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Troubles in Vietnam Weigh Down Its Imports to U.S.

While a surge in Covid cases leading to factory closures in Vietnam, and capacity problems in Cambodia disrupted normal sourcing patterns in July, U.S. apparel imports still increased 14.9 percent year over year to 2.51 billion square meter equivalents (SME), according to data released Thursday by the Commerce Department’s Office of Textiles & Apparel (OTEXA).

While imports from No. 2 supplier Vietnam were up 22.74 percent to 2.6 billion SME for the first seven months of the year, shipments from the country were down 8 percent to 359.72 million SME in July compared to a year earlier, according to OTEXA. Imports from Cambodia fell 29 percent to 85.61 million SME in the month compared to July 2020, but still rose 11.41 percent to 645 million SME year to date.

Earlier this month, the Vietnam Textile and Apparel Association reported that skyrocketing Covid cases had forced about one third of the country’s footwear and apparel factories to suspend operations, troubling brands from The Buckle and Puma to Under Armour and Crocs.

Sofia Nazalya, Asia analyst at risk analysis firm Verisk Maplecroft, told Sourcing Journal earlier this month that Vietnam’s government is unlikely to allow factories to operate even with stricter health and safety guidelines in place, as manufacturers in countries like Bangladesh have been allowed to do.

As for Cambodia, it is set to see an influx of more than 9,500 apparel jobs, as the country’s development council has approved eight new projects with garment producers worth $71.4 million, according to the Council for the Development of Cambodia. While 100 factories closed due to Covid-related factors last year, 221 facilities opened, amounting to 1,853 apparel manufacturing factories at year’s end. In addition to the impacts of the virus, Cambodia was also affected by flooding in October that put the work of more than 80 of its garment factories on hold.

The European Union, citing human rights concerns, removed the country from the “Everything But Arms” trade arrangement guaranteeing preferential treatment from members in August.

Indonesia followed a similar pattern, with July shipments down 7.9 percent to 64 million SME, while imports from the country for the year so far rose 10.17 percent to 601 million SME.

The rest of the Top 10 countries and key production hubs fared well in July, based on OTEXA data. Back on top after a turbulent couple of years, imports from China increased 21.6 percent to 1.04 billion SME in July compared to a year earlier and were up 40.06 percent to 5.48 billion SME year to date.

Shipments from Bangladesh were up 35.1 percent for the month to 197.45 million SME compared to July 2020 and have increased 36.86 percent to 1.42 billion SME year to date. India’s growth as an apparel supplier for U.S. retailers and brands continued its momentum, rising 34 percent to 79.92 million SME for the month and 47.2 percent to 729 million SME for the year to date, while imports from Pakistan jumped 49.3 percent to 73.85 million SME in the month and were up 50.02 percent to 505 million SME year to date.

As nearshoring gains strength as a sourcing strategy, Western Hemisphere producing nations have also gained ground. Among top producing countries from the region, imports from Nicaragua increased 48.6 percent year over year in July to 54.37 million SME, Honduras shipments grew 17.4 percent to 75.69 million SME in the period, imports from Mexico rose 14.9 percent to 77.3 million SME and shipments from El Salvador were up 19.6 percent to 57.4 million SME.

Also on Thursday, the U.S. Census Bureau and Bureau of Economic Analysis reported that the goods and services deficit declined to $70.1 billion in July, down $3.2 billion from $73.2 billion in June.

The July decrease in the trade deficit reflected a decline in the goods deficit of $5.5 billion to $87.7 billion and a drop in the services surplus of $2.4 billion to $17.7 billion.

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