The biggest decline in shipments to the US came from Bangladesh during October at a staggering 30% drop in volumes, marking the third consecutive month it has experienced its worst performance in apparel exports.

This was followed by Honduras and Mexico which both booked shipment declines of 19%. Interestingly, Mexico slid right down to the bottom of the table of top 10 apparel suppliers to the US, having previously sat in front of Honduras, Pakistan and Nicaragua.

In a turn of events China saw a surge in shipment volumes by 10%, as did Pakistan which enjoyed shipment volume growth of 12%

US apparel sourcing in October 2023 versus October 2022 – a snapshot

• All sources: 2bn SME down 8.3% from 2.2bn
• China: 779m SME up 10% from 705m SME
• Vietnam: 305m SME down 12% from 350m SME
• Bangladesh: 182m SME down 30% from 263m SME
• India: 95m SME up 3.3% from 92m SME
• Indonesia: 92m SME down 18.3% from 113m SME
• Cambodia: 75m SME down 18% from 92m SME
• Pakistan: 63m SME up 12% from 57m SME
• Honduras: 56m SME down 19% from 68m SME
• Nicaragua: 53m SME up 5% from 50m SME
• Mexico: 51m SME down 19% from 62m SME.

“US apparel imports fell to a new low in October 2023, reflecting consumers’ weakened demand and lack of confidence in their household’s short-term financial outlook,” observes Dr Sheng Lu, associate professor in the Department of Fashion and Apparel Studies at the University of Delaware. “Specifically, US apparel imports in October 2023 were 8.3% lower in quantity and 21.9% lower in value from a year ago. However, after removing the seasonal factor, apparel imports in October 2023 were nearly 7% lower in value and quantity compared to September, the worst performance in the most recent six months.

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The US’ largest supplier of apparel, China, booked shipment volumes of 755bn SME, down 21% from 961bn SME for the same period a year earlier.

Vietnam, the second largest apparel exporter to the US of the top 10 major shippers also saw shipment volumes decline to 325bn SME from 435bn SME a year earlier, which is a drop of 25%.

Bangladesh shipment volumes fell 29.5% from 276bn SME to 195bn SME while India’s declined from 133bn SME to 105bn SME.

Indonesia booked a decline in volumes from 123bn SME to 88bn SME while Pakistan’s exports to the US fell from 78m SME to 57m SME.

Honduras and Nicaragua’s exports to the US fell also to 58bn SME and 50bn SME respectively, from earlier exports of 78bn SME and 56bn SME.

Mexico, saw shipment volumes decline to 59bn SME from 67bn SME.

Lu explains several macroeconomic indicators reveal a tepid market sentiment. For example, the latest consumer confidence index stood at 70.0 (Jan 2019=100) in October 2023, a straight three months of decline from 78.4 in July. Likewise, the retail sales index of US clothing stores also fell from 121 (January 2019=100) in January 2023 to 118 in October. As November to February is typically the off-season for apparel sourcing, it remains to be seen when the US apparel import volume will pick up again.

Notable YTD trends

Lu notes that Mexico has been one of the leading sources of US apparel imports in the Western Hemisphere for decades. However, due to the growing competition with Asian products, Mexico’s market share has been constantly declining from 5% in 2010 to 3.2% in 2022 (in value).

“In the first ten months of 2023, we see Mexico’s market share slightly rise to 3.6%, reflecting US fashion companies’ growing interest in exploring near-shoring opportunities in the Western Hemisphere. However, industry sources also indicate that importing apparel from Mexico by taking advantage of the de minimis rules has become more popular. Thus, the patterns of US apparel imports from Mexico deserve more scrutiny.”

Meanwhile, Bangladesh has experienced the worst performance in its apparel exports to the US market for three consecutive months among the top ten suppliers.

Lu notes, specifically in October 2023, US apparel imports from Bangladesh sharply fell by 30.9% in quantity and 36.5% in value, far worse than the world average (down 8.3% in quantity and 21.9% in value).

“However, the result does not necessarily mean that US fashion companies suddenly lose interest in sourcing from Bangladesh; instead, it reflects the disproportional negative impact of weakened US import demand on countries like Bangladesh that primarily provide large-volume basic apparel items. In comparison, as US fashion companies switch to place small-volume sourcing orders in the current business environment, those countries that can offer greater sourcing flexibility and agility tend to perform better.”

During October Bangladesh saw violent protests erupt over worker pay in factories after industry bodies warned the increased worker wages would pressure factories into holding back on sustainable measures.

At the end of October, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) instructed its members to close factories to protect both workers’ lives and factory properties after the death of two garment workers and a factory fire following ongoing protests by labourers in the Ashulia and Gazipur garment manufacturing areas, where workers had been rallying for the past for a minimum wage of Tk23,000 ($209.14).

The uproar sparked fear across the country’s apparel sector that fashion buyers might reduce orders from the country.

This coincided with news the Bangladesh Garment Exporters Association had called on the International Monetary Fund to support the development of Bangladesh’s ready-made garment sector, given its pivotal role in the country’s economy.

Since Russia’s invasion of Ukraine in 2022, Bangladesh’s dollar reserves have fallen by more than a third, according to Reuters and the country had previously secured a loan of $4.7bn from the IMF.

How political and business stability impact sourcing decisions

Lu points out the latest trade data reveals the direct impact of political stability on a country’s attractiveness as an apparel sourcing base for US fashion companies.

“Notably, countries with a stable political and business environment performed far better than those suffering from domestic violence and chaos in the same region.

“For example, in the first ten months of 2023, US apparel imports from several members of the African Growth and Opportunity Act (AGOA), including Kenya and Madagascar, outperformed the market average. However, after losing the AGOA benefits, Ethiopia’s apparel exports to the US have sharply declined by nearly 40% so far in 2023, followed by Lesotho (down 35%).

“Likewise, among CAFTA-DR members, US apparel imports from Nicaragua (down 30%) were much worse than those from the Dominican Republic (up 38%) and El Salvador (down 18%). As geopolitics becomes a more significant concern to businesses of all kinds, factors such as political stability, trade policies, and international relations will grow in importance in fashion companies’ sourcing decisions.”

By Just Style