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Global Denim Supply Chain Sees Significant Swings in 2019

The landscape for denim apparel sourcing continued to evolve as the new year got started, with significant surges and downturns in production among major U.S. suppliers.

The first month of the year could be seen as surprising, with an 11.52 percent increase in category imports–the vast majority of which are jeans–from Mexico to reach a value of $61.23 million worth of goods. The uptick came as the concern of importers that Mexican-made goods could lose their duty-free status as the country renegotiated the North American Free Trade Agreement with the U.S. and Canada. A new trilateral deal, the U.S-Mexico-Canada Agreement, was signed and now awaits ratification.

Vietnam continued its momentum as a growing denim supplier, with its shipments increasing 23.13 percent in the month to $25.98 million. While Mexican and other Western Hemisphere sourcing come with built-in duty-free treatment and closer to home logistics advantages, Vietnam’s gains are generally seen by sourcing experts as taking a bite out of China’s pie.

Denim apparel imports from China fell 1.9 percent in January to a value of $85.24 million, which was counter to a gain in overall apparel imports in the month and could indicate that the more specialized manufacturing needed to make jeans compared to more basic apparel, has companies taking a longer view of the risks of committing to China sourcing as trade tensions and cost increases hover above the country.

As companies readied for the spring retail season, denim apparel imports from the world rose 3.12 percent in January compared to a year earlier.

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“Countries like Vietnam, Cambodia, Indonesia and Mexico have been winning the trade war. Companies have started to looks at issues like where can I go [outside of China], and what will it do to my costs,” Laura Rabinowitz, special counsel at international trade law firm Kelley Drye, said.

Other major Asian suppliers also had a down month.

Jeans imports from Bangladesh fell 7.97 percent to $35.87 million, Pakistan’s shipments were down 20.3 percent to $21.07 million and U.S. imports from Cambodia decreased 13.46 percent to $8.41 million. On a smaller scale in the region, denim apparel imports from Indonesia rose 35.72 percent to $6.3 million, Sri Lanka’s shipments were up 8.15 percent to 5.1 million and imports from India gained 65.28 percent to $4.09 million.

Gail W. Strickler, president of global trade at Brookfield Associates, said, Indonesia is likely benefitting from China’s stagnancy and “Sri Lanka is getting back in the game and they have a high-end needle.”

Denim apparel imports from the Western Hemisphere increased 9.78 percent in January to $75.76 million. In addition to Mexico, Nicaragua led the way with a 17.1 percent gain to $6.31 million, and Guatemala nearly doubled its shipments from a year earlier, to $2.65 million.

Gainers in the month also included Egypt, with jeans imports rising 16.11 percent to $12.8 million, and Jordan, which supplied $5.83 million worth of gods, more than doubling its shipments on a year-to-year basis.