With trade talks between the US and China still unresolved when retailers and brands were planning their spring merchandise buys, US apparel imports surged in January as importers sought to mitigate the potential impact. Vietnam booked the largest growth, but rock-bottom prices at neighbouring giant China continue to win over US customers.
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 was up 47% month-on-month from 1.77bn SME to 2.61bn SME in January.
On a year-on-year basis, shipment volumes rose 8.7% and were up 8.3% in value terms to $7.57bn.
Eight of the top ten supplier countries booked export growth month-on-month, the only falls coming from Honduras at 60m SME compared with 82m SME in December and El Salvador, which booked a shipment decline to 50m SME compared with 66m SME in December.
The largest gains were seen by Vietnam which booked a 50% month-on-month jump in shipments to 402m SME, followed by India whose imports into the US were 46% higher month-on-month at 107m SME.
Cambodia and Indonesia both booked month-on-month shipment growth of 30% to 95m SME and 107m SME respectively. And China, the largest supplier of apparel to the US, saw a 27% growth in shipments month-on-month from the 874m SME recorded in December. Mexico’s shipments grew 8% to 62m SME.
Pakistan and Nicaragua have been jostling for the number ten position on the list over the past year, with Pakistan winning in January with shipments coming in at 52m SME.
When comparing the figures on a year-on-year basis, again Vietnam saw the largest growth with shipments up 15.54% from last year’s 347m SME. China’s apparel exports to the US grew 11.37% to 1.11bn SME compared with January last year.
Bangladesh, ranked number three in the top-ten US apparel supplier league table, saw exports grow 6.11% from 188m SME last year, while neighbouring Pakistan’s rose 6.04% higher than last year’s 49m SME. And despite a month-on-month decline, imports from El Salvador were up 4.06% year-on-year.
Of the remaining countries, Indonesia and Mexico booked flat shipment growth, while the volume of imports from Cambodia and Honduras were 3.1% and 9.2% lower respectively year-on-year.
Total textile and apparel imports, meanwhile, grew 12.4% year-on-year to 6.27bn SME, and in value terms by 8.4% to $9.99bn. Textiles alone recorded growth of 15.2% to 3.66bn SME, and in value terms were up 8.8% to $2.42bn.
Facts behind the figures
Vietnam is one of the largest suppliers of garments and textiles to the US, second only to China, despite the latter’s market share being significantly higher.
In terms of apparel imports by volume, Vietnam has grown its market share of the US from 7.72% in 2010 to 13.39% in 2018. One of the reasons for increased orders is thought to be vendors winning brands over with higher investments in the textile and dyeing industry. Suppliers have also benefitted from becoming more responsive to buyer demands for sustainable production methods.
In 2016, the Vietnam Improvement Program was launched with the support of the International Finance Corporation. It was rolled out to improve resource efficiency in local firms and has now been implemented in 70 factories that supply brands including VF Corp, Target Corp, Puma, New Balance and Adidas – enabling savings of US$24m in water, energy, and chemical operating costs.
Vietnam is also widely expected to be one of the biggest beneficiaries of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – or TPP-11 – which came into effect at the start of this year. Many of the original TPP provisions remain intact in CPTPP, with customs duties on 95% of trade in goods due to be removed, including all textiles and apparel. Some products will see immediate duty-free treatment, while tariffs on other goods will be lowered gradually over a number of years until being eliminated entirely.
It is also part of the EU-Vietnam Free Trade Agreement (EVFTA), which is currently undergoing a final legal review ahead of its signature and conclusion. The pact will eventually eliminate virtually all tariffs on goods traded between the two sides. Between then, these trade agreements will allow Vietnam to access nearly 40% of the world apparel import market (the EU and Japan) duty-free.
According to just-released figures from the Ministry of Industry and Trade, the US was the biggest market for Vietnam’s garment and textile products during the first three months of 2019, accounting for 46.6% of the country’s total export turnover. Recently, Vietnam’s apparel industry has seen production shift from neighbouring China as a result of the trade spat with the US.
However, China remains a tough competitor due to the significant volumes of apparel the US imports from it. When it comes to US apparel import volumes, China has by far the largest market share which, in 2018, stood at 41.92%.
Despite a fall in shipments to the US in November, assumed to be down to earlier stockpiling from retailers in the run-up to Christmas and to avoid a potential tariff hike at the beginning of the year, shipments began to return to growth in December with a 13% increase. In January, apparel imports by the US from China returned to healthy growth of 1.1bn SME.
One of the likely reasons for the increase is the appeal of low per unit prices of China’s apparel. Its prices have fallen year-on-year for the past seven years. While prices peaked to US$3.2 per SME in 2011, they have steadily fallen to a seven-year low of US$2.35 in 2018, compared with Vietnam’s $3.28 per unit. Of the top ten supplier countries to the US, China’s prices are the lowest.