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Dramatic Apparel Sourcing Shifts Marked 2020’s Arrival

Sourcing of apparel started the year with the familiar theme of volatility and rapid change among major suppliers for U.S. brands and retailers, but new patterns began to emerge.

China’s unquestioned dominance as an apparel supplier looks to be fading, and its top spot is being seriously challenged by smaller rival Vietnam, whose capacity constraints are started to be exposed, as experts have warned. That could be why established players like Bangladesh and Cambodia, with labor and safety problems of their own, saw shipments jump as the year began.

U.S. imports of apparel from China, somewhat skewed by a combination of the end-of-month Lunar New Year factory closing and the onset of the coronavirus epidemic, dropped 36.09 percent in January compared to a year earlier to a value of $1.62 billion, according to the Commerce Department’s Office of Textiles & Apparel (OTEXA). This gave China, which saw its shipments decline consistently during 2019 amid the U.S.-China trade war, an import market share of 28.9 percent compared to 33 percent share a year earlier.

Tim Boyle, chairman, president and CEO of Columbia Sportswear, said last week that temporary factory closures and the pace of workers returning to work have impacted the ability of the company’s contract manufacturers to source certain raw materials and to produce and fulfill finished goods as expected.

“The outbreak is also impacting distribution and logistics providers’ ability to operate in the normal course of business,” Boyle said. “These supply chain impacts will likely affect our ability to timely fulfill orders and meet consumer demand.”

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Apparel imports from second-place supplier Vietnam increased in value a modest 4.12 percent in January to $1.32 billion, according to OTEXA data. Sourcing executives have questioned whether Vietnam, a relatively small country with a limited labor pool, could maintain its dramatic increases and ascend up the supply chain ladder. Vietnam’s market share rose to 16.4 percent for the year ending Jan. 31 compared to 14.8 percent share a year earlier.

No. 3 supplier Bangladesh started the year with a 17.03 percent increase in shipments to reach $622 million in value, while sixth-place Cambodia’s imports jumped 19.91 percent to $277 million.

In between, Indonesia’s shipments rose 1.45 percent to $413 million, while imports from India, which had grown up the ladder for a 4.84 percent market share in 2019, were down 2.81 percent in January to a value of $371 million.

Rounding out the Top 10, Western Hemisphere countries Honduras, Mexico and El Salvador had mixed results. Imports from Honduras were up 0.87 percent in the month to $154 million, as Mexico’s shipments fell 14.79 percent to $205 million and El Salvador’s declined 3.08 percent to $118 million.

Imports from No. 10 supplier Pakistan inched up 0.36 percent to 131 million. This came as overall U.S. apparel imports declined 10.72 percent in January to a value of $6.76 billion.

The U.S. monthly international trade deficit decreased in January, according to the Bureau of Economic Analysis (BEA) and the U.S. Census Bureau. The deficit decreased to $45.3 billion in the first month of the year from a revised $48.6 billion in December, as imports decreased more than exports.

The goods deficit decreased $2.6 billion in January to $67 billion. The goods deficit with China decreased $2.1 billion to $23.7 billion in January. Exports increased $2 million to $7.7 billion and imports decreased $1.8 billion to $31.4 billion.