China saw the largest declines in March

China saw the largest declines in March

Apparel imports into the US took a massive double-digit downward turn in March, with China – the US's largest supplier – recording the biggest declines of nearly 40% from the year before. 

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 21.2% year-on-year in March, down from the 19.4% growth seen in February. Imports during the month fell to 1.79bn square metre equivalents (SME), from 2.27bn SME in the prior year. 

In value terms, imports slipped 20% year-on-year to $5.59bn in March. 

In terms of individual supplier countries, only one of the top ten recorded growth, albeit marginal: Bangladesh, ranked number three in the top-ten league table, saw apparel shipments edge up by just 0.5% to 172m SME. 

But shipments from China – the largest supplier of apparel to the US – dropped 39.4% to 471m SME. Nearest rival Vietnam fell 23.1% to 227m SME compared to the same month in the year before.

Of the remaining supplier countries, Cambodia recorded a decline of 36.2% to reach 72m SME, followed by Indonesia, which booked a drop of 14.6% to 111m SME. Pakistan recorded a fall of 13.3% to 46m SME, followed by Honduras, whose imports dropped 12.1% to 87m SME. Mexico reported a 7.7% decline to 80m SME, El Salvador a decline of 4.3% to 66m SME, and India a drop of 0.3% to 109m SME.

Meanwhile, total combined US apparel and textile imports were down 22.2% in March, amounting to 5.44bn SME, from 14.23bn SME in the same period a year ago, with textiles down 23% to 2.44bn SME.

March's total apparel imports of 1.79bn SME are also 24.5% lower than the 2.37bn seen in February, with month-on-month declines seen by China (down 50%) and Vietnam (down 25.8%). For Bangladesh, too, there was a decline of 1.2%.

At this time of year, US apparel import volumes should be beginning to make their traditional build-up towards the spring and summer seasons.

Some of the declines seen in March are undoubtedly due to difficult comparisons with last year's record high numbers, when a flood of backlogged cargo started to clear following the end of the US West Coast ports dispute. But cautious US retailers are also importing less merchandise than last year in an attempt to balance out high inventory levels and offset slow growth in consumer spending in recent months, while the decline from February's figures may be partly due to a carryover from Chinese New Year factory closings. 

The trend was also apparent in March last year, albeit to a different degree.

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Year-to-date

If anything, the numbers confirm that while monthly trade data is often volatile, with big swings from one month to the next. A broader view of the year so far shows total US apparel and textile imports dropped 0.4% between January and March to reach 14.50bn SME, from 14.56bn SME in the prior year. Within this, textiles were down 1.1% to 8.16bn SME, while apparel shipments edged up 0.6% to 6.34bn SME. 

In value terms, total US apparel and textile imports were down 2.5% to $25.27bn, from $25.93bn a year earlier. Apparel imports fell 2.14% to $19.30bn, while textiles fell 3.8% to $5.97bn.

However, five of the top ten apparel supplier countries booked growth during the first three months, with China dropping 1.6% to 2.36bn SME, Vietnam up 7.6% to 815m SME, and Bangladesh increasing 8.4% to 518m SME.

Facts behind the figures

While there continue to be concerns that increasing wages are undermining the competitiveness of China's garment production on the world stage, it still remains the largest source for apparel buyers as rising prices are largely being offset by productivity gains. No other country can match China in terms of the size of its supply base, its range of skills, its quality levels, its product variety and the completeness of its supply chain. The country also continues to lead the way when it comes to efficiency and infrastructure, and recent data shows manufacturing may be showing signs of improvement.

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However, a survey in February revealed that while US apparel executives believe China will still be the first choice sourcing destination over the next two years, they also expect the country's lead to narrow.

US apparel execs see China sourcing lead narrowing

Vietnam, meanwhile, has benefited as producers and buyers diversify their supply chains, helped by its low labour costs and its industry focus on specialisation, modernisation, and increasing value added.

Foreign direct investment continues to flow into the country, and the conclusion of negotiations on the Trans-Pacific Partnership (TPP) trade agreement means Vietnam is expected to be one of the biggest beneficiaries. Indeed, the country continues to gain US market share, and the Vietnam Textile and Apparel Association (Vitas) is confident the country's garment and textile exports will grow on average by 11.5% per year to 2020.

However, some industry observers have questioned whether the Southeast Asian country really is ready to reap the benefits that will come its way once the TPP deal goes live. And, the country's apparel and textile industry recently called on the country's government to revise its "out of date" 2020 development plan with a vision that will match the country's progress and improve its competitiveness.

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Bangladesh's clothing industry also continues to build on its momentum as a low-cost sourcing destination, despite factory safety issues. Since the collapse of the Rana Plaza building in April 2013, two major industry-backed remedial plans, together with one supported by the government, have worked to resolve issues over safety and worker rights, including the closure of some garment factories.

However, a fire in February at a garment factory deemed to be on track with remedial action, and the recent third-year anniversary of the Rana Plaza disaster, has served to highlight the race against time to make Bangladesh's garment factories safe, and renewed fears for workers' safety. Despite this, garment exports from the country have continued to grow at a steady pace despite the country's image taking a hit.

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Cambodia's apparel industry is the country's largest manufacturing sector, despite being blighted by strikes, wage disputes, and factory faintings. Garment manufacturers have called for a focus on productivity in the sector as a 9.4% rise in the minimum wage for clothing workers to US$140 per month kicked in earlier this year. They are also urging buyers to increase their prices for Cambodian goods. A national campaign to push multinational brands to pay suppliers a minimum wage of $177 – which labour rights groups and unions believe is a fair minimum wage – began in November last year.

The country's garment and footwear exports earned around $6.3bn in 2015, recording a growth rate of nearly 6.7% when compared with the year before, according to recent figures from the Cambodian Ministry of Commerce.

Cambodia garment exports reached $5.7bn in 2015