Apparel shipments suddenly slowed down in the last week of July due to the combined impacts of Eid vacation, lockdown and container congestion at the Chattogram port, resulting in a 16% slump in export earnings in the month, relative to the same period last year.
Apparel exports, however, had shown a remarkable 37% growth in the first three weeks of July, increasing earnings to $2.22 bilion until 19 July from $1.66 billion of the same period last year, according to data compiled by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA)
Bangladesh exported apparels worth $2.60 billion from 1-30 July this year, down from $3.08 billion last year, said Mohiuddin Rubel, director of BGMEA.
Industry people said they had expected a good performance of the sector as the fiscal year 2021-22 began.
According to industry insiders, the demand for apparel products rose as the Covid situation in Europe and the USA returned to normal due to a wide vaccination coverage.
The apparel sector accounts for more than 80% of the country’s total exports for the last three decades. In the fiscal year 2020-21, apparel exports fetched $31.45 billion.
Export earnings fell drastically in April and May 2020 due to the pandemic, bringing down the sector’s earnings to $27.94billion in fiscal year 2019-20.
Industry people said the sector usually experienced a good growth in June, July and August riding on shipments for orders targeting the winter season and Christmas but this year Eid vacation and factory closure due to the ongoing lockdown disrupted exports.
Besides, the Chittagong Port has been facing container congestion due to import backlog.
BGMEA President Faruque Hassan said, “We hope the export will rebound within the next 3-4 days as the government has allowed us to resume production.”
Factories take 3-5 days to resume production to their full capacity after any vacation, he said, adding that apparel makers had huge orders in hand for the coming days.
Hopes for better price
The high demand for goods in the upcoming season will also help garment makers get a better price from buyers whose stores are almost empty, Faruque said.
He said he had already asked the apparel makers to get imported raw materials released from the port, which would ease the container congestion.
Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) First Vice President Mohammad Hatem said, “We were very optimistic about export performance in July having significant orders but it did not meet our expectations due to the closure of factories.”
Ahead of the lockdown, apparel makers had expedited delivery of goods, which reflected in the growth of exports earnings before Eid, he added.
Fazlee Shamim Ehsan, chief executive officer of Fatullah Apparels, said exports could be made in high volumes before Eid because the port authority had allowed Colombo-bound three new vessels to ship goods from here.
BKMEA Vice President Ehsan expressed the hope that buyers would adjust the prices of goods to the price hike of raw materials amid the rising demand in the global market.
“Already we are getting better prices, compared with the prices [at which apparels were exported] a few months ago”.
The major competitors of Bangladesh in apparel exports — Vietnam and India are at risk of factory closures, which will create opportunities for Bangladesh to secure a better price.
Echoing the view of Ehsan, Mitali Fashion Ltd Managing Director Tuhin Abdullah said the global market situation had created scope for Bangladesh to increase apparel prices by 30 to 40%.
“If we can negotiate with the buyers, they must pay more as Vietnam has a high risk of factory closure, Pakistan is facing a threat to lose GSP Plus facility in the EU and most of the buyers are not willing to visit India due to the Covid management situation.”
According to Vietnam’s Ministry of Health, the country has confirmed a total of 150,060 cases of infections while only 38,734 have recovered.
The country’s daily infection jumped to more than 8,000 from around 400 a month ago.
India saw daily infections go down to 41,000 from over 4 lakhs in May.
