There will be rebound of apparel shipment to US. But it will be slow and steady. | The Daily Star
12:00 AM, July 06, 2020 / LAST MODIFIED: 02:39 AM, July 06, 2020

There will be rebound of apparel shipment to US. But it will be slow and steady.

Bangladesh's garment exporters expect a slow rebound of shipment to the US market, the country's single largest export destination, this year as American buyers have been consumed by a confidence deficit amid an economic meltdown lurking round the corner.

Due to the coronavirus pandemic, garment export to the US plunged 12.50 per cent year-on-year to $2.32 billion in the January-May period of this year, according to the Office of Textiles and Apparel (OTEXA) of the US.

Though retail stores in the US have started opening up gradually, it will take a lot of time for normalcy to return as consumers are still staying at home amid the fear of contagion, exporters said.

The pandemic has badly impacted the US economy bringing down sales of commodities including clothing items, they said.

"Garment shipment from my factory to the US market might not pick up soon although orders are coming back from the American buyers gradually," AK Azad, managing director of Ha-Meem Group, told The Daily Star over the phone.

The US market accounts for about 80 per cent of Azad's $450 million annual shipments.

"Within December, I might get 70 per cent of the work orders I had received at the same time last year."

However, everything is depending on the invention of a vaccine, he said, adding that the shipment to the American market will increase if the vaccine comes this year.

The export trend was positive in 2019 but after the coronavirus broke out, orders from the US have nosedived, said Mostafa Sobhan Rubel, managing director of Dragon Sweaters. Almost half the products of his company are destined to the US.

Many of his customers complained that their stores were not logging the expected sales even after the lockdown was withdrawn in most US states.

"I am fortunate that I work with some very good customers in the US and we did not face any order cancellations."

But new orders from these existing customers have dropped by almost 60 per cent, he said, while attributing this to the current second wave of infections and a lack of confidence among buyers in the throes of fears of an economic meltdown and job losses.

"However, we expect that the US market will rebound strongly in 2021 as American buyers and importers are looking for an alternative to China because of the political conflict between the two economic powerhouses," he added.

Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association, said she was hopeful about a faster rebound of apparel shipment to the US market.

"With the gradual opening of stores, there's huge potential for Bangladesh to grow in the US market," she added.

Like Bangladesh, garment export to the US from major peer countries also declined in the January-May period compared to the same time a year ago, according to OTEXA data.

Despite being a least-developed country (LDC), Bangladesh does not enjoy zero duty benefit on garment exports to the US, as the American government does not allow zero duty benefit on export of garment items except some African countries under the African Growth and Opportunity Act (AGOA).

As a result, Bangladeshi garment exporters face 15.62 per cent duty on export of apparel items to the US although America allows zero duty benefits for 97 per cent products of the LDCs.

Bangladesh exports more than $6 billion worth of garment items to the US market a year though the country's garment items are not included in the 97 per cent package.

The country has been performing well in the US market because of rising demand for Bangladeshi goods among American consumers.

 

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