July 19, 2024 4:08 pm
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Bangladesh: Garment industry faces decline in US orders

by fstcap

Bangladesh is lagging far behind others in seizing US garment work orders shifting from China, which industry insiders attributed to a number of factors like inefficiency, long lead time and energy crisis.

Data available with the Office of Textiles and Apparel (OTEXA), a body under the American Commerce Department, also indicated the same trend that showed Vietnam has surpassed China in garment shipments to the US during the first four months of 2024.

On the other hand, Bangladesh sustained double-digit negative growth, 14.44 per cent to US market, to fetch $2.30 billion during the period in question. The country’s slump is evident in both the value and volume of exports.

During the January-April period of 2024, Bangladesh shipped 8.26 per cent fewer garments, which is 763.35 million square metres, compared to the previous year’s 832.06 million square metres.

US import figures show Bangladesh’s key ready-made garment competitors China and Vietnam outperformed Bangladesh while exporters list a number of domestic issues like long lead times, inconsistent energy supplies and an overall high cost of doing business for their loss of export share in the US market.

These same factors, they say, give Vietnam an advantage in the American market.

US apparel imports from Vietnam totalled $4.38 billion in the January-April period this year, marking a slight 0.31 per cent growth, show OTEXA figures released on May 06.

In contrast, China’s apparel exports to the US saw a decline of 4.43 per cent to $4.32 billion.

However, overall US apparel imports fell by 6.0 per cent to $23.68 billion in the first four months of 2024, down from $25.20 billion in the same period of 2023.

Talking to the FE, a number of exporters have opined that buyers are now expressing concern over energy security of the country, saying that labour and energy are one of major two strengths that helped the sector grow.

Asif Ashraf, managing director of Urmi Garments Ltd, said, “We can’t grab the work orders of US buyers shifting from China mainly because of inefficiency, absence of aggressive marketing there and also energy crisis.”

Buyers are now expressing concern over energy security as there is gas and electricity problems and factories can’t use full of their production capacity, he noted.

Mr Ashraf, also a director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said the government should give strong attention to the issue.

Many Chinese people are investing in Vietnam and Vietnam has been taking most advantage from China shifting with rising exports to the US market, he observed.

When asked, Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said buyers are now placing orders with shorter lead times due to various factors. This situation puts China and Vietnam, with their shorter lead times and more consistent energy supplies, in a more advantageous position.

Exporters are struggling to meet lead times for current work orders due to a severe gas crisis, he told The FE on Saturday.

He also said that meeting production timelines is difficult as they require 15-20 days to obtain fabric due to gas and electricity shortages.

Bangladesh also cannot receive all materials efficiently due to the lack of a deep-sea port, further delaying import and export activities.

The BKMEA leader said high production costs due to rising gas prices, recent wage hikes and anticipated electricity rate increases are eroding their competitiveness.

“In many cases, we can’t receive the work orders as buyers offer prices below the production costs,” he noted.

He alleged that they also face difficulties due to non-cooperation from banks. “In such a situation, how Bangladesh could be competitive?” he posed a question.

Mr Hatem also opines that Bangladesh also lags behind Vietnam in grabbing shifted work orders from China due to their advantageous position of short lead time, lower duty to US market, good connectivity with China while many Chinese people invested in Vietnam.

OTEXA data shows that the US RMG imports from Cambodia rose by 7.92 per cent to $1.02 billion in the January-April period compared to the same period in 2023.

India’s RMG exports to the US market declined by 5.02 per cent to $1.66 billion and Indonesia recorded an 8.46-percent fall to $1.38 billion during the period.

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