From January through May, import values and volumes moved in disparate directions.
According to the latest apparel and textiles import data released by the International Trade Administration’s Office of Textiles and Apparel (OTEXA) this month, the total number of units imported year to date as of May 2024 was up 5.87 percent year over year, while dollar value of goods imported was down 3.51 percent in the same period. For the 12 months until May 2024, dollar value declined a more dramatic 13.48 percent while units were fairly flat, decreasing 0.35 percent.
Sheng Lu, associate professor of fashion and apparel studies at the University of Delaware, noted that the increase in production cost has “stabilized” as pressures such as raw material prices have lowered. “The cost pressure is still there, but it’s not as urgent and as stressful like in the past,” he told Sourcing Journal. Also contributing to easing pricing pressure is a lessened demand for apparel goods, as consumer spending on the category has stalled and shifted amid inflation.
The OTEXA data does not include goods that enter the country under the de minimis provision, which enables companies to ship goods valued up to $800 directly to individuals without duties.
Although there has been a general diversification from China, the production powerhouse has held on to its top position in apparel and textile imports, with a 34 percent share of imported units in the year ended in May, roughly the same as its 33 percent share in 2022 and 2023. However, the nation has been among those to see a downturn in value of imports, with the dollar amount of imports dropping 12.94 percent year over year for the 12 months to May 2024 as units rose 3.64 percent. Year to date, units are up 16.29 percent while dollar amounts were flat, declining about 1 percent.
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One of the factors behind this is China’s economic environment, which has seen domestic demand and spending decrease. The country’s outbound shipments were up 8.6 percent year over year in June while imports fell 2.3 percent. “As China’s economy weakened, Chinese consumers spent less on clothing, and also China really [needed] to leverage the labor-intensive apparel industry to support economic growth,” said Lu. “China probably is dumping its cheap products to the world market… More Chinese companies are competing with each other for the limited export market, therefore, their actual price [goes] down.”
In the short-term, companies could be considering taking advantage of lower costs by allocating more than initially planned to China, but over the long-term, Lu said he hears companies resolved to reduce their exposure to China due to risks including the Uyghur Forced Labor Prevention Act.
Due to its significant position in the market, China’s trajectory has the power to shape wider trends in the data. “When Made in China becomes cheaper, the overall price will also go down,” said Lu.
Bucking the trend, India, Cambodia and Turkey were the only countries in the top 10 for import value that saw dollar amounts of imports grow in the year so far, with increases of 2.52 percent, 6.59 percent and 0.97 percent, respectively. This disparity is unusual, said Lu, since typically prices move in the same direction due to shared cost environments, such as raw material pricing.
An ITA economist told Sourcing Journal that India has shifted its product assortment over the years, and currently imports are split fairly evenly between textiles and apparel.
“India is relatively large. It already has an established textile and apparel industry, and also it has some capacity of locally making textile material,” said Lu.” So I’m not surprised to see more companies start vetting India to see if they can expand more sourcing from the country.”
Despite the buzz around nearshoring, the dollar value of imports from the Western Hemisphere declined 16.64 percent in the year ended May 2024, and units were also down 21.42 percent. Still, the Western Hemiphere’s market share in dollar amount has held firm at just under 15 percent for 2022, 2023 and the year to date.
Per Lu, what could usher in more growth in these countries and make them more competitive is an expanded array of capabilities, including broadening fiber types to include linen, nylon, spandex and viscose. Currently, the capacities are more geared toward basics like T-shirts in polyester or cotton, rather than more complex items like dresses and outerwear. “When fashion brands and retailers are thinking about moving their sourcing orders from Asia to the Western Hemisphere, realistically, they’re looking for capacity in the Western Hemisphere that can make these more sophisticated products. But unfortunately, at this point, the capacity is not there,” said Lu.
He added that Central America has a “bright future,” even though the investment process will take time. “It’s truly a historical moment for producers in Central America to take advantage of the current situation, because fashion brands and retailers really have a genuine interest in expanding nearshoring, in diversifying their sourcing away from Asia, particularly from China.”
Looking ahead, the presidential election year could also make companies consider where they are sourcing, since tariff rates may change if a new administration enters the White House. Lu noted that companies will likely lean on diversification to mitigate risk. “The current uncertainty or the predicted uncertainty next year will definitely have an impact on where companies will source their products,” Lu said.