The latest figures from the Department of Commerce’s Office of Textiles and Apparel (OTEXA) show the volume of US apparel imports from all sources dropped by 1.85% month-on-month in June to 2,323 million square metres (MM2), down from 2,280 MM2 in May.

Compared to the same month last year, the US saw a 55.2% spike in apparel shipment volumes. In value terms, imports were up 55.5% to US$6.16bn on the prior-year period. It is, however, difficult to draw comparisons on a year-on-year basis due to the impact of the Covid-19 pandemic and factory closures worldwide which skewed last year’s results.

In terms of individual supplier countries, all of the top ten recorded substantial year-on-year increases in apparel import volumes during June.

China, the largest supplier of apparel to the US saw shipment growth of 42.9% to 928 MM2, nearly triple that of the second-largest supplier Vietnam, which recorded shipment growth of 21.6% to $324 MM2.

El Salvador recorded by far the largest growth in June, which spiked 537.8% to 59 MM2. This was followed by India, which saw shipments jump 241.4% to 96 MM2.

Honduras and Bangladesh also recorded triple-digit increases, of 161.6% and 133.5% respectively to 82 MM2 and 193 MM2.

Of the remaining ten countries, Cambodia saw shipments grow 10.3% to 66 MM2, while Pakistan’s jumped 85.8% to 73 MM2. Double-digit increases were also recorded by Indonesia and Mexico, at 51.6% and 21.6% respectively, to 76 MM2 and 80 MM2 for the month of June.

Combined textile and apparel suppliers saw imports jump 83.9% year-on-year to 8,536 MM2. In value terms, imports were 56.3% higher at $8.94bn.

Textiles alone saw a 97.5% increase in shipment volumes year-on-year to 6,212 MM2, and a 58.1% jump in value terms to $2.78bn.

Year-to-date for the January to June period, apparel volumes were up 38.4% to 13,365 MM2, and in value terms were up 26.9% to $35.38bn.

Combined, apparel and textile volumes grew 50.7% to 40,948 MM2, and in value terms by 31.2% to $50.6bn.

Facts behind the figures

Comparing the month through a year-over-year lens for 2020/21 is difficult as 2020 brought challenges the industry had never seen before, including global factory shutdowns, store closures, and dampened consumer demand.

An early shutdown of China saw massive delays in key inputs reaching producer countries like India and Cambodia leading to further production delays.

What it did fuel was growing conversations around nearshoring and onshoring as the level of exposure of supply chains in and around Asia became evident.

Experts have said Latin American production could benefit post-pandemic.

Nicole Bivens Collinson from international trade law firm Sandler, Travis and Rosenberg (ST&R), said recently: “Most companies are reassessing and restructuring their global supply chains. The economic costs to retailers are resulting in physical presence reductions and closures of stores. The reduction of stores means a reduction in inventory.”

As such, Collinson said brands are looking at rebalancing their sourcing to ensure they are not “overexposed” in one geographical area; are considering a “hub and spoke” sourcing model to manufacture in geographical proximity to the target market; are looking at vertical manufacturing locations either as an individual country or as a close geographical region of countries; are looking at sustainable production to meet growing consumer demands; and are looking at nearshoring suppliers as it helps to meet several of the sourcing restructuring objectives.

El Salvador, which recorded the highest increase in shipments to the US in June, is set to receive investment from the US to help improve worker's rights and working conditions. Earlier this month, the US Department of Labor announced plans to award up to US$20m in grant funding to the Central American countries of El Salvador, Guatemala and Honduras.

Meanwhile, a recent study by Capgemini found 72% of consumer product organisations and 58% of retailers say they are actively investing in regionalising or localising their manufacturing base or nearshoring production.

“CPGs and retailers recognise the great risk of future disruption, and they have an opportunity to be in front of creating agility and resilience to adapt their supply chain networks,” says Lindsey Mazza, global retail supply chain leader at Capgemini. “The pandemic was an accelerated learning event. Organisations realise that new technologies can enable much-needed agility – from improving demand predictions to boosting fulfilment to quicker, cost-effective last-mile deliveries. By investing now, organisations put themselves in good stead to safely support consumers in their time of need – whenever the next industry disruption may be.”

It could go some way to explaining why Latin America saw a spike in shipments to the US during May 2021, particularly as many retailers and brands looked to make up the shortfall with products held up in China and the rest of Asia.

But realistically, Honduras, Mexico, and El Salvador combined still cannot match the volumes coming out of China alone. Moreover, Asia is still a strategic production location due to its scale of operations, proximity to raw materials, developed infrastructure and supply chain linkages, and productive skills and know-how. It is difficult to immediately replicate this in other sourcing destinations such as Africa or Latin America while remaining cost-competitive.

After all, sourcing from all destinations, including China, Cambodia, and Vietnam was up, suggesting brands and retailers are not at a point where they are immediately ready to sever ties with makers in Asia. 

By Just Style