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Denim Sourcing Shows Wide Swings Among Top Suppliers in the First Quarter

There were clear winners and losers when it came to U.S. imports of denim apparel in the first quarter of the year.

Among the Top 10 suppliers of the category–97 percent of which is jeans–imports from China, Bangladesh, Pakistan, Cambodia and Lesotho were down in value, while shipments arriving to U.S. ports from Mexico, Vietnam, Egypt, Nicaragua and Indonesia saw increases.

The movement in sourcing strategies comes at a volatile time for U.S. trade, particularly with China, which saw its shipments to the U.S. decline 2.2 percent in the first three months of the year to $183.57 million worth of goods. China’s recent downward pattern as a dominant apparel supplier to the U.S., accelerated by the tariff-based trade dispute with the U.S. and higher costs in the country, has left room for several countries and regions to grow their market share.

“For some time now, many companies in this segment have been moving production of China-made goods destined for the U.S. to other countries such as Vietnam or Cambodia,” a report from Moody’s Investor Services said. “However, as more companies move production to lower-cost countries, capacity constraints may result in higher costs of production in the new countries due to rising demand.”

For example, Moody’s said, PVH Corp. recently disclosed that less than 20 percent, or around 8 percent to 9 percent of its total cost of goods sold for its North American product, is made in China. Three years ago, it was more than 40 percent. Moody’s also said while G-III Apparel sourced roughly 61.5 percent of its fiscal 2019 inventory purchases from China, that number is down from 65.1 percent in fiscal 2018 and 72 percent in fiscal 2017.

Western Hemisphere countries are taking up some of the slack in jeans production. Mexico shipped 15.09 percent more goods to the U.S. in the quarter, for a value of $195.04 million, while imports from Nicaragua grew 21.54 percent to $24.48 million.

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Among other Asian suppliers, imports from Vietnam jumped 30.24 percent to $63.94 million in the period and Indonesia’s shipments increased 14.89 percent to $19.82 million. On the downside, imports from Bangladesh fell 1.24 percent in the period to $95.11 million, Pakistan’s shipments were down 0.85 percent to $53.86 million and Cambodia’s dropped 11.71 percent to $20.91 million.

Even African countries had their ups and downs. Imports of denim apparel from Egypt rose 4.23 percent to $34.36 million, while Lesotho’s shipments fell 24.78 percent to $9.49 million. Overall, Sub-Saharan countries are growing from a small base as jeans supplier, with imports up 9 percent to $28.75 million from the region, mostly duty-free under the African Growth and Opportunity Act.

These swings came as U.S. jeans imports grew 5.82 percent in the January to March period to a value of $810.07 million. For the 12 months through March, denim apparel imports increased 7.46 percent to $3.9 billion.