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GUESS WHAT? WHEN YOU WEREN’T LOOKING PRICES INCHED UP, UNLESS YOU SOURCED CLOTHING MADE WITH SYNTHETICS

By Robert Antoshak | 17th July 2018

All the talk in the industry these days seems to be about two things: trade wars and sustainability. In both cases, prices can be affected in unforeseen ways. Trump hits China with punitive tariffs on a wide range of products exported to the US, and China responds in kind. And then, at the same time, we have what seems to be an endless stream of new raw material and production sustainability initiatives building standards requiring higher costs of production.

In either case, we're talking higher prices. After all, companies in China are resourceful and will find ways of offsetting higher tariffs. And, of course, the government of China isn't about to fold up over a tariff spat; they will make sure their industries are supported and guided through these uncertain times. 

From the perspective of prices, the same goes for sustainability. Actually, the best sustainability programs encourage efficiency which, properly managed, can offset the higher costs of adopting sustainability programs in the first place!

But despite all of the doom and gloom talk about trade wars, the demise of supply chains and the end of the world as we know it, we need to remember that our business hasn't been functioning in a vacuum. It wasn't just dropped from space. It has been operating in a global economy for many years and has dealt with production and trade interruptions before. Today, even with the worst of what we've seen of the Trump trade wars, we're only dealing with moderate tariffs — when compared to what used to be. Triple-digit tariffs were common in the old days. And we had import quotas. Everywhere, it seemed.

But in the meantime, tariffs or not, trade wars or not, the industry continues to churn out product, although that product costs buyers of such apparel a little more if it contains natural fibres, and a lot less if it contains synthetic fibres. So what's a good way of measuring these prices? Let's take a look.

An easy way of gauging the state of wholesale apparel prices is to analyse US import statistics. Updated on a monthly basis, and reasonably current (updated through April 2018), US statistics may be correlated using the category classification system devised – you guessed it – for analysing the time of import quotas. Indeed, textile and apparel quotas may no longer exist to harass and confound sourcing managers around the world, but the classification system still exists, a legacy of sorts from a different time.

For clothing, the US system combines a few thousand 10-digit Harmonized Tariff System product codes into about 70 or so three-digit product groupings for cotton, wool, and man-made fibre apparel products. And these, in turn, may be aggregated to totals for each fibre. Happily, the US collects these data in units of measure (e.g., dozens, metres, kilos, etc.) and value (in US dollars). So, we can calculate unit price statistics with monthly updates. In fact, when analysed over longer periods of time and compared to historical averages, it's possible to gauge price trends over time. And for the data geeks reading this, forecasting becomes a bit easier because of the decades worth of monthly data collected by the US Census Bureau.

Let's begin with the easy stuff and look at the aggregate data. The following table, list average US import prices for apparel on an annual basis from 2015 through (the just released) year-to-date May 2018 data. At this level of aggregation, unit prices are dollars per square metre equivalent (an estimated measure of the metres in various garments). But what's most important here is the overall price trend.

Average US apparel import prices (full year 2015-2017; YTD May 2018, US$)

Description US$/Unit 2015 2016 2017 2018 2015-18 Average Diff. from avge. 2017 Diff. from avge. 2018
1 Total Apparel US$/SME 3.13 3 2.96 2.94 3 -0.05 -0.07
31 Total Cotton Apparel US$/SME 3.38 3.24 3.26 3.27 3.29 -0.03 -0.02
41 Total Wool Apparel US$/SME 18.34 17.85 17.87 18.92 18.24 -0.37 0.68
61 Total MMF Apparel US$/SME 2.68 2.6 2.56 2.52 2.59 -0.03 -0.07

Source: US Bureau of the Census

So, for example, the average wool garment price soared about 68 cents higher per square metre equivalent in 2018 than it was over average of the period of 2015-2018, while prices for apparel made with synthetics actually dropped by 7 cents per square metre equivalent. However, there are a lot more garments made with synthetics than with wool imported into the US, so the drop in synthetic apparel prices are significant when those volumes are taken into account. Cotton apparel prices also fell slightly over the same period though not to the same extent as synthetics.

The following chart makes the net changes easier to visualise:

Unit price difference in YTD 2018 vs 2015-18 average (US$/SME)

Source: US Bureau of the Census

Price hikes for wool apparel jumps off the page, but there's more to the story for each fibre-type of apparel. Let's see what I mean.

Cotton apparel

Despite the run-up in raw cotton prices over the past year or two, cotton apparel prices in general are relatively flat so far in 2018, at least when compared to average prices since 2015. Even so, price declines are significant in men's and cotton trousers (jeans), down about US$4/dozen, as well as men's woven shirts, down about US$1.50/dozen. For womenswear, cotton trousers are of off nearly US$1.50/dozen, but the opposite is the case with woven blouses where 2018 prices are up nearly US$2/dozen. In terms of knits, men's cotton knit shirts (such as outerwear t-shirts) are about in line with 2015-2018 averages, although the opposite is the case with women's knit blouses where prices have declined by more than US$2/dozen. 

It is worth noting substantial price increases in dresses (up about US$1/dozen), women's coats (up by nearly US$5/dozen), sweaters (up by more than US$6/dozen), and men's suit-type coats (sport coats), which rose by more than US$12/dozen. Moreover, for many of these product categories, 2018 price increases follow rather steep declines recorded in 2017 when compared to the overall 2015-2018 average. So it is possible that higher cotton prices have begun to register in downstream product prices.

As a side note, the steep price declines recorded in down-filled coats appear to have been off-set by higher prices recorded in their man-made fibre equivalents noted below. In fact, with these products in general, although included in the following data tables, have been excluded from the graphs provided after each table as the price fluctuations tend to visually overwhelm the price fluctuations recorded in the other products.

Average US cotton apparel import prices (full year 2015-2017; YTD May 2018, US$)

Description US$/Unit 2015 2016 2017 2018 2015-18 Average Diff. from avge. 2017 Diff. from avge. 2018
353 M&B down-filled coats $/DOZ 509.61 665.14 632.27 443.69 562.68 69.59 -118.98
354 W&G down-filled coats $/DOZ 668.03 644.53 670.11 586.98 642.41 27.7 -55.44
351 Nightwear and pajamas $/DOZ 45.29 42.9 41.38 38.2 41.94 -0.57 -3.74
347 M&B trousers, breeches & shorts $/DOZ 76.7 73.09 70.33 68.44 72.14 -1.81 -3.7
350 Robes, dressing gowns, etc. $/DOZ 46.09 46.26 46.33 41.58 45.07 1.27 -3.48
339 W&G knit shirts & blouses $/DOZ 35.5 33.83 34.96 31.98 34.07 0.89 -2.08
340 M&B shirts, not knit $/DOZ 86.05 82.28 81 81.18 82.63 -1.63 -1.44
348 W&G trousers, breeches & shorts $/DOZ 57.29 54.98 54.35 53.63 55.06 -0.71 -1.43
349 Brassieres & other body supporting garments $/DOZ 25.4 23.93 25.88 24.73 24.99 0.89 -0.25
330 Handkerchiefs $/DOZ 4.89 5.32 5.51 4.92 5.16 0.35 -0.24
338 M&B knit shirts $/DOZ 31.6 30.32 30.86 30.61 30.85 0.01 -0.24
332 Hosiery $/DPR 5.68 5.66 5.9 5.58 5.71 0.2 -0.13
334 Other M&B coats $/DOZ 120.89 114.17 115.58 116.77 116.85 -1.27 -0.08
352 Underwear $/DOZ 13.06 12.79 12.79 12.81 12.86 -0.07 -0.06
31 Total Cotton Apparel $/SME 3.38 3.24 3.26 3.27 3.29 -0.03 -0.02
331 Gloves and mittens $/DPR 2.67 2.42 2.48 2.58 2.54 -0.06 0.04
342 Skirts $/DOZ 58.3 56.92 59.18 58.57 58.24 0.94 0.33
359 Other cotton apparel $/KG 17.04 16.48 16.81 17.84 17.04 -0.23 0.8
336 Dresses $/DOZ 73.76 67.24 67.81 71.02 69.96 -2.14 1.06
341 W&G shirts & blouses, not knit $/DOZ 70.49 66.59 68.71 71.16 69.24 -0.52 1.92
335 W&G coats $/DOZ 119.16 109.72 106.49 118.36 113.43 -6.94 4.93
345 Sweaters $/DOZ 92.4 86.6 84.52 96.04 89.89 -5.37 6.15
333 M&B suit-type coats $/DOZ 227.48 229.7 215.29 240.08 228.14 -12.85 11.94

Source: US Bureau of the Census

Cotton Apparel: Unit Price Difference in YTD 2018 vs 2015-18 Average ($/DOZ)*

Source: US Bureau of the Census

Wool apparel

As noted previously, prices of imported wool apparel have really soared in 2018, in fact reversing declining prices in 2017 as measured against the 2015-2018 average. Examples include knit shirts & blouses (up nearly US$14/dozen), women's sweaters (up more than US$21/dozen), men's suit-type coats (sport coats) up by more than US$27/dozen, women's coats (up by nearly US$90/dozen), men's sweaters (up by more than US$115/dozen), and other men's coats (up by more than US$120/dozen).

Again, such price increases may see extreme when compared to other types of apparel (such as sportswear), but the wool items described are typically tailored clothing which is necessarily more expensive by its very nature of manufacturing. Yet, what is most noteworthy is that for many of the previously mentioned wool products, 2018 price increases stand in sharp contrast to decreases noted in 2017.

Average US wool apparel import prices (full year 2015-2017; YTD May 2018, US$)

Description US$/Unit 2015 2016 2017 2018 2015-18 Average Diff. from avge. 2017 Diff. from avge. 2018
436 Dresses $/DOZ 374.06 388.83 297.36 221.76 320.5 -23.15 -98.74
440 Shirts & blouses, not knit $/DOZ 295.13 339.48 342.37 267.7 311.17 31.2 -43.47
439 Babies' garments and clothing accessories $/DOZ 89.94 83.49 68.31 48.98 72.68 -4.37 -23.7
444 W&G suits $/UNIT 129.8 131.8 213.99 137.93 153.38 60.61 -15.45
442 Skirts $/DOZ 277.87 244.52 266.28 246.84 258.88 7.41 -12.04
431 Gloves and mittens $/DPR 39.51 44.03 43.05 33.91 40.13 2.93 -6.22
432 Hosiery $/DPR 24.43 23.85 21.58 20.55 22.6 -1.03 -2.05
448 W&G trousers, breeches & shorts $/DOZ 296.14 286.25 285.93 287.05 288.84 -2.91 -1.79
447 M&B trousers, breeches & shorts $/DOZ 283.66 278.81 273.12 279.9 278.87 -5.75 1.03
443 M&B suits $/UNIT 98.16 93.84 104.2 100.95 99.29 4.91 1.66
459 Other wool apparel $/KG 66.03 66.15 64.89 69.07 66.54 -1.65 2.54
438 Knit shirts & blouses $/DOZ 223.89 205.15 225.48 236.44 222.74 2.74 13.7
446 W&G sweaters $/DOZ 411.65 410.68 427.45 444.71 423.62 3.82 21.09
433 M&B suit-type coats $/DOZ 636.8 615.14 637.62 666.32 638.97 -1.35 27.35
435 W&G coats $/DOZ 583.31 586.96 602.57 709.66 620.62 -18.05 89.03
445 M&B sweaters $/DOZ 466.6 419.63 448.65 599.5 483.59 -34.94 115.91
434 Other M&B coats $/DOZ 520.68 579.42 582.32 725.4 601.95 -19.64 123.45

Source: US Bureau of the Census

Wool Apparel: Unit Price Difference in YTD 2018 vs 2015-18 Average ($/DOZ)*

Source: US Bureau of the Census

Man-made fibre apparel

In stark comparison to the price situation is man-made fibre apparel. Most category imports collected in the US data show price declines in 2018 building on previously recorded declines in 2017 compared to 2015-2018 averages. In particular, price declines are noted in men's suit-type coats (down nearly US$26/dozen), women's sweaters (down more than US$6/dozen), and dresses (down more than US$4/dozen). Other categories of importance include women's trousers (down more than US$2/dozen) and men's trousers (down nearly US$2/dozen). In contrast price increases were only recorded in gloves (up nearly US$1/dpr), men's coats (up nearly US$1.50/dozen), men's suits (up nearly US$2/unit), and women's coats (up more than US$3/dozen).

Down filled coats for both men's and women's recorded significant increases, which may in part be due to product replacement of cotton equivalent products where prices have plummeted so far in 2018.

Average US MMF apparel import prices (full year 2015-2017; YTD May 2018, US$)

Description US$/Unit 2015 2016 2017 2018 2015-18 Average Diff. from avge. 2017 Diff. from avge. 2018
633 M&B suit-type coats $/DOZ 180.57 175.43 135.01 129.37 155.09 -20.09 -25.72
646 W&G sweaters $/DOZ 62.91 58.56 59.97 52.26 58.42 1.54 -6.16
636 Dresses $/DOZ 89.49 82.02 80.67 78.46 82.66 -1.99 -4.2
639 W&G knit shirts & blouses $/DOZ 44.2 42.32 43.63 39.02 42.29 1.34 -3.27
641 W&G shirts & blouses, not knit $/DOZ 57.75 57.76 57.27 53.41 56.55 0.72 -3.14
651 Nightwear and pajamas $/DOZ 42.98 42.57 40.69 38.52 41.19 -0.5 -2.67
648 W&G trousers, breeches & shorts $/DOZ 59.87 58.34 55.25 54.65 57.02 -1.78 -2.38
645 M&B sweaters $/DOZ 81.86 97.05 77.69 82.68 84.82 -7.13 -2.14
642 Skirts $/DOZ 62.24 60.74 62.93 59.45 61.34 1.59 -1.89
640 M&B shirts, non knit $/DOZ 76.36 75.17 77.13 73.97 75.66 1.47 -1.69
647 M&B trousers, breeches & shorts $/DOZ 57.77 60.19 59.25 56.83 58.51 0.74 -1.68
638 M&B knit shirts $/DOZ 45.16 42.68 44.34 42.2 43.59 0.74 -1.39
652 Underwear $/DOZ 18.99 18.77 18.24 17.37 18.34 -0.1 -0.97
650 Robes, dressing gowns, etc. $/DOZ 46.11 45.15 45.33 44.3 45.22 0.11 -0.92
649 Brassieres & other body supporting garments $/DOZ 47.24 47.67 47.22 46.23 47.09 0.13 -0.86
644 W&G suits $/UNIT 15.18 14.91 16.56 14.43 15.27 1.29 -0.84
632 Hosiery $/DOZ 6.38 5.97 5.5 5.01 5.72 -0.21 -0.71
630 Handkerchiefs $/DOZ 4.85 4.78 5.2 4.48 4.83 0.37 -0.35
631 Gloves and mittens $/DPR 14.01 13.98 13.53 14.97 14.12 -0.59 0.85
659 Other man-made fiber apparel $/KG 20.77 20.08 19.91 21.6 20.59 -0.68 1.01
634 Other M&B coats $/DOZ 159.36 154.52 147.19 155.64 154.18 -6.99 1.46
643 M&B suits $/UNIT 14.34 15.97 16.17 17.92 16.1 0.07 1.82
635 W&G coats $/DOZ 134.43 131.48 129.06 136.02 132.75 -3.69 3.27
654 W&G down-filled coats $/DOZ 373.45 356.75 386.06 448.59 391.21 -5.16 57.38
653 M&B down-filled coats $/DOZ 380.4 384.34 367.67 508.1 410.13 -42.46 97.98

Source: US Bureau of the Census

MMF Apparel: Unit Price Difference in YTD 2018 vs 2015-18 Average ($/DOZ)*

Source: US Bureau of the Census

Conclusion

So why go through this exercise? It's for more than simple intellectual curiosity. There are massive sourcing implications buried in all of these data. Of course, tailored clothing costs a lot more these days than sportswear. Not too surprising. But the drop in man-made prices was somewhat surprising. Some of my friends in the cotton industry have claimed that cotton is on its way back. It's always possible that cotton can stage a return, but as long as man-made fibre prices continue to drop like they are in finished apparel, those cotton claims will ring hollow.

However, there are even bigger implications to consider. Trade, for one thing. Going forward, trade conflicts will affect prices across the board. More pointedly, the prices quoted above do not reflect Trump's tariff assault on China. So how will global prices be affected as a result of a trade war? Chinese exporters may be harmed by higher US tariffs, but how will suppliers react? Will they lower prices to take advantage of the situation — or will they raise prices enough to remain just below prices offered by Chinese companies? Only time will tell. 

What we do know is that current statistics provide us with a baseline from which to measure how prices will adjust. In these times, though, it's not enough to simply watch month-over-month results. Trends are more important than ever, which is why this analysis is constructed in a way to incorporate prices over multiple years. Indeed, market fundamentals will always affect prices. But don't kid yourself: if trade restrictions return, if the old ways of the whack-a-mole approach to restricting trade (China today, Vietnam tomorrow, and the EU the day after), then we truly will enter a new age of doing business. I wonder when we'll start to hear about quotas?

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