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US Footwear Imports Flop 27.8% in First Half, as Sourcing Leaders Emerge

Smacked by trade-limiting tariffs from the U.S.-China trade war exacerbated by the debilitating coronavirus pandemic, U.S. footwear imports fell 27.8 percent in the first half of the year compared to the same period in 2019 to a value of $9.02 billion, according to the Commerce Department’s Office of Textiles & Apparel (OTEXA).

Only Cambodia and Germany of the Top 10 suppliers saw increases in their shipments to the U.S. in the six-month period compared to last year. According to OTEXA, imports from Cambodia increased 15.5 percent in the period to $226.19 million, while Germany’s shipments rose 9.2 percent to $80.23 million.

Executives such as Robert Antoshak, managing director of Olah Inc., have pointed out the difficulty of trying to find sourcing patterns or forecasts during the pandemic, and the degree of losses can be telling.

For example, the numbers paint a clear picture of China’s demise. Footwear imports from the sourcing powerhouse tumbled 40.5 percent in the year-to-year period to $3.59 billion, while imports from No. 2 supplier Vietnam dipped 8.7 percent to $3.06 billion, OTEXA reported.

“Even with declining shipments in 2020, Vietnam is still likely to see its share of the pie continue to grow because its shipments are not likely to decline as much as from the rest of the world,” Gary Raines, chief economist at the Footwear Distributors & Retailers of America (FDRA), said at the group’s virtual sourcing summit earlier this month.

The next major suppliers–Indonesia and Italy–posted declines of 16 percent to $741.99 million and 37.3 percent to $478.73 million, respectively.

While many see Indonesia and Cambodia as key low-cost suppliers, both have their limitations. Though Indonesia has been roiled by political instability over the years, the country has blossomed into a strong sneaker producer.

Mike Jeppesen, president of global operations at Wolverine Worldwide, speaking at the summit, noted that landlocked Cambodia must transport most of its goods over the border to Vietnam.

“I think Cambodia is one of the countries that can benefit greatly from the footwear industry over the next five to 10 years,” he said.

Besides Germany’s gains, the other four second tier Top 10 suppliers–India, Mexico, Spain and Brazil–all saw significant declines in the period. Of the third-tier countries, only Thailand and Burma inched out increases in the period.

When looking at June alone, U.S. footwear imports also fell sharply in volume and value to the lowest June in 24 years, due in part to the impact from the coronavirus and from continued surges in duty costs, FDRA said in its monthly analysis.

FDRA reported the volume of footwear reaching U.S. shores in June fell for the 10th consecutive month and the third-biggest decline since 1996. A 4.5 percent falloff in shipments from top supplier China outpaced smaller drops from Vietnam and Indonesia, while imports from the rest of the world plummeted 43.6 percent.

The value of total footwear imports also fell for the 10th straight month in June, down 40.9 percent from a year earlier. It marked the second-biggest decline in more than 24 years behind the May collapse.

“With the value of imports sinking a bit faster than the volume, the average landed cost of footwear imports slipped 1.5 percent in June, only the sixth decline in the last 27 months,” FDRA said. “Despite the June retreat, year-to-date evidence hints at a year of sharply lower imports, but higher import costs.”

Duties remain problematic for the industry, reaching $184.4 million in June, with “Trump duties applied against footwear from China…the key culprit behind the jump in duties per pair the last several months,” FDRA said.

“On balance, given the broad-based June losses, lingering Trump tariffs, and coronavirus fallout on both sides of the Pacific, we maintain our view that full-year shipments will retreat sharply in 2020, while duties may retreat only modestly from last year’s record of $3.3 billion,” FDRA added.

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