first wave of COVID-19 has hit our country in March last year, particularly the exports started getting affected since March 2020, a year-over-year comparison of monthly exports between 2020 and 2021 would be misleading; thus the growth in export for the months of 2021 has to be calculated with the corresponding months of 2019.

After the third quarter of the fiscal year 2020-21, the export earnings from RMG stood at $23.49 billion which was $25.95 billion during the same period of FY2018-19, indicating a 9.49 percent decline equivalent to a short of $2.46 billion.

Knitwear export struggled to retain 0.35 percent growth in March 2021 over March 2019; the average growth of knitwear export for July-March 2020-21 than July-March 2018-19 is -1.15 percent.

Woven garments is facing the toughest time ever, while export has suffered double-digit decline since August 2020, and in March 2021 compared to March 2019 woven export fell by 27.70 percent. The nine-month average growth between 2021 and 2019 stands at -17.62 percent.

The price trend continues to worsen as March 2021 posts a 5.11 percent decline in unit price compared to March 2019.

The average decline in unit price for July-March 2020-21 compared to July-March 2018-19 is -3.58%. Such consecutive declines in unit price do not require further analysis to understand the magnitude of vulnerability the industry is dwelling with. The export markets are still struggling to contain the spread of the virus, the third wave has only added to the woes.

Until recently Bangladesh was faring well in containing the infection; however, the present lockdown, which is a timely move by the government, would further impact the already depressed performance of the industry.

“We are having negotiation with the US retailers and brands so that they pay more prices for our products. We have already held meetings with them to convey our message for increasing the prices of the goods,” said Faruque Hassan, President of the BGMEA.

However, it is a matter of good news that the export to the US is getting better now as the American retailers and brands have been reopening their stores in larger numbers from the lockdown, Hassan also said.

“The next two months are very crucial for us. We have to continue our business as there is a big demand from our buyers with the reopening of their stores,” Hassan said adding that the export trend is good now to the US markets. Nearly 50 percent people of in the USA have been vaccinated so far. “So, the US retailers and brands are confident that the business with a rebound soon,” Hassan also said.

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

Related posts

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

Textile Today

Bangladesh and other jeans exporting countries witness a dip in export to US

Textile Today

Bangladesh apparel export to USA surges in terms of volume in Feb’21

Textile Today

Latest Publications

View All