The importance of manufacturing in fashion was reemphasized in the last two years as the pandemic and US-China trade war disrupted production in China and other parts of the world. Virus flare ups continued to disrupt production across countries like Italy and Vietnam. Besides, manufacturers in countries like Ukraine are also contending with geopolitical tensions.

Brands diversify sourcing to nearby

To deal with these issues, fashion brands are increasingly adopting the nearshoring. They are diverting supply chains to countries like Mexico, one among emerging popular sourcing destinations for US brands. Manufacturer of intimate clothing Gelmart sources not just from Mexico but also Columbia and Brazil, says Levy Limpert, Chief Marketing Officer.

Brands are also plagued by rising shipping costs from China which has skyrocketed to $18,000 for a single shipping container, says Raine Mahdi, Founder, Ziplox a logistic company. Shipping costs from Mexico to the US have remained constant at only around $5,000, he adds. Moreover shipping times from China to the US have also doubled to 60 days compared to Mexico that remained constant at 5-10 days. Imports from China also attract 25 per cent tariffs while imports from Mexico comes free due to the FTA between the US and Mexico, adds Mahdi.

Apparel imports from Mexico rise to $7 billion

With more US companies seeking closer manufacturing hubs, imports from Latin America are likely to rise, says a report by the Women’s Wear Daily. US’ apparel imports from Mexico are likely to rise to $7 billion with knitwear, T-shirts, polo shirts, lingerie, underwear and socks’, dominating the export basket, explains Raul Garcia, Mexico WTC.

Realizing the benefits of nearshoring, manufacturers in Mexico are setting up production bases closer home, points out Eugene Furman, Chief Marketing Officer, Xena, a workwear brand. The brand manufactures shoes in Mexico and plans to stay as close to North America as possible. Manufacturers are also relying on more than one production base. They are diversifying production to countries like India to remain unaffected by local issues, adds Fuman.

By Fashionating World
https://www.fashionatingworld.com/new1-2/rising-shipping-costs-geopolitical-issues-drive-us-fashion-companies-to-latin-america