United States Fashion Industry Association president Julia Hughes explains: “The economic recovery means there are inflationary pressures throughout the economy – and the fashion industry has not escaped. After Covid-19, the biggest concern today is higher costs throughout the supply chain. The survey finds that almost everything becomes more expensive in 2021.”

Disruptions from Covid-19 have driven up production and sourcing costs and are causing shipping delays and supply chain disruptions. The report explains that many have employed strategies such as strengthening relationships with key vendors, emphasising sourcing agility and flexibility, and leveraging digital technologies to overcome these issues.

The sourcing costs issue is also being affected by the US-China tariff war with nearly 90% of those surveyed revealing the US-China tariff war has directly increased their company’s sourcing cost this year. It also means US apparel companies had to pay an average 23.4% import duty rate for apparel imports from China in 2020, which was much higher than the 16.5% rate in 2017.

Covid-19 remains the top business challenge for 2021, however those surveyed explained Covid-19 response strategies include strengthening relationships with key vendors, emphasising sourcing agility and flexibility, and leveraging digital technologies.

The report explains that with US inflation reaching its highest level in 13 years, the global container shortage expected to last until 2022 and textile raw material price staying solid, the sourcing pressures for US apparel companies is expected to remain for the time being.

Yet there is growing confidence in the outlook for the US apparel industry both in 2021 and the next five years with around 76% expecting their sourcing value or volume to increase from 2020 and more than half anticipate a double-digit growth.

Around 60% of respondents expect a full recovery of their sourcing value or volume to the pre-Covid level by 2022. This is not the same for everyone however, with one fifth of those surveyed (20%) expecting 2021 to be a challenging year from a financial point of view.

Almost all of those surveyed for the report (92%) plan to increase hiring over the next five years as the demand for supply chain specialists grows, especially those related to sustainability and social compliance and data science.

The report reveals Asia is holding the top spot of being the dominant supplier of apparel with almost all the top ten most-used apparel sourcing destinations in 2021 being based in Asia with China coming first (93%), followed by Vietnam (87%), India (77%), and Bangladesh (73%).

This is the eighth annual survey conducted by the USFIA. Every year it invites executives from over 30 leading fashion and apparel brands, retailers, importers, and wholesalers, including some of the largest brands and retailers in the US to take part.

The survey was conducted in conjunction with Dr. Sheng Lu, associate professor in the University of Delaware’s Department of Fashion & Apparel Studies. The survey asked respondents about the business outlook, sourcing practices, use of Free Trade Agreements and preference programmes, and views on trade policy.

The respondents of the survey represent companies with headquarters or major management offices in the US. This year, around 75% of respondents also have headquarters or major management offices outside the US, including China (27%), Asia other than China (46%),  Europe (18%), Eastern and Central America (16%) and Mexico (4%) among others. In addition to everyone selling products in the US, over half of respondents also sell products in Canada, Western Europe, Mexico, and Asia. 

By Just Style