Lockdown in Bangladesh threatens international apparel retailers
Shipments decreased by only 1.6% in the three months ending 30 April compared to the same time last year.
International clothing retailers including H&M and Levi's are in danger of suffering heightened supply chain delays, as Bangladesh prepares for harsh lockdown.
The seven-day lockdown will certainly entail factories being compelled to shut down, stopping manufacturing. It is Bangladesh's strictest lockdown to date to curb the spread of Covid-19 infections, with residents only permitted to leave their houses in an emergency.
According to CNBC, recent research from Panjiva, a business line of S&P Global Market Intelligence, shows that this is a sharp turnaround from a trend seen earlier in the pandemic. Then, retailers in Europe and the Americas withdrew orders, causing Bangladeshi garment producers to suffer.
Keep updated, follow The Business Standard's Google news channel
Despite this, Panjiva's data suggest that Bangladeshi clothing exporters to the United States have fared better than surrounding areas throughout the pandemic. Shipments decreased by only 1.6% in the three months ending 30 April compared to the same time last year. India's and Sri Lanka's exports, on the other hand, fell by 10.1% and 6.4% respectively.
Among the main retail brands with a presence in Bangladesh, H&M exports grew 13.5% in the three months ending 31 May compared to the same period last year, according to Panjiva. Imports connected with Levi's plummeted 47.8%, while those associated with Calvin Klein-owner PVH fell 68.7%.
Representatives from H&M, Levi's and PVH didn't immediately respond to CNBC's requests for comment.
Bangladesh has been gaining market share as China has grown less competitive in labour-intensive industries like apparel, according to a September review of US International Trade Commission statistics by the Peterson Institute for International Economics.
Retailers will be impacted by further supply chain interruptions at a time when resources are already stretched owing to a variety of causes. Inventory has been backlogged for weeks due to a scarcity of shipping containers and truck drivers. This is generally when retailers place Christmas season orders to ensure that shelves are supplied during the busiest shopping season of the year.
The risk companies face is running into out-of-stocks, leaving customers to look elsewhere.
Brooks Running Company CEO Jim Weber told CNBC's "Squawk Box" on Tuesday that his company is running on a roughly 80-day cycle for shipping, compared with what used to take just 40 days.
"There's no question the supply chain is strung out in our industry," he said.
