Bangladesh’s crucial textile industry, vital to its economic health, has encountered a significant challenge in exporting to the US market. According to the authoritative Office of Textiles and Apparel (OTEXA), operating under the American Commerce Department, the statistics paint a grim picture. There has been a dramatic 17 per cent drop year-over-year, resulting in a substantial loss of $1.75 billion in the first quarter of this year.
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This decline isn’t just about financial figures; it also reflects a decrease in trade volume. Bangladesh’s competitors in the ready-made garments sector, particularly China and Vietnam, have surged ahead, leaving Bangladesh struggling with declining numbers on both economic fronts.
Challenges Plague Bangladesh’s Textile Exporters
Exporters voiced grievances about a host of domestic challenges hampering their competitiveness, including prolonged lead times and unreliable energy supplies. These obstacles escalated the cost of doing business, dimming Bangladesh’s prospects in the US market. Conversely, these same hurdles propelled China and Vietnam ahead, granting them a significant edge in the American arena.
The OTEXA’s revelation on May 2, 2024, was a dagger to the heart of Bangladesh’s textile magnates. The stark contrast between $1.75 billion in exports this year against $2.13 billion in the corresponding period of 2023 painted a bleak picture. The crux of the matter lay not only in the sheer decline in numbers but also in the quantum of garments shipped—a whopping 11.92 per cent decrease, accounting for 586.09 million square meters against the previous year’s 665.42 million square meters.
OTEXA’s Revelation (May 2, 2024):
- Exports in 2024: $1.75 billion
- Exports in 2023 (corresponding period): $2.13 billion
Overall US Apparel Imports (Q1 2024):
- Decrease of 7.14%
- 2023: $19.46 billion
- 2024: $18.07 billion
Garments shipped decreased by 11.92%
- 2024: 586.09 million square meters
- 2023: 665.42 million square meters
In this unfolding drama, China emerged as a formidable force. While its export values may have witnessed a slight dip, the narrative of growth in volume underscored its resilience. However, the overarching theme of the first quarter of 2024 was one of contraction. Overall US apparel imports nosedived by 7.14 per cent, dwindling from $19.46 billion in 2023 to a meager $18.07 billion this year.
In a candid discussion, Mohammad Hatem, BKMEA’s executive president, underscored the formidable hurdles confronting Bangladesh’s textile sector. Shorter lead times demanded by buyers favored industry giants like China and Vietnam. Hatem revealed challenges such as a severe gas crisis disrupting production, prolonged fabric procurement due to energy shortages, and infrastructure deficits causing import/export delays. He lamented rising production costs driven by surging gas prices, wage hikes, and impending electricity rate increases, often leaving exporters unable to meet orders as buyers offered prices below production costs.
Red Sea Crisis Casts Shadow on Bangladesh’s Textile Ambitions
SM Mannan Kochi, BGMEA president, echoed concerns over rising production costs, stressing the need for cost reduction and fair pricing to salvage Bangladesh’s competitiveness. As despair mounted, Bangladesh faced a critical juncture—only through united efforts to foster fair competition could it regain its standing in the global textile arena.
Abdullah Hil Rakib, managing director at Team Group and vice president of BGMEA, attributed the industry downturn to the Red Sea crisis, intensifying challenges for exporters and overshadowing Bangladesh’s textile ambitions.
The narrative of decline echoed not only in Bangladesh but also in its counterparts. OTEXA’s meticulous data painted a picture of contrasting fortunes. While China witnessed a marginal dip of 0.71 per cent in apparel exports to the US, the resilience lay in the staggering 9.79 per cent surge in volume—a testament to its formidable presence in the global textile landscape. Vietnam, too, emerged unscathed, boasting a 0.91 per cent uptick in apparel exports and an impressive 11.54 per cent increase in volume, underscoring its growing influence in the American market.
Comparison of Export Trends (China, Vietnam, Cambodia, India, Indonesia):
China:
- Marginal dip of 0.71%
- 9.79% surge in volume
Vietnam:
- 0.91% uptick
- 11.54% increase in volume
Cambodia:
- 11.13% spike
India:
- 8.79% decline in exports
Indonesia:
- 14.16% decrease
Amidst this tapestry of fluctuating fortunes, the narrative extended beyond the borders of China and Vietnam. Cambodia’s ascent, reflected in an 11.13 per cent spike in RMG imports to the US, added a new dimension to the textile saga. Meanwhile, India’s stumble, marked by an 8.79 per cent decline in exports, and Indonesia’s retreat, evidenced by a 14.16 per cent decrease in RMG imports, underscored the volatility engulfing the global textile trade.
Observations on Bangladesh’s Textile Industry Dynamics
Bangladesh’s textile industry story is one of ups and downs, with each chapter shaped by the unpredictable winds of global trade. Amidst aspirations of exporting to the US, the recent 17.68% decline in garment shipments, as revealed by OTEXA data, underlines the challenges faced by Bangladeshi exporters.
Each statistic in the trade narrative carried the weight of a nation’s aspirations. The January-February period saw a significant 19.24% decline, dimming Bangladesh’s export prospects. The overall textile and garment shipment followed suit, slipping by 17.37%, signalling challenges ahead.
Despite challenges, Bangladesh’s textile industry showed resilience, witnessing a remarkable 53% surge in garment exports post-Covid-19. Yet, the presence of unsold stockpiles tempered industry optimism. As commerce wheels turned, a retail sales revival emerged, fuelled by festive cheer, boosting apparel demand and export ambitions. However, wage hike turmoil tested industry resilience, disrupting production amidst optimism.
Bangladesh’s Textile Industry Trends:
Recent 17.68% decline in garment shipments
January-February period saw a significant 19.24% decline in exports
Overall textile and garment shipment decreased by 17.37%
In Bangladesh’s garment industry, AK Azad, MD of Ha-Meem Group, observed the shifting tides with insight. With 95% of exports bound for the US, Azad noted a decline in demand from low-end consumers. High-interest rates in US banks further hindered spending, while infrastructure deficiencies compounded challenges.
Amidst the shadows, a glimmer of hope emerged—the National Retail Federation (NRF) reported a steady rise in retail sales. Matthew Shay, NRF’s CEO, praised a resilient consumer base, buoyed by wage gains and a robust labor market. Retailers fought to keep prices low, meeting the demands of budget-conscious consumers.
Amidst statistical complexities, resilience prevailed—a 0.36% increase in total retail sales testified to human tenacity. As the industry prepared for challenges, resilience and innovation united, guiding the way forward amidst uncertainty.
OTEXA Data Highlights Challenges
As per the latest figures from the Commerce Department’s Office of Textiles and Apparel (OTEXA), Bangladesh faced a stark decline of 25.07% in apparel exports to the US in 2023, dropping to $7.29 billion from the previous year’s $9.72 billion. Despite securing the third position with a 9.37% market share, challenges loomed large due to global economic turmoil stemming from the Ukraine-Russia war, leading to high inflation and diminished demands.
Bangladesh’s Apparel Exports to the US (2023):
- A decline of 25.07%
- Dropped to $7.29 billion from $9.72 billion in 2022
- Secured the third position with a 9.37% market share
- 95% of exports bound for the US
- 0.36% increase in total retail sales
The pulse of the North American apparel market echoed a somber note—a precipitous plunge of 22.04% in overall apparel imports, plummeting from $99.85 billion in 2022 to $77.84 billion in 2023, as per OTEXA data. Against this backdrop, Bangladesh’s export earnings in 2023 painted a nuanced picture, a testament to the ebbs and flows of trade dynamics. From January to December, the figures bore witness to the ebb and flow of fortunes, reflecting the industry’s resilience amidst adversity.
China, once a behemoth in the apparel arena, found itself grappling with a negative growth of 24.98% in 2023, witnessing a decline from $21.75 billion to $16.31 billion. The reverberations of this downturn echoed across the globe, as Vietnam, another stalwart in the industry, experienced a similar fate—a decline of 22.29% from $18.24 billion to $14.17 billion, as per OTEXA data.
Export Earnings Comparison:
- Bangladesh: Declined by 21.42%
- China: Declined by 24.98%
- Vietnam: Declined by 22.29%
- India: Declined by 21.42%
- Indonesia: Declined by 25.19%
- Cambodia: Declined by 23.58%
In this mosaic of market dynamics, Bangladesh stood firm, securing the third position, its export earnings registering a decline of 21.42% from $5.69 billion to $4.47 billion. India, following closely behind, faced a parallel trajectory—a negative growth of 21.42%, marking a descent from $5.69 billion to $4.47 billion. The tale unfolded further as Indonesia and Cambodia, once formidable players in the apparel arena, faced the brunt of the downturn, their imports to the US plummeting by 25.19% and 23.58% respectively, as per OTEXA data.
