Why are exporters facing losses on pre-existing orders amid rising costs?

Exporters and manufacturers in Bangladesh are facing growing pressure as rising raw material costs linked to the Middle East war begin to affect previously confirmed orders, limiting their ability to adjust prices and increasing the risk of financial losses.

As prices continue to surge, exporters and manufacturers with pre-existing orders are bracing for significant losses.

ABM Shamsuddin, managing director of knitwear manufacturer Hannan Group, said, "As we have already finalised our export orders, it will not be possible to pass the additional costs on to the buyers. We are forced to absorb these expenses, which may result in losses given our already thin profit margins."

He added, "We anticipate that fabric prices may climb further, as suppliers are now issuing proforma invoices with extremely short validity periods, often less than seven days."

Shamim Ahmed, president of the Bangladesh Plastic Goods Manufacturers and Exporters Association, said, "Due to the fresh hike in raw material prices, many plastic product manufacturers will face losses because they have already accepted purchase orders. It will not be possible to collect the additional costs from the buyers."

However, he added that for new orders, it may be possible to negotiate higher prices to reflect increased costs.

Garment industry stakeholders said weakening global demand for apparel is making it difficult to pass on higher production costs to international buyers, adding further pressure on exporters already dealing with market uncertainty.