COVID-19 and US Apparel Imports: Key Trends (Updated: January 2022)

First, US apparel imports continue to rebound in November 2021 as companies build the inventory for the holiday season. Thanks to US consumers’ strong demand and the upcoming holidays, the value of US apparel imports went up by 15.7% in November 2021 from a month ago (seasonally adjusted) and increased by as much as 39.7% from 2020. However, before the pandemic, the value of US apparel imports always peaked in October and then gradually slipped in November and December. The unusual surge of imports in November 2021 could be the combined effects of price inflation and the late arrival of goods due to the shipping crisis.

Meanwhile, US apparel imports so far in 2021 have been far more volatile than in the past few years because of uncertainties and disruptions caused by COVID-19 and the shipping crisis. For example, the year-over-year (YoY) growth rate ranged from 131% in May to 17.6% in July, causing fashion companies additional inventory planning and supply chain management challenges. Unfortunately, the new omicron variant could worsen the market uncertainty and volatility.

Second, Asian countries remain the dominant sourcing base for US fashion companies as the production capacity elsewhere is limited. Asian countries’ market shares fell from 74.2% in 2020 to 71.3% in July 2021, primarily because of the COVID lockdowns in Vietnam and Bangladesh. US apparel imports came from Asian countries rebounded to 74.8% and 72.5% in October and November 2021, respectively. This result suggests a lack of alternative sourcing destinations outside Asia, especially for large volume items. Meanwhile, the worsening shipping crisis affecting the route from Asia to North America could explain why Asian suppliers’ market shares in November were somewhat lower than a month ago.

Third, US companies continue to treat China as one of their essential sourcing bases in the current business environment. However, companies are NOT reversing their long-term strategy of reducing “China exposure.”  China stays the largest supplier for the US market in November 2021, accounting for 41.5% of total US apparel imports in quantity and 25.8% in value. Due to the seasonal factor, China’s market shares typically peak from June to September and then drop from October until March-April.

Both industry sources and the export product diversification index also consistently show that China supplied the most variety of products to the US market with no near competitors. In comparison, US apparel imports from Bangladesh, Mexico, and CAFTA-DR members concentrate more on specific product categories.

Nevertheless, the HHI index and market concentration ratios (CR3 and CR5) calculated based on the latest data suggest that US fashion companies continue to move their apparel sourcing orders from China to other Asian countries overall. For example, only around 15% of US cotton apparel comes from China, compared with about 27% in 2018. My latest studies also indicate that it has become ever more common to see a fashion company places only around 10% of its total sourcing value or volume from China compared to over 30% in the past. Furthermore, with the growing tensions of the US-China relations and the newly enacted Uyghur Forced Labor Prevention Act, fashion companies could take another look at their China sourcing strategy to avoid potential high-impact disruptions.

Fourth, near sourcing from the Western Hemisphere, especially CAFTA-DR members, continue to gain popularity. Specifically, 17.3% of US apparel imports came from the Western Hemisphere year-to-date (YTD) in 2021 (January-November), higher than 16.1% in 2020. Notably, CAFTA-DR members’ market shares increased to 10.6% in 2021 (January to November) from 9.6% in 2020. The value of US apparel imports from CAFTA-DR also enjoyed a 41.7% growth in 2021 (January—November) from a year ago, one of the highest among all sourcing destinations. The imports from El Salvador (up 42.6%), Honduras (up 47.1%), and Guatemala (36.6%) had grown particularly fast so far in 2021. However, the political instability in some Central American countries could make fashion companies feel hesitant to permanently switch their sourcing orders to the region or make long-term investments.

Additionally, the latest trade data suggests a notable increase in the price of US apparel imports. Notably, the unit price of US apparel imports from almost all leading sources went up by more than 10% from January 2021 to November 2021. As worldwide inflation continues, the rising sourcing cost pressure won’t ease anytime soon.

by Sheng Lu

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Author: Sheng Lu

Professor @ University of Delaware

6 thoughts on “COVID-19 and US Apparel Imports: Key Trends (Updated: January 2022)”

  1. It is interesting to see the data and statistics to back up the claims about the shipping crisis. It is something I really appreciated learning about from the standpoint of a consumer to help me understand the web of problems that affect the world trade routes. Something I have noticed from this article and others is that they all point out that global trading takes a day-by-day approach, especially with so much uncertainty in local and international governments having to deal with the pandemic in different ways. It is important to consider how lockdowns in different countries affect shipping too. As mentioned, there were lockdowns in Vietnam and Bangladesh while at the same time the US was able to continue business under somewhat normal conditions. I am interested to see how the shipping crisis plays out with the current politics in the United States as well as other countries, like China, Vietnam, and other major exporting countries.

  2. I think the adjustment coming from the greatest impacts of the pandemic will prove to be very interesting to follow in the textile and apparel industry over the next year or so. Whether that be our relations with China, sourcing from other East Asian countries – especially those hit hardest by the pandemic, the shift to regional sourcing because of factors like NAFTA and CAFTA-DR, amongst others. What I found to be most interesting in this article is that although companies are said to be reducing “China exposure,” i.e., limiting their sourcing from China, this is not the full truth. Because of the major delays in shipment from other parts of the world because of the pandemic, China has become once again the best option for some countries to source from. It is cheap and remains to be one of the fastest in the world.

  3. Covid-19 continues to shape how business is conducted in the U.S. and around the world. That being said, to be successful and minimize its effects, knowledge of trends and patterns is crucial. This article presented such information in an organized way that was easy to follow. Some specific assertions that intrigued me were the following. First, the fact that US fashion companies continue to source from China despite policies implemented to reduce this. This is exemplified by your inclusion of data stating that China supplies for 41.5% of total US apparel imports in quantity in November 2021. Is this due to the tariff not being high enough or that countries with whom we have FTAs with lack the skill and resources to produce certain goods? I originally found this somewhat embarrassing for the US given their efforts to benefit from this so-called “trade war” seemed ineffective. However, data further in the article indicating an increase of sourcing from Western Hemisphere countries reduced my disappointment at US’s efforts. Lastly, I feel like policies the US is implementing to reduce trade with China are effecting trade very slowly and are not as influential as I would have thought given the connotation of the title “trade war”.

  4. Factors affecting the volume of U.S. apparel imports include COVID-19, the shipping crisis and Omicron, all of which create uncertainty and volatility. I expect that these factors will lead to a reduction in the number of U.S. orders to Asian countries, and thus more orders to procurement bases in the Western Hemisphere. However, I did not expect that China would still play an important role. Asian countries have the strong production capacity and cheap labor, which is the competitiveness of Asian garments in the global market. Although the United States is gradually reducing its purchases from China and turning to other countries, the strategy is slowly being implemented. Although there are certain advantages to being a procurement base in the Western hemisphere, such as reduced shipping costs, faster shipping, easy communication and so on. But making multifarious clothes is difficult and has high labor costs. But countries like Vietnam are still facing a COVID-19 lockdown, with slow orders, lack of shipping volume, drivers and other factors. These uncertain factors have greatly affected the number of orders. In general, Asian countries are still very competitive.

  5. U.S imports have been greatly affected the past two years regarding Covid-19. I found it interesting that a normal schedule for U.S imports would peak in October, and slip in November and December. I would imagine it would be higher in November and December for the holidays. In 2021, due to delays in shipping and price inflation led the peaks to November. Although imports have improved from 2020, new variants pose a threat to the crisis the supply chain is facing. Asian countries are the dominant sourcing base for the U.S, but with lockdowns in Vietnam and Bangladesh this furthers issues with the U.S Imports. The options to source elsewhere are limited. Companies are having a hard time moving away from China, because of this issue. They provide the most variety, and volume of products to the U.S. U.S companies need to work to find the best sourcing option available while being cost efficient. Hopefully, with CAFTA, near sourcing can be a more common trend. This will make production more accessible, and cheaper.

  6. The delay in manufacturing and the supply chain has had evident effects on the industry. As you mentioned, since many countries continue to struggle with production capacity, the United States is not diversifying their sourcing. This is an issue because there is a lack of a wide range of products. Since COVID hit, not only did prices in the apparel industry go out, but in all businesses. We will unfortunately be dealing with this inflation for years and years.

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