The ongoing conflict between Russia and Ukraine has begun to have a significant impact on garment shipments to Russia, which has resulted in a significant decrease in export earnings from this potentially lucrative market for Bangladeshi apparel goods.
Earnings from exporting garments to Russia totaled $482.23 million from July through February, which indicates that the average monthly earning for the first eight months of the current fiscal year was $60.15 million.
However, the average monthly earning in the last three months between March and May from the Russian market declined significantly to $27.05 million, totalling $81.17million. Although earnings from apparel shipments during the period of July to May showed a year-on-year growth of 4.32 percent, reaching $562.40 billion, the majority of those earnings were against garments that were shipped before the start of the war.
According to data provided by the Export Promotion Bureau, the revenue generated by clothing exports to the Russian market reached a total of $539.10 million during the first five months of the previous fiscal year (July–May) (EPB).
After the start of the war, exporters reported a decrease in the number of garment items shipped to Russia, citing two primary factors as the primary contributors. At the beginning of the war, a large number of ships carrying goods were trapped in ports that were associated with opposing forces. Second, when the SWIFT ban against Russian banks went into effect, the local exporters found themselves in a quagmire regarding how they could receive payments for their goods and services.
Although work orders had been made earlier, the company was unable to produce goods for future shipments as a result. There has been a decline in the amount of clothing exported to Russia over the last three to four months.
Shipments are expected to pick up soon, according to the exporters, who believe that legal shipping channels will be reinstated and that local exporters would be paid in Chinese currency. Because it allows businesses to continue doing business with Russia, payments made in Chinese currency were much appreciated by the region’s exporters. Local garment exporters remain hopeful that shipments to Russia will increase despite the ongoing conflict, as it has done so even throughout the conflict.
Because Russian retailers and brands have been putting work orders with Bangladeshi manufacturers while foreign shops and brands have been fleeing Russia for the SWIFT ban, they are optimistic about the future shipment estimates.
Because of the commencement of the Russia-Ukraine war, which began on February 24 this year, local garment exporters said they expected their revenues from sending textile products to Russia to be halted. Despite the fact that growth in shipments to Russia is slowing, they can still make a profit. Managing director of Fatullah-based Young 4 Ever Textile, Rajiv Chowdhury claims to have received $5 lakh as export payment from his Russian buyer via an alternate method through Turkey.
After the outbreak of the war, he was worried about the Russian buyer’s payment, but he was relieved when he received the money via Turkey. Rajiv had previously received work orders from Russian buyers, but he was wary of doing business with them because of the ongoing conflict in the country. It has become increasingly common for local garment exporters to receive payments in Chinese yuan as a result of the SWIFT restriction. Chowdhury further stated that big purchasers could simply pay in Chinese yuan, but shipping to the fighting zone had become extremely dangerous. According to him, he sends more than $1 million worth of knitwear to Russia each year.
Rupa Group’s Shahidul Islam, the managing director, has been extremely cautious while shipping to Russia because of the dangers that the conflict poses to his goods. However, he was eager to get his goods to Russia. In a typical year, he sends out $2 million worth of knitwear to customers. However, he continued, reaching this yearly total in the remaining six months of the present year appears to be unachievable because of a decrease in shipments for the war. The Russian market is a promising one for local garment exporters, he said. As a result of Russian clients becoming more accustomed to paying in Chinese money, Mohammad Hatem, executive president of the Bangladesh Garment Manufacturers and Exporters Association, views Russia as a prospective export market.
In addition to that, the traditional routes that Russia used to take while exporting goods have been reestablished. For instance, at the moment, local manufacturers of clothing are able to ship their wares through the ports located in Finland, Belarus, and Hamburg.
“We are using alternative means to export our products and are also obtaining money using alternative means. We sincerely hope that our exports will quickly resume to Russia “The president of the Bangladesh Garment Manufacturers and Exporters Association, Faruque Hassan, made this statement. According to him, only a few work orders were delayed or placed on hold during the disruption, and the company is now gradually getting back to normal.
Reference:
“RMG Exports to Russia on Decline.” The Daily Star, 23 June 2022,https://www.thedailystar.net/business/economy/news/rmg-exports-russia-decline-3054246
Image Courtesy:
- https://www.maritimegateway.com/bangladesh-garment-exports-to-russia-stuck/
- https://www.thedailystar.net/news-detail-37022
