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Second-Half Slowdown? Apparel, Cargo Imports Cooling Off

After rising 24 percent in the first half of the year, U.S. apparel imports receded to an increase of 22.91 percent year to date through July to 19.5 billion square meter equivalents (SME), the Commerce Department’s Office of Textiles & Apparel (OTEXA) reported Wednesday.

The new data also showed July imports were up 17.4 percent from a year earlier to 2.04 billion SME, down from a 19 percent year over year increase in June. Shipments from top supplier China held steady with a 22.41 percent increase for 2022 through July to 6.71 billion SME, on par with the first half. The country, still with tariffs in place against its shipments to the U.S., did see a 22.7 percent year-to-year gain to 1.27 billion SME following a 12.6 rise in June.

The rest of the Asian Top 10 producers for U.S, retailers and brands drove divergent results. Showing strong gains were Vietnam, Cambodia, India and Indonesia, while Pakistan and Bangladesh posted modest increases.

Year-over-year imports in July for Vietnam were up 17.4 percent to 422.34 million SME, India’s shipments rose 52.3 percent to 121.74 million SME, Cambodia’s increased 50 percent to 128.43 million SME and imports from Indonesia rose 45.8 percent to 94.8 million SME. On the other hand, imports from Bangladesh inched up 4.4 percent in the month to 203.34 million SME and shipments from Pakistan were up just 4.7 percent to 77.31 million SME.

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Imports from Pakistan are likely to continue to suffer, as the country and its supply chain suffers through a devastating monsoon season. The death toll in the South Asian nation, a third of which is currently submerged underwater, has crossed the 1,300 mark, with more than 1 million houses damaged or destroyed and 800,000 livestock perished so far. H&M Foundation recently pledged $250,000 in disaster relief.

Though the final cost of the building, infrastructure, agricultural and livestock loss will take another six to eight weeks to determine, minister of planning Ahsan Iqbal said that it could well exceed $10 billion and take the better part of a decade to remediate.

Pakistan’s monsoon rains have swept away some 70 percent of Better Cotton grown in the country. Better Cotton, which works with nearly 500,000 licensed farmers across 1 million hectares of Pakistan cropland, said last week it was still surveying the damage, but early estimates suggest that between 200,000 to 250,000 farmers have been affected.

The Western Hemisphere supplier nations rounding out the Top 10 also presented a mixed picture. With new initiatives spurring momentum, countries under the Central American Free Trade Agreement posted solid year-over-year increases in July. Imports from Honduras rose 13.2 percent to 85.69 million SME and shipments from Nicaragua increased 13.4 percent to 61.63 million SME.

North Carolina educational institutions are joining forces with a key Honduran university to educate and train thousands of students for the next-generation textile workforce to meet a rising tide of nearshoring and onshoring in Honduras, Central America and the United States.

With backing from the U.S. State Department, North Carolina State University, Gaston College and Catawba Valley Community College signed a Memorandum of Understanding last month with Honduran-based Central American Technological University.

“U.S. companies are making significant investments in developing co-production facilities that will create jobs in both the United States and Central America, which advances U.S. government efforts to create economic opportunity in the region,” a State Department spokesperson said. “This agreement will strengthen supply chain security and integration, providing benefits for producers and consumers across the Western Hemisphere. The U.S. government will continue to maintain and build upon these successes by working together with other governments and the private sector to solidify and expand these productive relationships. We all benefit when we cooperate and facilitate strong, mutually beneficial public-private partnerships.”

Not faring as well was Mexico, which saw its imports into the U.S. fall 20 percent in July from a year earlier to 61.51 million SME. For the year to date, shipments from Mexico were down 19.13 percent to 393 million SME.  

Cargo imports fall from last year’s heights

The Global Port Tracker report also released Wednesday by the National Retail Federation (NRF) and Hackett Associates said imports at the nation’s major container ports are expected to fall below last year’s levels for the remainder of 2022, with inflation continuing and the Federal Reserve hoping to cool demand through higher interest rates.

“Consumers are still buying, but the cargo surge we saw during the past two years appears to be slowing down,” Jonathan Gold, vice president for supply chain and customs policy a NRF, said. “Cargo volumes are solidly above pre-pandemic levels, but the rate of growth has slowed and even slid into negative numbers compared with unusually high volumes last year. The key now is dealing with ongoing supply chain issues around the globe and with labor negotiations at West Coast ports and freight railroads. Smooth operations at the ports and on the rails is crucial as we enter the busy holiday season.”

Talks continue between the International Longshore and Warehouse Union and the Pacific Maritime Association, whose contract expired July 1. Meanwhile, the freight railroads and their unions have continued to negotiate after recommendations from the Presidential Emergency Board appointed this summer were released. Both dockworkers and railroad workers remain on the job, but there are concerns about potential disruptions.

“The number of vessels waiting to dock on the West Coast has been reduced to near normal,” Hackett Associates founder Ben Hackett said. “But with the switch of some cargo to the East Coast, congestion and pressure on the ports has shifted to the East Coast. The inland supply chain, particularly rail, continues to face difficulties that have resulted in the delay of containers leaving ports, causing terminal congestion that impacts the ability of carriers to discharge their cargo.”

U.S. ports covered by Global Port Tracker handled 2.18 million 20-foot containers or equivalent units (TEU) in July, down 3.1 percent from June and 0.4 percent from July 2021. This marks only the third year-over-year decline in two years and the first since December 2021.

Global Port Tracker projected August cargo imports fell 4.3 percent to 2.17 million TEU. September is forecast at 2.1 million TEU, down 1.8 percent; October also at 2.1 million TEU, down 4.8 percent; November at 2.04 million TEU, down 3.3 percent, and December at 2.01 million TEU, down 4 percent.

The first half of the year totaled 13.5 million TEU, a 5.5 percent year-over-year increase. The forecast for the remainder of the year would bring the second half to 12.6 million TEU, off 3.1 percent year over year. For the full year, 2022 is expected to total 26.1 million TEU, up 1.2 percent from last year’s annual record of 25.8 million TEU.

Global Port Tracker provides historical data and forecasts for the U.S. ports of Los Angeles-Long Beach and Oakland, Calif., and Seattle and Tacoma, Wash., on the West Coast; New York-New Jersey; Port of Virginia; Charleston, S.C.; Savannah, Ga., and Port Everglades, Miami and Jacksonville, Fla., on the East Coast, and Houston on the Gulf Coast.