Though the value of US apparel imports registered a 2.4 per cent increase in October 2021 from previous month and 20.3 per cent from year ago, it is likely to decline in the subsequent months of 2021 due to the seasonal nature of imports. As per a Shenglu Fashion report, the value of US apparel imports is likely to remain in the range of19.9 per cent-24.5 per cent this year.
OTEXA figures reveal so far in 2021, US apparel imports remained unstable due to the uncertainties and disruptions caused by COVID-19 and the shipping crisis. They have grown between 13.1 per cent in May to 17.6 per cent in July, compelling fashion companies to focus on inventory planning and supply chain management. Companies are likely to continue to remain challenged by the new Omicron variant.
Limited production capacity elsewhere has resulted in Asian countries remaining the dominant sourcing base for US fashion companies. However, due to COVID-lockdowns in Vietnam and Bangladesh, the market share of Asian countries’ fell from 74.2 per cent in 2020 to 71.3 per cent in July 2021. However, it rebounded in October 2021 as US apparel imports from Asian countries surged 74.8 per cent.
China to remain dominant sourcing base
China continues to remain one of the essential sourcing bases for US fashion companies in the current business environment. It remained the largest supplier in October 2021, accounting for 41.0 per cent of total US apparel imports in quantity and 27.1 per cent in value. China supplied the most diverse range of products to the US market during the month compared to other competitors like Bangladesh, Mexico, and CAFTA-DR members.
Yet, as shown by the HHI index and market concentration ratios (CR3 and CR5), the US fashion companies continue to move apparel sourcing orders from China to other Asian countries. As against 27 per cent in 2018, they now source only 15 per cent cotton apparels from China. Only around 10 per cent of their total sourcing value or volume is from China compared to over 30 per cent in the past. US companies continue to reconsider China sourcing strategies to avoid potential high-impact disruptions due to growing tensions between US-China relations and the looming new US legislation targeting products made by forced labor.
Near-sourcing to increase
US fashion companies prefer near sourcing from the Western Hemisphere now, especially CAFTA-DR members. From January-October 2021, they sourced around 17.3 per cent of their apparels needs from the Western Hemisphere, which is 16.1 per cent more from that sourced in 2020. The share of CAFTA-DR members’ market shares during this period increased to 10.6 per cent in 2021 from 9.6 per cent in 2020. The value of US apparel imports from CAFTA-DR also increased 41.9 per cent growth during the period. Imports from El Salvador, Honduras and Guatemala grew particularly fast during these months. However, companies hesitate to permanently shift their sourcing bases to this region due to the political instability in some Central American countries like Nicaragua and Haiti.
From January to October 2021, there was a notable increase in prices of US apparel imports. The unit price of US apparel imports from almost all leading sources surged over 10 per cent during this period. Pressures of these rising costs are unlikely to ease anytime soon.
