Analysis of December data from the US Office of Textiles and Apparel (OTEXA) suggests US brands and retailers are gradually increasing their sourcing from suppliers based in CAFTA-DR regions.

US apparel imports in December enjoyed a 4.5% uplift on the previous month after several months of straight decline, but were down on a year-on-year basis after six of the 10 top supplier countries reported lower shipments.

The data from the US Office of Textiles and Apparel suggests the holiday season and a gradual improvement of the US economy boosted consumer confidence and is consistent with figures from the US Consumer Confidence Index (CCI) which increased from 67.2 in November to 76.4 in December (January 2019=100).

Dr Sheng Lu, associate professor of fashion and apparel studies, at the University of Delaware says the results suggest US households became more confident about their financial outlook and were more willing to spend.

“That being said, the latest January 2024 International Monetary Fund (IMF) forecasts still predicted the US GDP growth would slow from 2.5% in 2023 to 2.1% in 2024. Thus, whether the US apparel import volume could continue to experience positive growth after the holiday season remains a big question mark.”

On a year-on-year basis, however, the data paints a very different picture.

US apparel imports year-on-year to December sink

Overall, global apparel imports to the US fell 6.3% to 1.79bn SME during December.

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Central American nations experienced the biggest year-on-year declines in shipment volumes with Nicaragua’s falling 24.8% to 40m SME, Mexico’s shipment volumes falling 21.2% to 39m SME and Honduras’ falling 20% to 55m SME.

Apparel shipments from Indonesia fell 18% to 63m SME on a year-on-year basis while shipment volumes from Bangladesh, the third largest apparel supplier to the US, were down 17.9% to 169m SME.

Vietnam, which is the second largest apparel supplier to the US, saw shipment volumes fall 5% year-on-year to 296m SME.

Meanwhile, its rival nation, China, the US’s largest supplier of apparel, enjoyed a healthy 2.8% increase in shipment volumes to 634m SME.

Of the ten biggest supplier countries, Cambodia and Pakistan saw the highest increases on a year-on-year basis of apparel shipment volumes with 9.6% to 84m SME and 9.4% to 57m SME respectively, though in real volume terms, their figures pale in comparison to the likes of China, Vietnam and Bangladesh.

India saw flat growth in shipment volumes with a 0.7% fall to 89m SME.

Lu observes diversification is a key trend in US fashion companies’ sourcing strategies.

“Notably, measured in value, only 71.6% of US apparel imports came from Asia in 2023, the lowest in five years. Highly consistent with the US Fashion Industry Association’s Benchmarking Survey results, OTEXA’s data reflected companies’ intentions to diversify their sourcing away from Asia due to increasing geopolitical concerns.”

The leaders and laggards in 2023 as it stands

With 12-month data in front of us, it’s a great opportunity to reflect on whether there has been a shift in US sourcing patterns over the year.

Shipment volumes from all sources were down 21.7% to 24.3bn SME in the year to December.

Year-to-date data reveals Indonesia had the largest fall in shipment volumes to date at 28.1% to 993m SME followed by Bangladesh whose shipment volumes fell 27.9% to 2.3bn SME.

Cambodia’s shipment volumes on a year-to-date basis slid 27.7% to 983m SME.

The lowest falls in shipment volume on a year-to-date basis came from Central America regions with El Salvador booking an 18.6% fall, Mexico with a 13.4% fall and Nicaragua with a 12% fall.

But also China, whose year-to-date shipment volumes were 18.5% lower at 8.7bn SME.

Recently, experts told Just Style that concerns about security and energy costs in Mexico could cost its clothing and textile industry a golden opportunity to seize nearshoring business in the United States.

US apparel supplier market share update

The Central American apparel suppliers to the US were the only ones of the 10 who have seen market share grow when comparing December 2023 with December 2022.

Honduras, Nicaragua and Mexico all increased their share of the US apparel supplier market by 0.3% followed by El Salvador whose share grew 0.1%.

Bangladesh’s market share fell the most by 0.8%, however China’s market share went up the most (1.4%) despite the ongoing US push for diversification away from China.

The South East Asian Nation (ASEAN) countries did see a 1% decline in market share overall, but Lu pointed out the diversification away from these countries has not hugely benefited nearshoring from the Western Hemisphere.

“For example, in 2023, approximately 14.6% of US apparel imports originated from USMCA and CAFTA-DR members, nearly the same as the 14.3% recorded in 2022.

“Instead, US apparel imports outside Asia and the Western Hemisphere jumped to 11.4% in 2023 from 9.8% a year ago. Some emerging EU and African suppliers such as Türkiye, Romania, Morocco and Tunisia performed relatively well in the US market in 2023, although their market shares remained small. We could highly expect the sourcing diversification strategy to continue in 2024 as many companies regard the strategy the most effective to mitigate various market uncertainties and sourcing risks.”

However, he notes there has been better utilisation of trade agreements.

Specifically, in the first 12 months of 2023 (latest OTEXA data), about 70.2% of US apparel imports came from CAFTA-DR members who claimed the duty-free benefit, up from 66.6% the same period a year ago. Particularly, 65.1% of US apparel imports under CAFTA-DR complied with the yarn-forward rules of origin in 2023, a notable increase from 61.3% in 2022. Another 2.6% of imports utilised the agreement’s short supply mechanism, also went up from 2.3% in 2022.

He added: “The results could reflect an ever more integrated regional textile and apparel supply chain among CAFTA-DR members due to increasing investments made to the region in recent years. However, there is still much that needs to be done to effectively increase the volume of US apparel imports from the region.”

By Just Style