NEWS


After Suez Canal Crisis, Freight Rates Are Sky High. When Will Fees Fall?

2021/05/08

In the aftermath of the Suez Canal blockage and bottleneck, port congestion is expected to remain a concern until at least mid-May and carrier schedules are unlikely to return to near-normal operations before mid-June, particularly on the Asia-Europe route, according to a new report from Everstream Analytics. A month after maritime traffic in the canal was unexpectedly suspended for six days, the effects of the shipping snafu continue to ripple through global supply chains. On April 3, the last of the 360 ships stuck in the Suez Canal at the end of March finally transited the crucial gateway, normalizing operations that were disrupted for almost a week and held up trade valued at more than $9 billion per day. Everstream, which delivers a range of predictive analytics solutions for supply chain and logistics professionals, said congestion levels have started to affect container gateways in Europe and Southeast Asia, such as Rotterdam, Holland and Singapore, due to simultaneous vessel arrivals. Terminals in Rotterdam are likely to have the highest risk of congestion, as ocean carriers are considering a strategy that involves offloading cargo at major hub ports, skipping subsequent port calls and turning ships around early to return to Asian export hubs. In Asia, the Port of Singapore, which is expected to receive the largest number of vessel calls on Eastbound services, has also faced an uptick in vessel berthing times over the past 18 days, with vessels now spending 60 hours on average outside the port, compared to 42 hours on April 8, the report noted. “As empty containers have been held for longer than usual at European ports, Asian export gateways such as Shanghai and Busan, South Korea, will experience scarcity of container equipment in the coming weeks,” the report said.Spot rates on the Asia-Europe ocean cargo trade lane have been rising due to a lack of capacity following the Suez Canal closure, pushing up rates in the air cargo market as shippers convert ocean cargo to air freight shipments. Drewry’s composite World Container Index (WCI) inched up 0.2 percent or $8 to $4,913.07 per 40-foot container or equivalent unit (FEU) for the week ended April 22. The average composite index of the WCI, assessed by Drewry for year-to-date, was $5,096 per FEU, which is $3,292 higher than the five-year average of $1,804. Freight rates on the Shanghai to Genoa, Italy, route rose $264 to $7,919 per FEU, while rates on the Shanghai-Los Angeles trade lane increased $71 to $4,209 per FEU. Rates on Rotterdam to New York rose $19 to $2,642 per FEU.Conversely,rates on Shanghai to Rotterdam dropped $147 to come in at $7,831 per FEI and Shanghai-New York rates fell $78 to $6,255 per FEU. Everstream said the availability of containers at Asian export hubs is likely to improve toward the end of May, especially when the long queue of vessels outside U.S. West Coast ports carrying hundreds of thousands of containers starts to clear. “However, no significant decrease in ocean cargo spot rates should be expected until the fourth quarter of 2021, as carriers continue to be in the driver’s seat, meticulously managing the supply and demand balance with a clear focus on maximizing profits,” Everstream said. Meanwhile, air cargo rates have risen in April following the Ever Given’s grounding, as shippers looked to convert critical shipments from ocean to air. Everstream said this is particularly true on the Hong Kong to North America lane. Figures from the Baltic Exchange Air Freight Index (BAI) showed that average prices in mid-April were higher than at any point during 2020’s demand surge amid the export boom of personal protective equipment between March and June.

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China’s Share of US Apparel Imports Fell Below 25%

2021/02/10

U.S. apparel imports were dramatically impacted by the global coronavirus pandemic and some other geopolitical factors, falling 23.46 percent in 2020 to a value of $64.07 billion from $83.71 billion in 2019, the Commerce Department’s Office of Textiles & Apparel (OTEXA) reported Friday. The China conundrum The most significant effect on major suppliers was seen by China. The still No. 1 apparel supplier saw its shipments to the U.S. drop 39.16 percent to $15.16 billion. China’s market share declined to 23.65 percent from 29.68 percent a year earlier and 33 percent in 2018. In 2020, China was caught in an ongoing trade war with the U.S. and tariffs imposed by the Trump administration, on top of factory closures at the onset of the Covid crisis and an overall sourcing flight to avoid risks and costs, trade experts said. While the decline in imports from China has decelerated in the last few months, “I still think the trend is definitely down for China beyond issues related to Covid,” said Nate Herman, senior vice president for policy at the American Apparel & Footwear Association. “However, China will still be one of the Top 2 suppliers for years going forward,” Herman added. “It’s a matter of the rest of the world trying to build the capacity to handle what China was handling.” Even if China isn’t “making the final pair of pants or shirt, factories there are still making all the inputs like fabrics” that go into apparel and are selling them in Asia and around the world, he added. For his part, Dr. Sheng Lu, associate professor at the University of Delaware’s Department of Fashion & Apparel Studies, said, “U.S. fashion companies are not giving up on China as one of their essential apparel-sourcing bases, although companies continue to reduce their China exposure overall.” “For a lot of companies, the trade war and Covid accelerated the trend…which was to try to shift out of China, so they were not as dependent on a single source,” Julia Hughes, president of the United States Fashion Industry Association, said. “The initial Covid disruptions really brought that home for folks as they looked at their sourcing strategies.” Asian tigers Cambodia, Pakistan and Vietnam showed surprising strength during the past year and are likely to continue, along with Bangladesh, India and Indonesia, Hughes said.“There’s a lot of risk around the world and there aren’t a lot of safe harbors,” Hughes said, citing for example the military junta in Myanmar just as that country was building an apparel manufacturing base. “Then there’s the talk of Vietnam reaching capacity and the government there not wanting the industry to grow that much more over concern like water usage and labor strife.” Hughes said Cambodia, Pakistan and Vietnam showed surprising strength during the past year and are likely to continue, along with Bangladesh, India and Indonesia.“I have to expect that we’re going to see some expanded trade with Indonesia and India,” she added. “Both of those countries have deep vertically integrated industries and have a real opportunity to take advantage of the desire of companies to look for other destinations for their manufacturing.” Herman felt that among the other top tier countries, Vietnam “dodged the bullet” of threatened tariffs by the Trump administration and “will continue to be a winner,” as will Cambodia, which was one of the few countries that saw apparel imports increases during the pandemic, thanks to capacity availability after the European Union took away its preferential trade status and the Vietnam tariff threat, although Cambodia does have some human rights issues it needs to address. In addition, Bangladesh “will see an uptick,” he forecast, as well as Indonesia and India. “The advantage with India, in particular, is that it has a lot of material availability,” Herman said. “India makes is own denim…so that takes away some of the problems of relying on China. The same with Bangladesh with knit product, and Indonesia has the capacity and knowledge to make technical products.” Looking at how those Top 10 Asian countries fared in 2020, No. 2 supplier Vietnam saw its shipments fall 7.25 percent for the year to $12.57 billion, according to OTEXA, with its market share rising to 19.62 from 16.18 percent in 2019. Imports from No. 3 Bangladesh declined 11.73 percent to $5.23 billion last year, according to OTEXA. Cambodia was the only Top 10 supplier to see and increase in its shipments to the U.S. in 2020–up 5.45 percent to $2.82 billion. Imports from Indonesia fell 20.09 percent to $3.52 billion for the year, while India’s shipments declined 25.58 percent to $3.02 billion and Pakistan’s dipped 4.17 percent to $1.4 billion.

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Importers Feel the Heat of Skyrocketing Shipping Container Costs

2021/01/29

As the worldwide demand for Chinese goods continues to rapidly increase amid the Covid-driven growth in e-commerce spending, it’s creating a shortage of shipping containers, and unfortunately for actors throughout the supply chain, whether it’s the exporters, the manufacturers, the retailers or their consumers, they will all continue to bear the burden of higher costs.

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Pantone Names ‘Uplifting’ Duo for Color of the Year 2021

2020/12/14

If Pantone’s Color of the Year for 2020—the ever-calming Classic Blue—was a preemptive choice for what unraveled into a chaotic year, its choice for 2021 points to a strong will for finding silver linings and more optimistic days ahead. The color specialist announced Wednesday that it has selected a duo of colors, Pantone 17-5104 Ultimate Gray and Pantone 13-0647 Illuminating, as the Pantone Color of the Year for 2021. Described as two independent colors that come together to create an “aspirational color pairing,” the colors express feelings of cautious optimism for 2021, it said. The colors, Pantone stated, represent the ways people are seeking to fortify themselves with energy, clarity and hope to overcome uncertainty. Mimicking the colors of pebbles on a beach and natural elements that withstand the test of time, Ultimate Gray provides a firm foundation that is dependable and resilient. Illuminating, a bright and cheerful solar yellow, counters the soft gray with its sparkling and warming qualities. “Practical and rock solid but at the same time warming and optimistic, this is a color combination that gives us resilience and hope. We need to feel encouraged and uplifted, this is essential to the human spirit,” said Leatrice Eiseman, Pantone Color Institute executive director.

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VF Reigns With Supreme

2020/11/13

VF Corp. has made some noise about snapping up new brands this year, and now it’s making good by acquiring streetwear sweetheart Supreme in a $2.1 billion deal. Earlier this year, before Covid-19 struck, the Denver-based apparel giant leared out much of its workwear portfolio—part of its consumer-oriented makeover, it said. The deal to acquire Gen Z-beloved Supreme, which is expected to close at the end of the year, would give VF another jewel in a crown that includes opular powerhouses from The North Face to Timberland to Vans—brands that have already collaborated with the hype-driven streetwear standout. Supreme’s collection of apparel, footwear and accessories, VF says, could drive $1 billion annually once it fully fleshes out the brand’s international and direct-to-consumer presence. The deal, says VF CEO Steve Rendle, is “further validation of our vision and strategy to further evolve our portfolio of brands to align with the total addressable market opportunities we see driving the apparel and footwear sector.” Incorporating Supreme into its stable of brands will “accelerate VF’s hyper-digital business model transformation” and also drive shareholder value, he added. The acquisition gives VF the stakes owned by private equity firms The Carlyle Group and Goode Partners, as well as by founder James Jebbia, who will remain at the New York City-based brand’s headquarters along with the rest of its senior leadership team. The new relationship with VF, Jebbia says, “will aintain our unique culture and independence, while allowing us to grow on the same path we’ve been on since 1994.” Since founding Supreme as a store on downtown Manhattan’s Lafayette Street rooted in skate culture, Jebbia has grown the label into a $500-million-plus global lifestyle brand. Carlyle acquired a 50 percent stake from Jebbia in 2017 for $500 million, for a valuation $1 billion though annual volume was just $200 million. In a conference call Monday, Rendle said VF and Supreme focused on creating synergies rather than slugging it out through a competitive bidding process, noting the streetwear market’s “$50 billion global opportunity.” The “marquee property” boasts a diverse following in youth culture, he added. It also ioneered the weekly drop model that thrives on scarcity, driving full-priced product sell-throughs with “gross margins over 60 percent and operating margins over 20 percent,” noted VF chief financial officer Scott Roe—similar to the metrics at Vans. Supreme, Rendle says, is especially relevant at a time when fashion casualization, social influence and creative self-expression are trends that continue mold the consumer landscape. VF can leverage Supreme’s strong international platforms, while Supreme will gain deeper access to the ompany’s consumer segments as well as VF’s supply chain and analytics’ capabilities, he added.

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New Lawsuit Challenges Trump’s China Tariffs

2020/09/22

A new lawsuit takes aim at President Trump’s controversial tariffs. A challenge filed by a partner in the law firm of Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt in the U.S. Court of International Trade (CIT) contests the assessment of List 3 and List 4 tariffs that have been imposed on China-made goods by the Trump administration under Section 301 of the Trade Act of 1974. The lawsuit, filed by attorney Peter W. Klestadt, alleges that the List 3 and List 4 tariffs were imposed in an “untimely” manner. It also asserts that they were imposed to retaliate againstChinese tariff measures, rather than to remedy the Asian nation’s unfair trade practices, and therefore were not authorized under the Trade Act. The suit further alleges that the United States Trade Representative (USTR) failed to comply with the Administrative Procedures Act when imposing the tariffs. Klestadt wrote in a press release that if successful, these cases could result in the refund to the plaintiffs of all tariffs they paid on the List 3 and 4 goods over the past two years, and up until the case is resolved. “It is probable that only importers that file their own lawsuits will be able to recover refunds, at least with respect to entries that have been liquidated by CBP (Customs & Border Protection),” he said. “While importers can file protests on liquidated entries, there is no certainty that CBP would be authorized to issue refunds to importers without a case filed in court.” Klestadt noted that the deadline to file in court is two years after the cause of action accrues. The USTR published a notice imposing the List 3 duties on Sept. 21, 2018, and the duties took effect on all entries for consumption on or after Sept. 24, 2018. The safest course of action to ensure meeting the two-year deadline with respect to List 3 tariffs would be to file a court claim on or before Sept. 20, he noted. “Importers not meeting that deadline may still be able to assert that the two-year deadline runs from the date the tariffs were paid and thus a later filed lawsuit would be timely with respect to any tariffs paid during the previous two years,” Klestadt said. “We caution that, based upon prior court precedent, there is uncertainty as to whether the two-year filing deadline runs from date of the USTR decision or date of payment of the tariffs.” He said companies should contact the firm as soon as possible if they would like to file a lawsuit in the CIT to preserve potential rights to refunds on List 3 and List 4 duties or need further advice concerning this issue.

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Customs Says Hong Kong-Originating Goods Must Now Be Labeled Made in China

2020/08/14

As part of President Trump’s order to end any preferential treatment for Hong Kong, the rules of origin for goods made in the region are changing. In a Federal Register notice published Tuesday morning, U.S. Customs and Border Protection said instead of “Hong Kong” origin markings, all goods produced in the region must now be marked “Made in China.” There’s no indication yet as to whether these goods will now be subject to some of the same Section 301 tariffs that have impacted other Made in China goods. “Given the commercial realities, affected parties may need a transition period to implement marking consistent with the position announced in this notice,” the Federal Register noted. “Therefore, this document notifies the public that, unless excepted from marking, goods produced in Hong Kong, which are entered or withdrawn from warehouse for consumption into the United States after September 25, 2020, must be marked to indicate that their origin is ‘China.’” The change comes as a result of Trump’s July 14 executive order on Hong Kong’s normalization. As part of the order, the president said Hong Kong “is no longer sufficiently autonomous to justify differential treatment in relation to the People’s Republic of China.”Trump has been battling China on several fronts over what he deems its unfair practices, and this was the latest strike in that fight.

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Zara Owner Inditex to Close Up to 1,200 Stores

2020/06/16

Inditex, long the golden child of fashion success, is feeling the pain of the coronavirus pandemic. The Zara parent company posted its first ever quarterly loss Wednesday, reporting a 409 million euro ($464 million) net income loss in the first quarter, compared to a to 734 million euro ($832 million) gain in the same quarter of 2019. “Inditex’s 1Q2020 has been materially impacted by COVID-19,” the company said. Now, as many as 1,200 stores are on the chopping block. As part of its store optimization as it works to “fully integrate its store and online model,” Inditex said it “wants a higher quality network of better located stores.” Naturally, it also wants to reduce its capital expenditures to return to profitability. “Inditex has decided to absorb [read: close] between 1,000 and 1,200 stores in the years 2020 and 2021. The plan includes 500-600 units each year,” the company said. “The optimization plan focuses on stores at the end of their useful life, especially young concepts whose sales can be recovered in nearby stores and online.” In the past week, with stores starting to reopen, Inditex said sales across its brands have been “recovering gradually”—particularly in China, South Korea and Germany—but the losses are still steep. “With 52% of [the group’s] stores open in May with capacity restrictions in most markets,store and online sales in local currencies were -51% compared to last year’s revenues,” the company said Wednesday. “In the period between 2 and 8 of June, stores and online sales in local currencies were -34%. In the markets that were fully open (54% of total stores) sales were 16%.”

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Tax Breaks, Subsidies May Be New Tools to Pull US Supply Chains From China

2020/05/27

President Trump has made no secret of his interest in reshoring American manufacturing—particularly if it means fewer imports from China specifically. Now, with the coronavirus pandemic stoking already elevated tensions between the U.S. and China, he’s making further efforts to ensure it. On Thursday, Trump released a plan to restore the Strategic National Stockpile of critically needed items, like PPE and medical supplies, and signed an executive order that grants new authority to the United States International Development Finance Corporation (DFC) to finance companies producing “vital goods and services,” according to a White House statement. “My goal is to produce everything America needs for ourselves and then export to the world, and that includes medicines. It’s very important. Too reliant on other countries,” the president said during remarks Thursday at Owens & Minor, a medical supplies manufacturer in Allentown, Pa. “The final step in rebuilding the stockpile is to bring critical manufacturing permanently back to America. Wouldn’t that be nice?” U.S. lawmakers, according to Reuters, are drafting proposals to drive U.S. companies out of China that could see them incentivized to uproot their supply chains with tax breaks and subsidies. Government officials and industry executives are also reportedly mulling a $25 billion “reshoring fund” that would go toward efforts to sway American businesses to adjust—or eliminate—their reliance on China. The COVID-19 pandemic has exposed many U.S. companies’ over-dependence on China, as shutdowns and delays there led to component shortages that choked supply chains around the world. It also helped fuel a shortage in much-needed protective supplies, because before the pandemic, China was making the bulk of the world’s PPE. And now that the country’s return to business may be lapsing as a new cluster of coronavirus cases in China’s Jilin province has sent more than 100 million people back into lockdown, inputs may still not be entirely secure if the country is heading into its second wave. “Since less than half of personal protective equipment is manufactured in North America, our supply chain was extremely vulnerable to foreign production interruptions,” an outline of the national stockpile booster plan reads. “Under the former system, the ability to determine what products were most needed, rapidly replenish items, and target the distribution of critical products to high-need areas was lacking.” At the end of April, the National Council for Textile Organizations (NCTO) implored the U.S. government to implement a Buy American mandate, similar to what it has in place for military textiles, to support domestic manufacturing. “Anything short of fully instituting domestic purchase requirements through Executive Order and other legislative initiatives will ensure that PPE production through U.S. supply chains that have been created overnight don’t evaporate as soon as this crisis is over,” NCTO president and CEO Kim Glas said in a statement. “In the midst of the crisis, our failure to confront this challenge will allow for a repeat of the sins of the past that allowed sourcing agents to offshore the entire production of medical PPE in search of lucrative profits.” By Q4 2020, or “probably starting in the third quarter a little bit,” President Trump said the U.S. will be bigger and better than ever. “We’re reclaiming our heritage as a nation of manufacturers,” he said.

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Who’s Paying Garment Workers, Who Isn’t and How Can People Help?

2020/04/21

The Workers Rights Consortium (WRC), in partnership with the Center for Global Workers’ Rights (CGWR) at Penn State University, has launched a “COVID-19 tracker” to monitor which fashion companies are paying suppliers for in-Production and completed orders, and those that have refused to do so. “COVID-19 has meant a huge drop in demand for apparel,” the WRC wrote on its website. “Many brands and retailers responded to the crisis by canceling (or ‘holding’) orders or demanding retroactive price reductions, for goods already in production or completed and ready to ship. In some cases, brands have demanded large rebates, even on orders already in transit from the supplier.” The fallout from this, it said, has been large-scale dismissals of workers, often without legally mandated severance or furlough wages. “We recognize the financial challenges this creates for brands and retailers; at the same time, corporations have a responsibility to manage the crisis responsibly and honor obligations to suppliers and workers,” it added. Those that have agreed to honor their commitments include Adidas, H&M, Zara owner Inditex, Kiabi, Marks & Spencer, Nike, PVH Corp., Target and Uniqlo owner Fast Retailing. VF Corp., which operates The North Face and Timberland, is also provisionally on the list, albeit with an asterisk next to its name to indicate that concerns have been raised by suppliers about follow-through. Labels that have not agreed to pay for orders include Arcadia Group, which owns Topshop, Topman, Dorothy Perkins and Miss Selfridge and recently demanded a 30 percent discount from suppliers; Asos; C&A; Bestseller; Gap; J.C. Penney; Kohl’s; Mothercare; Next; Primark; Tesco; Urban Outfitters; and Walmart. A previous CGWR report noted that Primark has to date cancelled or delayed the most orders ($273 million), followed by C&A ($166 million) and Mothercare ($62 million). Primark, which faced widespread criticism for invoking the force majeure clause to get out of its contracts, announced last week that it was establishing a fund to help pay the wages of workers linked to orders in Bangladesh, Cambodia, India, Myanmar, Pakistan, Sri Lanka and Vietnam that were due for shipment. The company indicated, however, that the wage compensation would be adjusted to factor in government support packages in each country, a stipulation that caused some confusion. “While we welcome Primark’s announcement that they will compensate workers for the wages they will lose as a result of these cancelled orders, it is not clear enough what they mean,” Rubana Huq, chairperson of the Bangladesh Garment Manufacturers and Exporters Association, told the Guardian. “Wage compensation should not take government loans into consideration. These brands have existing business commitments with their suppliers that are their responsibility to honor.” Scott Nova, executive director of the WRC, said he was “very skeptical” that workers would see any of the promised money. He also questioned why Primark didn’t simply pay for the orders it nixed. “By refusing to pay for the orders, it will be doing so much financial damage to the factories that they will fire a lot of these workers anyway,” he told the Financial Times. “Vulnerable women who live on the margins of poverty and are at risk not just from COVID-19 but from all of the economic fallout of this pandemic,” Lauren Fay, executive director of the New Fashion Initiative, told Sourcing Journal. “The stakes right now are the highest for these fashion frontliners. This virus doesn’t mean the closing of a brand and the end of an entrepreneurial dream; it means starvation and homelessness.” “Garment workers are in crisis because brands [are] cancelling orders and pulling back production,” said journalist and author Elizabeth Cline, who worked with Fay, stylist Rachael Wang and influencer Benita Robledo, to set up the site. “We wanted to create a single resource that makes it easy for people to donate, take action and support garment workers,” she said. “There are a number of incredible campaigns, fundraisers and organizations working to support garment workers, so we wanted to [gather] all of these resources in one place to make it easy for people to help.”

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Fashion Retailers Cancel Nearly $1.5 Billion in Orders from Bangladesh

2020/03/25

Bangladesh’s ready-made garment sector is teetering on the brink of disaster. In the past week, factories have been facing a crush of daily order cancellations from brands and retailers that manufacture in Bangladesh, and as of Sunday, 490 factories have fielded cancellations affecting $1.44 billion worth of exports. ”Factories are reporting and registering new cases every hour,“Bangladesh Garment Manufacturers and Exporters Association (BGMEA) president Rubana Huq told Sourcing Journal late Sunday. The backpedaling on already placed orders could impact as many as 1.2 million workers. Calling on local buying offices in a meeting last week, BGMEA, which represents the country’s clothing factories, advised that no confirmed orders should be cancelled, and that orders retailers hope to postpone should be paid in part ahead of time rather than at point of shipping to help finance workers’ wages in the interim. "We met with them and have appealed to them to take our goods, which are already produced, even with deferred payment terms,"Hoq said. "We have also appealed to them to kindly also continue with taking orders till July and then adjust inventory later as we need to pay our workers. "While the brands close stores and recalibrate their exposure, we have a difficult reality to handle at our end," Huq said, adding that 4.1 million workers "can‘t go hungry.” When orders aren’t cancelled, brands are still pulling back on fabric placements, and now factories are incurring all of the raw material liability. “Unless the brands help us by lifting our ready goods and assuming liability of the cut and uncut fabric, our financial status will be jeopardized,” Huq said. “We have appealed to the brands to kindly pay us at least the cutting and making charge against the booked quantity of which we are holding at our end. This way we can at least pay our workers. [Cutting and making] is at an average one-fourth of the total FOB cost.” So far, brands and retailers seem to be saying little with regard to concessions to help save the factories that make for them as the world shuts down and borders close amid the COVID-19 pandemic. In fewer than four months, the novel coronavirus has changed the face of supply chains and exposed their fragility in a way few may have been able to grasp just five months back. And Bangladesh, which, after China, produces more garments than anywhere else in the world, counts on the sector for more than 80 percent of its exports and could face the biggest blow.

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Textile Input Costs Reach ‘Crazy’ Levels as Virus Approaches Pandemic, Manufacturers Say

2020/03/03

The tie-up with textile inputs owed to the coronavirus is sending raw material costs skyrocketing. Manufacturers in Pakistan claim the cost of imported textile inputs—which many apparel sourcing. countries bring in from China—has climbed by as much as 100 percent, according to Pakistan’s "The News", in light of the shortages resulting from slowed production and a pileup at ports that has goods crawling (if not altogether held up) to their destinations. Pakistan, along with other key apparel sourcing countries, like Vietnam, Cambodia and Thailand are facing threats to production and raw materials stock that could dry up in the next month if supply doesn’t resurface. “Everyone is talking about increasing exports from the country, but the fact is that production cannot be undertaken in the absence of materials,” Zubair Motiwala, a member of Pakistan’s Sindh Industrial Trading Estate Association of Industry, told The News. According to reports, Pakistan relies on textile raw material imports from China, including dyes and chemicals, to make 60 percent of its exports. At present, much of what has already been produced is stuck at Chinese ports and, according to Motiwala, alternative suppliers in Korea, Taiwan and India have either ceased supply or are quoting prices as much as 35 percent higher. “It is becoming difficult to continue production activities due to shortage of raw materials, while prices in the local market have gone up by 50-100 percent,” he told The News. “Value-added textile sector requires ample quantity of dyes and chemicals. It is obvious that no one keeps the inventory for more than 1 or 2 months due to cash flow constraints as large amounts of exporters are stuck in sales tax refunds.” The fear for manufacturers in Pakistan now is that instead of benefiting from a potential uptick in manufacturing as companies scramble to clear out of China, the price hikes and inputs shortage could prevent factories from being able to complete their orders and ship them on time. And conditions aren’t much different in Vietnam. Once the second quarter hits, manufacturers in the country may no longer have the materials. they need to make garments, as more than half of the garment industry’s inputs originate from China. “Domestic firms have sufficient materials for production until the end of the first quarter, but many of them will face severe shortage of materials from the second quarter because they have trouble importing materials from key suppliers in China, Japan and South Korea,” Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association, told Reuters. The material shortage story continues much the same in Thailand. And anufacturers there are already experiencing delayed deliveries. Orders from the last half year that would typically be filled in January or February are now being delayed until March because of the havoc created by the oronavirus outbreak, Thai Garment Manufacturers Association president Yuttana Silpsarnvitch told local news source The Star. “Manufacturers have been unable to deliver their products on time because of the scarcity of materials coming from China, such as lace fabrics and buttons,” he said. So far, there are few signs of the spread of the virus slowing, and while by some accounts manufacturing conditions are improving, it’s safe to assume a multitude of hiccups will continue to hamper supply chains in the coming months. The latest situation report from the World Health Organization (WHO) says there have been 81,109 confirmed coronavirus cases globally, and according to an update Thursday morning from WHO director-general Dr. Tedros hebreyesus,2,801 people have died. Now, “we’re at a decisive point,” he said, adding that what’s happening in the rest of the world is now WHO’s “greatest concern.”

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