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Bangladesh books first US apparel import gain since January

Apparel imports into the US in May were higher than both the previous month and the year before, with gains for the two largest suppliers, China and Vietnam. Bangladesh also booked a rise in imports for the first time since January, but half of the top-ten countries recorded a year-on-year decline.

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 8.6% month-on-month in May to 2.14bn square metre equivalents (SME), compared with 1.97bn SME booked in April.

The figures also show the volume of apparel imports increased 3.7% against May last year, and were up 0.3% to $6.11bn in value terms.

In terms of individual supplier countries, half of the top-ten recorded a year-on-year decline, while one country – Vietnam – saw a double-digit increase.

China – the largest supplier of apparel to the US – saw shipments climb 6.3% year-on-year to 824m SME, and up 12.7% from the 731m SME recorded in April. The second-largest supplier, Vietnam, booked an increase of 10.3% to 297m SME – although this was lower than April's 18.1% growth.

Bangladesh, ranked number three in the top-ten league table, swung from last month's decline to a 4.25% rise in exports to the US year-on-year to 151m SME. Cambodia booked a decline of 6.9% to 57m SME. India, meanwhile, saw shipments increase 5% to 96m SME.

Of the remaining top-ten supplier countries, Nicaragua, new to the top-ten list since February, featured again with a slight year-on-year decrease of 0.01% to 46m SME, while El Salvador fell 4.4% to 69m SME. Indonesia's shipments, meanwhile, slipped 3.9% to 100m SME; those from Honduras rose 5.3% to 96m SME; but Mexico booked a year-on-year decline of 1.9% to 76m SME.

Total US apparel and textile imports in May were up 3.7%, reaching 5.48bn SME from 5.29bn SME year-on-year. Textile shipments into the US were also up 3.7% to reach 3.35bn SME year-on-year.

Year-to-date and six year overview

While monthly trade data is often volatile, with big swings from one month to the next, a broader view of the year shows the volume of total US apparel and textile imports were up 2.6% in the January to May period to 25.1bn SME, from 24.46bn SME last year. Within this, textiles grew 2.7% to 14.56bn SME, while apparel shipments were up 2.5% to 10.55bn SME.

In value terms, total US apparel and textile imports were down 1.95% to $40.55bn year-to-date, from $41.35bn in the same period a year ago. Apparel imports dropped 1.3% to $30.67bn, while textiles dropped 3.9% to $9.87bn.

Again, only half of the top ten apparel supplier countries booked growth during the first five months of the year, with Vietnam seeing the largest increase at 11.7% to 1.48bn SME.

Nicaragua booked the second highest gain, at 7.6% to 224m SME. Imports from China, meanwhile, were up 5.1% to 3.95bn SME – the country remaining by far the biggest supplier of apparel to the US with a 41.5% share of the market. While Bangladesh, the third-largest supplier with a share of 6.9%, booked a 0.6% decline in shipments compared with last year to 799m SME.

Mexico saw the largest year-on-year decline at 7.9% to 348m SME, while Cambodia also saw a decline, of 1.6% to 359m SME.

Taking a broader look at the data over a six-year period from 2010 to 2016, Vietnam is the only country in the top ten to have seen a steady increase in import volumes to the US, growing from 1.91bn SME in 2010 to 3.35bn SME in 2016, increasing its share of total imports from 7.72% to 12.45%.

China's imports have fluctuated over this period, from 10.4bn SME in 2010, falling to 9.74bn SME a year later, before reaching a peak of 11.38bn SME in 2015, before falling again in 2016 to 11.17bn SME. The country has lost marginal market share, from 41.98% in 2010 to 41.50% last year.

Cambodia, Mexico and Pakistan, meanwhile, are all exporting less to the US than they were six years ago. Cambodia fell from 947.1m SME to 903m SME in 2016, decreasing its share of the total from 3.83% in 2010 to 3.35% last year.

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, the latest figures continue to confirm its appeal to 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.

Recent data on China's apparel imports to the US last year show the country's prices are now lower than they were six years ago. But an analysis of 2016 trade data also shows that while the country looks set to maintain its lead into the future, increasing competition is coming from suppliers in the Western Hemisphere who offer faster speed to market. This is supported by the recent growth of Nicaragua as a key apparel supplier to the US.

Meanwhile, a new report has shown imports of men's and boys' manmade fibre knit shirts and women's and girls' knit shirts and blouses from China into the US saw the biggest growth in volume across all clothing categories between 2010 and 2016.

Vietnam 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. In volume terms the country increased its share of US imports last year, rising from 11.52% in 2015 to 12.45% in the 12 months to December 2016.

Manufacturers in Vietnam stand to gain from improved access to the EU import market once the EU-Vietnam free trade agreement comes into force, as well as increased foreign direct investment that flowed into the country ahead of the now-abandoned Trans-Pacific Partnership (TPP) trade agreement.

The industry is also calling on the government to create a development strategy to 2025, with a vision towards 2040, in order to help domestic firms take advantage of opportunities from free trade agreements, as well as offset competition from neighbouring Cambodia and Myanmar, China, India, Bangladesh and Sri Lanka.

Meanwhile, the country's garment industry is expected to reach its export target of US$31bn, according to its national textile and garment group Vinatex.

Despite factory safety concerns, Bangladesh's clothing industry has largely continued to build momentum as a low-cost sourcing destination. 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.

Two fatal terrorist attacks in Dhaka, and a safety warning by the US State Department earlier this year, left garment buyers rethinking travel plans, reigniting concerns over a potential economic fallout for a sector reliant on foreign investment. But while industry observers have questioned whether the attacks mark a tipping point for Bangladesh, garment exporters insist that business continues as usual in the country – a view that appears consistent with the country's apparel export trend.

Indeed, a new initiative was launched in May - the Remediation Coordination Cell - designed to manage the remediation process of the country's garment factories. It will verify that remediation work has been completed at garment factories under the Government's National Initiative, with support from the International Labour Organization (ILO) and funding from Canada, the Netherlands and the UK.

Further, garment manufacturers are calling on the government to support the industry in its upcoming budget, with the provision of 5% cash incentives on exports for the next two years.

Last week, Primark, Hennes & Mauritz (H&M) and Inditex were among the first to join a raft of major apparel brands and unions in signing a new and improved Bangladesh Accord that will run to 2021 and promises to offer new worker protections and ensure more factories are inspected and renovated. The agreement includes additional commitments to the right of workers to organise and join a union in order to protect their own safety. So far the '2018 Accord' has been signed by 15 brands.

Meanwhile, the Accord said earlier this week it will evaluate whether it can expand its inspection programme to include boilers after 11 people were killed on 3 July after a boiler exploded at the Multifabs Limited garment factory on the outskirts of the capital Dhaka.

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