Apparel shipment to US plunges 20% in Jan-Jul
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Bangladesh's apparel shipments to the US declined 19.82 percent year-on-year in the January-July period this year in spite of a gradual improvement in retail sales.
Though the US is Bangladesh's single largest export destination, the drop has been recorded by other countries as well, as American retailers are still struggling to recover from the severe fallouts of the pandemic and Russia-Ukraine war.
Shipment of garments from all over the world to the US has been declining because of inflation and bank interest remaining high in America over the last three years for the pandemic and war.
However, retail sales in the US have also been growing recently as inflation is cooling down.
For instance, the National Retail Federation (NRF), the largest retail association in the US, in August said retail sales reversed their downward trend in July.
This was due to Amazon's Prime Day and major promotions by other brands prompting increased shopping while wage increases gave consumers more money to spend.
"July retail sales show consumers continue to drive the economy through this period of economic pressure with robust spending supported by steady job growth and wage gains," said NRF President and CEO Matthew Shay.
"Retailers remain focused on providing essential items at competitive prices for families and students as we approach the end of an expected record back-to-class shopping season," he said.
"Retail sales growth has been slowing, but July got a midsummer boost from special deal days offered by multiple retailers," said NRF Chief Economist Jack Kleinhenz.
The NRF in a statement last month said overall retail sales in July were up 0.7 percent from that in June and up 3.2 percent year-over-year.
Clothing and clothing accessory sales were up 1 percent month-over-month and up 0.9 percent year-over-year.
Among all other competing countries, Bangladesh's exports to the US fared comparatively better.
Garment shipment to the US from China, the world's largest apparel supplier, fell by 28.75 percent year-on-year to $9.12 billion in the January-July period, according to the Office of Textiles and Apparel (OTEXA) under the US Department of Commerce.
Meanwhile, garment shipments to the US from Vietnam also declined by 24.76 percent to $8.21 billion, it said.
Overall garment imports by American retailers and brands registered a 22.28 percent negative growth to stand at $45.74 billion, it added.
The US work orders are dwindling now as the retailers and brands are not running like that during the pre-pandemic and pre-war era, said Kutubuddin Ahmed, chairman of Envoy Legacy, a leading garment exporter to the US.
However, there is a positive trend as retail sales are picking up and in July it grew by more than 3 percent, Ahmed said.
Denim will perform well in the US market in the future as the retailers and brands are coming up with work orders for denim items, he said.
Similarly, AK Azad, chairman and chief executive officer of Ha-Meem Group, which ships nearly 90 percent of its garment products to the US, said it would take the next six months for there to be a rebound in the US markets for the shippers.
Because old inventories in stores are yet to be sold off and it is expected that in the upcoming Christmas period, a significant quantity of the old unsold stock will be sold off, he said.
The good sign is that the prices of locally made garment items going to the US have increased by 12.99 percent year-on-year to $3.26 per unit this year, said Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association.
This is due to the production of high value-added garment items and for prices of garment items being adjusted to the higher prices of raw materials like cotton and yarn, he said.
In 2023, work orders globally have been coming about slowly because of the volatile economic situation and the situation is improving gradually, he added.
So, at the end of this year the exports will not witness a strong rebound to the US, Hassan said.
Mohammad Abdur Razzaque, research director of Policy Research Institute, said Bangladesh needs to rebuild its capacity as there was a possibility of the inflow of a huge volume of work orders from the US in the near future.
The energy and production capacity should be improved so the future work orders can be catered to as some countries are reducing their dependence on China, he said.
The US markets may bounce back soon, he added.
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