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  1. Analysis
April 4, 2022

Covid two-years on: Recovery rates of US apparel sourcing hotspots

Two years on from the initial devastating impact of Covid, Just Style explores the rate of recovery of the top ten apparel suppliers to the US. All but three appear to have not only steadied the ship but surpassed pre-Covid volume levels – with Bangladesh and Pakistan leading the charge.

By Beth Wright

More than two years have passed since the World Health Organization declared Covid a global pandemic and apparel supply chains juddered to a halt worldwide as factories were forced to close in an attempt to stem the spread of the virus, leaving the sector reeling. 

But has the industry recovered, and are US clothing imports back to pre-pandemic levels?

Analysis of full-year total apparel import data for 2019-2021 from the US Office of Textiles and Apparel (OTEXA) – covering all apparel articles in Chapters 61 and 62 of the Harmonized Tariff Schedule, as well as certain headwear articles in Chapter 65 – paints a fairly promising picture.

Examining the data for 2019 and 2021 reveals all but three of the top ten suppliers to the US appear to have recovered from the crisis and have even surpassed pre-Covid rates.

Rate of recovery two years on

Pakistan, Bangladesh, and Cambodia lead the way in terms of the countries that appear to have shown the most impressive recovery.

Pakistan saw apparel shipments bound for the US surge by 49.42% between 2019 and 2021 year-to-date, from 599m SME pre-pandemic to 895m SME two years later. 

The country also booked the largest increase in the share of the US apparel market during 2021 at 11.4%. With a 3.04% share overall, Pakistan’s holding might be in the lower quarter of the top ten suppliers but it is has been steadily increasing since 2018. In fact, its 2021 holding marks its best performance since Just Style started monitoring OTEXA data in 2010. 

Certainly, a point of attraction is its competitive price point. After China, Pakistan was the most competitively priced apparel supplier to the US in 2021 on a price per unit basis, at US$2.48.

Next in line in terms of recovery rates is Bangladesh, which saw apparel shipment volumes increase 29.35% in 2021 to 2.60bn SME from 2.01bn SME in 2019.

Cambodia also saw volumes rise by 19.23% in the two-year period from 1.04bn SME to 1.24bn SME, while India, Vietnam, Mexico, and China also surpassed their pre-pandemic levels.

India saw a gain of 14.29% from 2019, with apparel shipment volumes amounting to 1.28bn SME in 2021, while Vietnam’s count rose 10.35% on 3.96bn SME in 2019 to 4.37bn SME two years later. 

Mexico saw a more modest increase at 4.42% on its pre-pandemic level, with shipment volumes rising to 826m SME.

Meanwhile, China saw its apparel shipments destined for the US inch up 0.45% to 11.13bn SME from 11.08bn SME in 2019.

While China’s increase pales into insignificance compared to the surges seen by Pakistan, Bangladesh, and Cambodia, the East Asian sourcing powerhouse still remains unrivalled as the top supplier of apparel to the United States. At 11.13bn SME, China’s total apparel export volumes in 2021 may be less than 1% ahead of its pre-Covid levels but it is 154.69% ahead of its closest competitor with Vietnam’s count sitting at only 4.37bn SME.

Reducing dependence on China has been top of mind for apparel sourcing executives in recent months, but many countries fail to compete with the country due to the sheer size of its supply base, wide skillset, quality and variety of products, and the completeness of its supply chain.

It is also the most competitively priced of the ten largest US apparel suppliers, with its per-unit price of garments standing at US$1.76 in 2021. This compares to $1.79 a year earlier – a fall of 1.7%.

At the other end of the scale, the supplier countries still floundering two years into Covid are Honduras, El Salvador and Indonesia.

According to the data, the Central American countries of Honduras and El Salvador have seen the volume of apparel shipments to the US decline from pre-Covid 2019 levels by 13.66% and 12.06% in 2021, respectively.  

While Indonesia’s 2021 shipment volumes were also down on pre-Covid levels, coming in at 1.77% below those recorded in 2019 at 1.11bn SME.

2020 data analysis reveals the supplier countries hardest hit by Covid

Unsurprisingly, given their failure to reach pre-pandemic levels, Honduras and El Salvador were the hardest hit by the crisis, according to OTEXA data, with apparel exports to the US falling by 32.57% and 34.05% in 2020 from 2019, respectively. 

China was also dealt a heavy blow, with shipment volumes tumbling 23.65% in 2020 from a year prior as sourcing executives moved to try and reduce their dependence on China amid the initial outbreak of Coronavirus in the country in early 2020. 

Elsewhere, India and Indonesia saw declines of 19.2% and 18.41%, respectively, while Mexico, Bangladesh, and Vietnam were also impacted but on a somewhat lesser scale, at 14.03%, 5.97%, and 4.29%.

Pakistan and Cambodia, however, managed to grow their apparel exports to the US during 2020 in spite of the crisis.

Pakistan’s apparel shipment volumes grew by 5.34% in 2020 to 631m SME, while clothing exports destined for the US from Cambodia rose by 7.69% to 1.12bn SME from 1.04bn SME in 2019. 

The increases suggest sourcing executives opted to shift production away from destinations such as China to the South Asian hotspots as they looked to mitigate risk.

But Dr Sheng Lu, associate professor at the Department of Fashion and Apparel Studies at the University of Delaware, is quick to caution against thinking the players that saw significant growth in shipments in 2021 have suddenly become more competitive or more suitable sourcing bases.

“Instead, it was more likely that fashion companies struggled to find enough production capacity that could fulfil their sourcing orders,” Lu tells Just Style.

Drilling down into Covid’s impact on apparel shipments alone

Stripping out the effect of certain headwear articles in Chapter 65 from OTEXA’s total apparel import data, and focusing solely on Chapters 61 and 62 of the Harmonized Tariff Schedule, gives a different perspective.

With this microscopic view of the OTEXA dataset, as analysed by GlobalData, comes a notable difference in China’s results.

Shipments from the East Asian manufacturing giant jumped by more than 25% to 33.14bn SME in 2021 from 26.50bn SME in 2019 – a markedly better performance than the 0.45% increase the total apparel import data shows.

Another major change is the recovery rate of Indonesia. Imports bound for the US grew by 21.78% in 2021 from pre-Covid levels in 2019, when looking at data for Chapters 61 and 62 alone. OTEXA total apparel import data portrays a 1.77% decline.

Other points of note are a considerable increase in India's exports. When stripping out the effect of headgear, India's shipments to the US increase by 58.73% from 2019 to 2020 as opposed to a 14.29% jump when examining OTEXA's total apparel import data.

India's rate of recovery, at 58.73%, is in fact the highest jump in exports from 2019 to 2020 when examining the data on this basis. Close behind is Bangladesh with a 55.26% increase from pre-Covid 2019 levels to 2020, and Pakistan at 50%.

Mexico's shipments also jump considerably when analysing this dataset, rising by 33.82% from 2019 to 2020 as opposed to 4.42% shown by the total apparel import data.

Elsewhere, the decline in apparel shipments to the US from Honduras in 2021 compared to 2019 lessens when taking Chapters 61 and 62 data alone. Shipments from the Central American country destined for the United States moved to a decline of 3.85% on this basis, compared to a fall of 13.66% when comparing total apparel import data.

El Salvador's rate of decline, however, increases to a drop of 21.74% when stripping out certain headwear articles in Chapter 65.

But is this a trend for the foreseeable? Are the Central American countries so rocked by Covid that their imports to the US won’t recover? Lu rejects this, adding there are more factors at play here.

“Several studies suggest the pandemic hurt some countries’ economies (including production and exports) more significantly because of their limited healthcare resources or more serious Covid situation... Understandably, it could also take longer for these countries’ apparel production and exports to fully recover to a pre-Covid level. As an encouraging sign, US apparel sourcing from these two countries enjoyed a 28% and 33% growth in 2021 year-on-year (by quantity), suggesting a sound recovery.”

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