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‘Once-in-a-Generation Sourcing Shift’ Drives Apparel Imports Surge

The first half of 2021 saw a major surge in U.S. apparel imports–38.39 percent to 13.37 billion square meter equivalents (SME)–as retailers and brands restocked and traditional powerhouse suppliers solidified their positions, but they can feel the heat of many competitor nations nipping at their heels.

In the January-to-June period, several Asian and Western Hemisphere countries flexed their production prowess following 2020’s unprecedented Covid-caused shutdowns, manufacturing pivots to personal protective equipment (PPE) and labor and geopolitical issues influencing sourcing strategies.

Steve Lamar, president and CEO of the American Apparel & Footwear Association, said while China and Vietnam have been top apparel sourcing destinations for some time, though the latter recently slipped to No. 3, sourcing diversification is top of mind for many companies looking to spread their risk.

“What we’re seeing now is a once-in-a-generation sourcing shift,” Lamar said. “It’s been playing out for a couple of years, and I think it’s going to continue to play out for some time to come. It’s going to lead to a global realignment…and factors contributing to it include the China diversification.”

He said that’s coming from factors, including the Trump and Biden tariffs on Chinese imported goods, Xinjiang’s forced labor issues in China and “the U.S.-China Cold War” that has emerged.

China and Vietnam did lead the apparel import comeback, with six-month gains of 45.21 percent to 4.45 billion SME for top supplier China and 29.69 percent to 2.24 billion SME for No. 2 Vietnam, according to the Commerce Department’s Office of Textiles & Apparel (OTEXA).

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However, OTEXA’s data and sourcing experts indicate a change in the landscape is underway. Julia K. Hughes, president of the United States Fashion Industry Association, said there’s “a clear shift by many companies to diversify their sourcing base and moving away from China to other key suppliers.”

Among Top 10 Asian suppliers, increases in apparel shipments were documented across the board. Imports from No. 3 supplier to the U.S. market Bangladesh gained 37.14 percent to 1.22 billion SME, while shipments from India soared 49 percent to 649 million SME and imports from Pakistan jumped 65.18 percent to 421 million SME. Also contributing from the region were Cambodia, up 22.07 percent to 559 million SME, and Indonesia, rising 1.49 percent to 536 million SME.

Also driving sourcing diversification, Lamar noted, is the booming e-commerce business and the speed-to-market requirements it brings. This includes being closer to market for production, arranging vertical operations to minimize supply chain disruptions, operating more sustainably and leveraging available technologies to efficiently manage supply chains.

The countries and regions that stand to benefit from the sourcing shift, Lamar said, include Central and South America because of nearshoring opportunities if the U.S. reforms country of origin requirements.

Among those countries, imports from Honduras increased 65.18 percent in the period to 421 million SME, shipments from Mexico gained 30.71 percent to 413 million SME and goods arriving from El Salvador vaulted 84.96 percent to 320 million SME. Taken as a whole, apparel imports from the Western Hemisphere rose 52.86 percent in the first half to 2.03 billion SME and a 14.64 percent market share, putting it third behind China’s 36.71 percent and Vietnam’s 16.02 percent.

Central America has significant potential to grow as a supplier to U.S. retailers and brands, according to Diego Cuenca, senior sales manager for Mercados Internacionales, based in El Salvador.

“There’s a lot of opportunity being so close to the largest end market in the world and it’s slowly been getting better but we have to make it go faster if we work more together,” Cuenca said. “Also important to note is that Central America has been producing garments for 30 to 40 years now, so the labor force is very experienced. Right now, it’s been crazily growing. Almost all spinning mills are booked and most of the manufacturing is also fully booked. We got out of the pandemic into this huge demand and we’re trying to make it and hopefully it continues.”

Meanwhile, Lamar noted that several Africa countries are poised to benefit from the sourcing shift, notably Egypt, Ethiopia, Lesotho and Kenya, all of which posted substantial gains in the first half. In Asia, outside of Vietnam’s potential for growth, Lamar cited Cambodia, Bangladesh, Indonesia, India and Thailand.