Your default browser language is set to . Browse this site in another language: Continue color Created with Sketch.
  • Newsletter subscription (View Sample)
  • Used DHL Services before
MORE FROM THIS COLLECTION

Navigating the new global fashion supply chain

How is the fashion supply chain affected by global trade tensions, and how should companies react?
18 October 2019 •

As one of the more cost-sensitive sectors, the fashion industry is generally quick to respond to shifts in global markets and trading conditions.

The sector’s supply chains, for example, have undergone shifts even before the U.S.–China trade tensions. With production costs increasing in China, textile and garment makers were already relocating manufacturing operations to other lower-cost Asian countries.

The U.S.–China tariff war is now accelerating this trend, while Britain’s impending exit from the European Union (EU) is keeping global industry players on their toes.

These uncertainties have taken a toll on the trade growth outlook for the consumer fashion goods sector, which deteriorated significantly across key markets over the past quarter, according to the September 2019 results from the DHL Global Trade Barometer (GTB).

To maintain competitiveness, it is crucial for industry players to understand and adapt to the dynamic global fashion supply chain.

Changing Asian supply chains

For years, global fashion retailers have been making plans to shift their production out of China.

At the same time, clothing exports from Bangladesh, Vietnam, and Cambodia have been on the rise. The value of these countries’ exports jumped by 11 percent, 13 percent, and 14 percent respectively during 2018, based on World Trade Organization (WTO) figures.

In Bangladesh, the world’s third-largest clothing exporter ahead of Vietnam, the fashion sector now dominates outbound trade from the South Asian country.

A similar trend is observed for DHL Global Forwarding Bangladesh where apparels accounted for 90 percent of the company’s total exports last year, shared Fabian Rybka, Cluster Head, DHL Global Forwarding Bangladesh and Sri Lanka.

Despite the emergence of new manufacturing hubs and the stagnation of China’s growth in 2018, China remains the biggest clothing exporter by a large margin. Faced with increasingly unfavorable conditions, brands may still struggle to shift production out of China because of the country’s deep-rooted expertise in manufacturing higher-value fashion goods.

“U.S. retailers may quickly move sourcing orders from China to other suppliers for basic fashion items, such as tops, bottoms, and underwear. However, there seems to be much fewer alternative sourcing destinations for more sophisticated product categories, such as accessories and outerwear,” said Sheng Lu, an associate professor of fashion and apparel studies at the University of Delaware.

Textiles may be a different story if higher U.S. tariffs start to bite. But in 2018 at least, China still enjoyed a 7.9 percent increase in textile exports, thus well and truly maintaining its global market leadership.

Challenging global trends

Europe is another beneficiary of the fashion industry’s changing supply chain.

Already the second-largest exporter of both clothing and textiles, the EU saw increases of 11 percent and 7 percent respectively during 2018, the WTO revealed.

In EU’s diverse market, cheaper clothing products are typically manufactured in countries with lower production costs, such as Poland, Hungary, and Romania, while higher-end products are generally made in developed countries, including Italy, UK, France, and Germany.

Globally, in 2018, the sector experienced a strong year for trade. The total value of textiles and apparel exports increased by 6.4 percent and 11.1 percent respectively over the year —the fastest growth since 2012, shared Lu.

However, the trade growth outlook for the consumer fashion goods sector has slumped during the first half of 2019, according to the GTB.

DHL GLOBAL TRADE BAROMETER – CONSUMER FASHION GOODS SEP

A growth index put together based on key import and export data, the GTB provides an early indicator of the trade outlook — and the latest results reveal sharp slowdowns in China, South Korea, and the UK.

The U.S. and India were the only bright spots in the September GTB. The U.S. result may have been helped by stronger than expected consumer spending in clothing and other retail goods, while India’s positive growth could be largely due to trade diversion as a result of the trade war between the U.S. and China.

Smart strategies for new supply chains

One thing is for certain: the global fashion industry will remain in a state of flux.

Brexit and the U.S.–China tariff war highlight the volatile nature of today’s global trade politics. Looking ahead, the effects of this political maneuvering, as well as ongoing economic and market changes, will be just as unpredictable.

So, what can companies in the fashion industry do to combat this volatility?

An increasingly popular strategy is to diversify supply chains to mitigate the risks associated with change.

China remains the largest clothing exporter in the world.
China remains the largest clothing exporter in the world.

“No single country has emerged to become the ‘next China.’ Instead, China’s lost market shares in apparel exports were fulfilled by a group of countries, a phenomenon which can be linked with fashion brands and retailers’ sourcing diversification strategy,” Lu commented.

Agility is also vital to rapidly adapt to changes, as McKinsey’s The State of Fashion 2019 report predicts “continued investment in speed” throughout the industry.

This will include adopting technologies such as analytics, automation, micro-factories for rapid prototyping, and more onshoring and “nearshoring” — sourcing goods from nearby countries.

Together, these initiatives will enable companies to “respond quickly to source and develop products, squeeze production timelines, and streamline distribution.”

New technologies are also changing cost structures. For example, labor’s contribution to total production costs in western EU countries has dropped from 30 percent in 2006 to 21 percent in 2016.

With more elements of automation progressively introduced into supply chains, labor productivity will improve while labor costs can be further reduced. The quicker fashion companies adapt, the quicker they can transform their supply chain efficiency into a competitive advantage.

		Array
(
    [get_fields] => Array
        (
            [seo_title] => Navigating the new global fashion supply chain
            [introduction_paragraph] => How is the fashion supply chain affected by global trade tensions, and how should companies react?
            [excerpt] => How is the fashion supply chain affected by global trade tensions, and how should companies react?
            [thumbnail] => Array
                (
                    [wide] => Array
                        (
                            [ID] => 5154
                            [id] => 5154
                            [title] => Article Key Image - 575865862
                            [filename] => Article-Key-Image-575865862.jpg
                            [filesize] => 83815
                            [url] => https://lot.dhl.com/wp-content/uploads/2019/09/Article-Key-Image-575865862.jpg
                            [link] => https://lot.dhl.com/navigating-the-new-global-fashion-supply-chain/article-key-image-575865862/
                            [alt] => 
                            [author] => 159
                            [description] => 
                            [caption] => 
                            [name] => article-key-image-575865862
                            [status] => inherit
                            [uploaded_to] => 5153
                            [date] => 2019-09-23 07:30:27
                            [modified] => 2019-09-23 07:30:27
                            [menu_order] => 0
                            [mime_type] => image/jpeg
                            [type] => image
                            [subtype] => jpeg
                            [icon] => https://lot.dhl.com/wp-includes/images/media/default.png
                            [width] => 1200
                            [height] => 630
                            [sizes] => Array
                                (
                                    [thumbnail] => https://lot.dhl.com/wp-content/uploads/2019/09/Article-Key-Image-575865862-150x150.jpg
                                    [thumbnail-width] => 150
                                    [thumbnail-height] => 150
                                    [medium] => https://lot.dhl.com/wp-content/uploads/2019/09/Article-Key-Image-575865862-300x158.jpg
                                    [medium-width] => 300
                                    [medium-height] => 158
                                    [medium_large] => https://lot.dhl.com/wp-content/uploads/2019/09/Article-Key-Image-575865862-768x403.jpg
                                    [medium_large-width] => 768
                                    [medium_large-height] => 403
                                    [large] => https://lot.dhl.com/wp-content/uploads/2019/09/Article-Key-Image-575865862-1024x538.jpg
                                    [large-width] => 1024
                                    [large-height] => 538
                                    [1536x1536] => https://lot.dhl.com/wp-content/uploads/2019/09/Article-Key-Image-575865862.jpg
                                    [1536x1536-width] => 1200
                                    [1536x1536-height] => 630
                                    [2048x2048] => https://lot.dhl.com/wp-content/uploads/2019/09/Article-Key-Image-575865862.jpg
                                    [2048x2048-width] => 1200
                                    [2048x2048-height] => 630
                                    [story_normal] => https://lot.dhl.com/wp-content/uploads/2019/09/Article-Key-Image-575865862-300x248.jpg
                                    [story_normal-width] => 300
                                    [story_normal-height] => 248
                                    [story_single] => https://lot.dhl.com/wp-content/uploads/2019/09/Article-Key-Image-575865862-800x420.jpg
                                    [story_single-width] => 800
                                    [story_single-height] => 420
                                    [story_wide] => https://lot.dhl.com/wp-content/uploads/2019/09/Article-Key-Image-575865862-800x310.jpg
                                    [story_wide-width] => 800
                                    [story_wide-height] => 310
                                    [whitepaper_thumb] => https://lot.dhl.com/wp-content/uploads/2019/09/Article-Key-Image-575865862-300x417.jpg
                                    [whitepaper_thumb-width] => 300
                                    [whitepaper_thumb-height] => 417
                                    [story_gallery] => https://lot.dhl.com/wp-content/uploads/2019/09/Article-Key-Image-575865862-1024x538.jpg
                                    [story_gallery-width] => 1024
                                    [story_gallery-height] => 538
                                    [story_ampsize] => https://lot.dhl.com/wp-content/uploads/2019/09/Article-Key-Image-575865862-1200x630.jpg
                                    [story_ampsize-width] => 1200
                                    [story_ampsize-height] => 630
                                    [ads_mobile] => https://lot.dhl.com/wp-content/uploads/2019/09/Article-Key-Image-575865862.jpg
                                    [ads_mobile-width] => 300
                                    [ads_mobile-height] => 158
                                    [web-stories-poster-portrait] => https://lot.dhl.com/wp-content/uploads/2019/09/Article-Key-Image-575865862.jpg
                                    [web-stories-poster-portrait-width] => 640
                                    [web-stories-poster-portrait-height] => 336
                                    [web-stories-publisher-logo] => https://lot.dhl.com/wp-content/uploads/2019/09/Article-Key-Image-575865862.jpg
                                    [web-stories-publisher-logo-width] => 96
                                    [web-stories-publisher-logo-height] => 50
                                    [web-stories-thumbnail] => https://lot.dhl.com/wp-content/uploads/2019/09/Article-Key-Image-575865862.jpg
                                    [web-stories-thumbnail-width] => 150
                                    [web-stories-thumbnail-height] => 79
                                )

                        )

                    [square] => Array
                        (
                            [ID] => 5155
                            [id] => 5155
                            [title] => Single Column Image (Normal) - 575865862
                            [filename] => Single-Column-Image-Normal-575865862.jpg
                            [filesize] => 13630
                            [url] => https://lot.dhl.com/wp-content/uploads/2019/09/Single-Column-Image-Normal-575865862.jpg
                            [link] => https://lot.dhl.com/navigating-the-new-global-fashion-supply-chain/single-column-image-normal-575865862/
                            [alt] => 
                            [author] => 159
                            [description] => 
                            [caption] => 
                            [name] => single-column-image-normal-575865862
                            [status] => inherit
                            [uploaded_to] => 5153
                            [date] => 2019-09-23 07:30:58
                            [modified] => 2019-09-23 07:30:58
                            [menu_order] => 0
                            [mime_type] => image/jpeg
                            [type] => image
                            [subtype] => jpeg
                            [icon] => https://lot.dhl.com/wp-includes/images/media/default.png
                            [width] => 300
                            [height] => 248
                            [sizes] => Array
                                (
                                    [thumbnail] => https://lot.dhl.com/wp-content/uploads/2019/09/Single-Column-Image-Normal-575865862-150x150.jpg
                                    [thumbnail-width] => 150
                                    [thumbnail-height] => 150
                                    [medium] => https://lot.dhl.com/wp-content/uploads/2019/09/Single-Column-Image-Normal-575865862-300x248.jpg
                                    [medium-width] => 300
                                    [medium-height] => 248
                                    [medium_large] => https://lot.dhl.com/wp-content/uploads/2019/09/Single-Column-Image-Normal-575865862.jpg
                                    [medium_large-width] => 300
                                    [medium_large-height] => 248
                                    [large] => https://lot.dhl.com/wp-content/uploads/2019/09/Single-Column-Image-Normal-575865862.jpg
                                    [large-width] => 300
                                    [large-height] => 248
                                    [1536x1536] => https://lot.dhl.com/wp-content/uploads/2019/09/Single-Column-Image-Normal-575865862.jpg
                                    [1536x1536-width] => 300
                                    [1536x1536-height] => 248
                                    [2048x2048] => https://lot.dhl.com/wp-content/uploads/2019/09/Single-Column-Image-Normal-575865862.jpg
                                    [2048x2048-width] => 300
                                    [2048x2048-height] => 248
                                    [story_normal] => https://lot.dhl.com/wp-content/uploads/2019/09/Single-Column-Image-Normal-575865862.jpg
                                    [story_normal-width] => 300
                                    [story_normal-height] => 248
                                    [story_single] => https://lot.dhl.com/wp-content/uploads/2019/09/Single-Column-Image-Normal-575865862.jpg
                                    [story_single-width] => 300
                                    [story_single-height] => 248
                                    [story_wide] => https://lot.dhl.com/wp-content/uploads/2019/09/Single-Column-Image-Normal-575865862.jpg
                                    [story_wide-width] => 300
                                    [story_wide-height] => 248
                                    [whitepaper_thumb] => https://lot.dhl.com/wp-content/uploads/2019/09/Single-Column-Image-Normal-575865862-300x248.jpg
                                    [whitepaper_thumb-width] => 300
                                    [whitepaper_thumb-height] => 248
                                    [story_gallery] => https://lot.dhl.com/wp-content/uploads/2019/09/Single-Column-Image-Normal-575865862.jpg
                                    [story_gallery-width] => 300
                                    [story_gallery-height] => 248
                                    [story_ampsize] => https://lot.dhl.com/wp-content/uploads/2019/09/Single-Column-Image-Normal-575865862.jpg
                                    [story_ampsize-width] => 300
                                    [story_ampsize-height] => 248
                                    [ads_mobile] => https://lot.dhl.com/wp-content/uploads/2019/09/Single-Column-Image-Normal-575865862.jpg
                                    [ads_mobile-width] => 300
                                    [ads_mobile-height] => 248
                                    [web-stories-poster-portrait] => https://lot.dhl.com/wp-content/uploads/2019/09/Single-Column-Image-Normal-575865862.jpg
                                    [web-stories-poster-portrait-width] => 300
                                    [web-stories-poster-portrait-height] => 248
                                    [web-stories-publisher-logo] => https://lot.dhl.com/wp-content/uploads/2019/09/Single-Column-Image-Normal-575865862.jpg
                                    [web-stories-publisher-logo-width] => 96
                                    [web-stories-publisher-logo-height] => 79
                                    [web-stories-thumbnail] => https://lot.dhl.com/wp-content/uploads/2019/09/Single-Column-Image-Normal-575865862.jpg
                                    [web-stories-thumbnail-width] => 150
                                    [web-stories-thumbnail-height] => 124
                                )

                        )

                    [thumbnail_category_option] => none
                    [gif_wide] => 
                    [gif_square] => 
                    [video_key] => 
                    [video_single] => 
                )

            [story_options] => Array
                (
                )

            [content] => Array
                (
                    [0] => Array
                        (
                            [acf_fc_layout] => wysiwyg
                            [wysiwyg] => 

As one of the more cost-sensitive sectors, the fashion industry is generally quick to respond to shifts in global markets and trading conditions.

The sector’s supply chains, for example, have undergone shifts even before the U.S.–China trade tensions. With production costs increasing in China, textile and garment makers were already relocating manufacturing operations to other lower-cost Asian countries.

The U.S.–China tariff war is now accelerating this trend, while Britain’s impending exit from the European Union (EU) is keeping global industry players on their toes.

These uncertainties have taken a toll on the trade growth outlook for the consumer fashion goods sector, which deteriorated significantly across key markets over the past quarter, according to the September 2019 results from the DHL Global Trade Barometer (GTB).

To maintain competitiveness, it is crucial for industry players to understand and adapt to the dynamic global fashion supply chain.

Changing Asian supply chains

For years, global fashion retailers have been making plans to shift their production out of China.

At the same time, clothing exports from Bangladesh, Vietnam, and Cambodia have been on the rise. The value of these countries’ exports jumped by 11 percent, 13 percent, and 14 percent respectively during 2018, based on World Trade Organization (WTO) figures.

In Bangladesh, the world’s third-largest clothing exporter ahead of Vietnam, the fashion sector now dominates outbound trade from the South Asian country.

A similar trend is observed for DHL Global Forwarding Bangladesh where apparels accounted for 90 percent of the company’s total exports last year, shared Fabian Rybka, Cluster Head, DHL Global Forwarding Bangladesh and Sri Lanka.

Despite the emergence of new manufacturing hubs and the stagnation of China’s growth in 2018, China remains the biggest clothing exporter by a large margin. Faced with increasingly unfavorable conditions, brands may still struggle to shift production out of China because of the country’s deep-rooted expertise in manufacturing higher-value fashion goods.

) [1] => Array ( [acf_fc_layout] => outbound_box [cards] => Array ( [0] => Array ( [type] => linked [linked_post] => WP_Post Object ( [ID] => 3529 [post_author] => 159 [post_date] => 2019-09-05 10:00:50 [post_date_gmt] => 2019-09-05 02:00:50 [post_content] =>

The world’s second-largest ready-made garment exporter is set to make bigger strides with new reforms to boost its apparel industry.

Inside a garment factory in Dhamrai, northwest of the Bangladeshi capital of Dhaka, a computerized sewing machine churns out batches of women’s designer tops every minute.

An automated trimming system nearby cuts away excess cloth before employees meticulously conduct quality inspections at their respective work stations.

This modern factory is just one of the country’s 4,500 apparel manufacturing plants that exported more than US$30 billion (€26.3 billion) worth of clothing to major global retailers in 2018.

Over the past decade, Bangladesh has made a name for itself as a powerful player on the global garment manufacturing stage.

The apparel industry is the backbone of the country’s economy, making up almost 12.36 percent of its total gross domestic product, and employing as many as 40 million workers. It accounted for nearly 80.5 percent of its total merchandise exports in 2018.

Behind its exceptional market performance, Bangladesh’s capacity for producing high volumes of low-cost garments for Western retailers has repeatedly come under public scrutiny.

Global brands with operations in the country have also frequently come under fire by human rights organizations championing the rights of workers who endure poor wages and dangerous working conditions.

Driven by both government initiatives and technology, the sector has been slowly reinventing itself.

How the Rana Plaza collapse changed everything

The turning point came in 2013, after tragedy struck the town of Savar, a 30-kilometer drive from Dhaka, where the eight-story Rana Plaza garment factory collapsed due to structural issues. More than 1,100 people lost their lives, while another 2,500 workers were seriously injured.

The Rana Plaza collapse

Bangladesh’s worst modern-day industrial disaster put its garment industry in the global spotlight and brought it to a standstill.

To protect its US$30.61 billion ready-made garment industry, the government moved swiftly. It roped in over 180 global retailers, importers and trade unions to draw up the Accord on Fire and Building Safety in Bangladesh (Accord) — a five-year plan to improve working conditions in garment factories across the country.

Six years on, the safety body has inspected over 2,000 factories, while helping to remedy workplace hazards that range from poor building structures to toxic emissions, as well as overcrowded working conditions.

Perhaps the best outcome of the five-year plan was the introduction of employee-initiated watchdog programs, which have empowered workers to blow the whistle on negligence and hold factory owners accountable.

For Rob Wayss, executive director of Accord, things are looking up for Bangladesh’s clothing industry in terms of safety. “I think right now, of the developing countries with a ready-made garment sector, Bangladesh is the safest,” he said, in a 2018 interview with The Guardian.

Still, these efforts to improve safety so far could come to naught if the Bangladesh government insists on halting the operations of Accord after failed negotiations.

The apparel industry is the backbone of the country’s economy, making up almost 12.36 percent of its total GDP.

Dangerous working conditions aside, low wages have also been a major factor that has stirred unrest among garment workers in the country.

Most of the workers’ feedback go unheard because of the fear of reprisals and intimidation against union members, who are often seen as threats by business owners.

Frustrations boiled over when the government announced an unsatisfactory minimum-wage hike in January 2019 — up to 50,000 garment workers took part in demonstrations that turned violent, leaving one dead, 50 injured and causing more than 5,000 workers to lose their jobs.

Grand ambitions

Despite the negative press and the issues plaguing Bangladesh’s dominant garment industry, the country is still flourishing.

As an economy that is largely powered by textile and garment exports, Bangladesh celebrated a historic moment in 2018 when it achieved the status of “developing country” from “least developed country”.

The South Asian nation has set an ambitious goal for its next phase of growth: to reach upper-middle-income country status by 2021, to be led by a nationwide push in manufacturing.

In line with this, it has also set a target for apparel exports to hit US$50 billion by 2021. So far, the signs have been encouraging.

On the whole, exports have soared by an average annual rate of 15 to 17 percent in recent years to reach a record US$36.7 billion for the year through June 2018.

Further growth in the apparel industry would unlock more opportunities in logistics, as Bangladesh continues to export to retailers all across the world.

RELATED ARTICLES


DHL Global Connectedness Index 2018
A detailed analysis of globalization, measured by international flows of trade, capital, information and people

Apparels made up 90 percent of the business’ total exports from Bangladesh in 2018, according to Fabian Rybka, Cluster Head, DHL Global Forwarding Bangladesh and Sri Lanka.

“The growth of the export industry, despite a slowdown in many neighboring states, bodes well for Bangladesh’s economy in general,” said Rybka. “Bangladesh has continued to remain extremely competitive in the international market, exporting quality products at inexpensive prices.”

For Bangladesh to continue as a manufacturing powerhouse, however, it needs to rely on the support from other countries and the major global brands investing in the country.

Pressing reforms are therefore essential to ironing out the welfare of the country’s garment workers. Only then can Bangladesh fashion the future of its apparel industry into one that is not only profitable, but also ethical and responsible.

[post_title] => Fashioning its future: Reforms needed in Bangladesh’s apparel industry [post_excerpt] => [post_status] => publish [comment_status] => open [ping_status] => open [post_password] => [post_name] => fashioning-its-future-reforms-needed-in-bangladeshs-apparel-industry [to_ping] => [pinged] => [post_modified] => 2022-09-28 00:24:34 [post_modified_gmt] => 2022-09-27 16:24:34 [post_content_filtered] =>

Inside a garment factory in Dhamrai, northwest of the Bangladeshi capital of Dhaka, a computerized sewing machine churns out batches of women’s designer tops every minute.

An automated trimming system nearby cuts away excess cloth before employees meticulously conduct quality inspections at their respective work stations.

This modern factory is just one of the country’s 4,500 apparel manufacturing plants that exported more than US$30 billion (€26.3 billion) worth of clothing to major global retailers in 2018.

Over the past decade, Bangladesh has made a name for itself as a powerful player on the global garment manufacturing stage.

The apparel industry is the backbone of the country’s economy, making up almost 12.36 percent of its total gross domestic product, and employing as many as 40 million workers. It accounted for nearly 80.5 percent of its total merchandise exports in 2018.

Behind its exceptional market performance, Bangladesh’s capacity for producing high volumes of low-cost garments for Western retailers has repeatedly come under public scrutiny.

Global brands with operations in the country have also frequently come under fire by human rights organizations championing the rights of workers who endure poor wages and dangerous working conditions.

Driven by both government initiatives and technology, the sector has been slowly reinventing itself.

How the Rana Plaza collapse changed everything

The turning point came in 2013, after tragedy struck the town of Savar, a 30-kilometer drive from Dhaka, where the eight-story Rana Plaza garment factory collapsed due to structural issues. More than 1,100 people lost their lives, while another 2,500 workers were seriously injured.

The Rana Plaza collapse

Bangladesh’s worst modern-day industrial disaster put its garment industry in the global spotlight and brought it to a standstill.

To protect its US$30.61 billion ready-made garment industry, the government moved swiftly. It roped in over 180 global retailers, importers and trade unions to draw up the Accord on Fire and Building Safety in Bangladesh (Accord) — a five-year plan to improve working conditions in garment factories across the country.

Six years on, the safety body has inspected over 2,000 factories, while helping to remedy workplace hazards that range from poor building structures to toxic emissions, as well as overcrowded working conditions.

Perhaps the best outcome of the five-year plan was the introduction of employee-initiated watchdog programs, which have empowered workers to blow the whistle on negligence and hold factory owners accountable.

For Rob Wayss, executive director of Accord, things are looking up for Bangladesh’s clothing industry in terms of safety. “I think right now, of the developing countries with a ready-made garment sector, Bangladesh is the safest,” he said, in a 2018 interview with The Guardian.

Still, these efforts to improve safety so far could come to naught if the Bangladesh government insists on halting the operations of Accord after failed negotiations.

The apparel industry is the backbone of the country’s economy, making up almost 12.36 percent of its total GDP.

Dangerous working conditions aside, low wages have also been a major factor that has stirred unrest among garment workers in the country.

Most of the workers’ feedback go unheard because of the fear of reprisals and intimidation against union members, who are often seen as threats by business owners.

Frustrations boiled over when the government announced an unsatisfactory minimum-wage hike in January 2019 — up to 50,000 garment workers took part in demonstrations that turned violent, leaving one dead, 50 injured and causing more than 5,000 workers to lose their jobs.

Grand ambitions

Despite the negative press and the issues plaguing Bangladesh’s dominant garment industry, the country is still flourishing.

As an economy that is largely powered by textile and garment exports, Bangladesh celebrated a historic moment in 2018 when it achieved the status of “developing country” from “least developed country”.

The South Asian nation has set an ambitious goal for its next phase of growth: to reach upper-middle-income country status by 2021, to be led by a nationwide push in manufacturing.

In line with this, it has also set a target for apparel exports to hit US$50 billion by 2021. So far, the signs have been encouraging.

On the whole, exports have soared by an average annual rate of 15 to 17 percent in recent years to reach a record US$36.7 billion for the year through June 2018.

Further growth in the apparel industry would unlock more opportunities in logistics, as Bangladesh continues to export to retailers all across the world.

RELATED ARTICLES


DHL Global Connectedness Index 2018
A detailed analysis of globalization, measured by international flows of trade, capital, information and people

Apparels made up 90 percent of the business’ total exports from Bangladesh in 2018, according to Fabian Rybka, Cluster Head, DHL Global Forwarding Bangladesh and Sri Lanka.

“The growth of the export industry, despite a slowdown in many neighboring states, bodes well for Bangladesh’s economy in general,” said Rybka. “Bangladesh has continued to remain extremely competitive in the international market, exporting quality products at inexpensive prices.”

For Bangladesh to continue as a manufacturing powerhouse, however, it needs to rely on the support from other countries and the major global brands investing in the country.

Pressing reforms are therefore essential to ironing out the welfare of the country’s garment workers. Only then can Bangladesh fashion the future of its apparel industry into one that is not only profitable, but also ethical and responsible.

[post_parent] => 0 [guid] => https://lot.dhl.com/?p=3529 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [custom] => Array ( [thumbnail] => [title] => [excerpt] => [cta] => Read more [linkmail] => [cta_url] => [email_address] => [outbound_email_subject] => ) ) ) ) [2] => Array ( [acf_fc_layout] => wysiwyg [wysiwyg] =>

“U.S. retailers may quickly move sourcing orders from China to other suppliers for basic fashion items, such as tops, bottoms, and underwear. However, there seems to be much fewer alternative sourcing destinations for more sophisticated product categories, such as accessories and outerwear,” said Sheng Lu, an associate professor of fashion and apparel studies at the University of Delaware.

Textiles may be a different story if higher U.S. tariffs start to bite. But in 2018 at least, China still enjoyed a 7.9 percent increase in textile exports, thus well and truly maintaining its global market leadership.

Challenging global trends

Europe is another beneficiary of the fashion industry’s changing supply chain.

Already the second-largest exporter of both clothing and textiles, the EU saw increases of 11 percent and 7 percent respectively during 2018, the WTO revealed.

In EU’s diverse market, cheaper clothing products are typically manufactured in countries with lower production costs, such as Poland, Hungary, and Romania, while higher-end products are generally made in developed countries, including Italy, UK, France, and Germany.

Globally, in 2018, the sector experienced a strong year for trade. The total value of textiles and apparel exports increased by 6.4 percent and 11.1 percent respectively over the year —the fastest growth since 2012, shared Lu.

However, the trade growth outlook for the consumer fashion goods sector has slumped during the first half of 2019, according to the GTB.

DHL GLOBAL TRADE BAROMETER – CONSUMER FASHION GOODS SEP

A growth index put together based on key import and export data, the GTB provides an early indicator of the trade outlook — and the latest results reveal sharp slowdowns in China, South Korea, and the UK.

The U.S. and India were the only bright spots in the September GTB. The U.S. result may have been helped by stronger than expected consumer spending in clothing and other retail goods, while India’s positive growth could be largely due to trade diversion as a result of the trade war between the U.S. and China.

Smart strategies for new supply chains

One thing is for certain: the global fashion industry will remain in a state of flux.

Brexit and the U.S.–China tariff war highlight the volatile nature of today’s global trade politics. Looking ahead, the effects of this political maneuvering, as well as ongoing economic and market changes, will be just as unpredictable.

So, what can companies in the fashion industry do to combat this volatility?

An increasingly popular strategy is to diversify supply chains to mitigate the risks associated with change.

China remains the largest clothing exporter in the world.
China remains the largest clothing exporter in the world.

“No single country has emerged to become the ‘next China.’ Instead, China’s lost market shares in apparel exports were fulfilled by a group of countries, a phenomenon which can be linked with fashion brands and retailers’ sourcing diversification strategy,” Lu commented.

Agility is also vital to rapidly adapt to changes, as McKinsey’s The State of Fashion 2019 report predicts “continued investment in speed” throughout the industry.

This will include adopting technologies such as analytics, automation, micro-factories for rapid prototyping, and more onshoring and “nearshoring” — sourcing goods from nearby countries.

Together, these initiatives will enable companies to “respond quickly to source and develop products, squeeze production timelines, and streamline distribution.”

New technologies are also changing cost structures. For example, labor’s contribution to total production costs in western EU countries has dropped from 30 percent in 2006 to 21 percent in 2016.

With more elements of automation progressively introduced into supply chains, labor productivity will improve while labor costs can be further reduced. The quicker fashion companies adapt, the quicker they can transform their supply chain efficiency into a competitive advantage.

) ) [category] => 6 [regions] => Array ( [0] => 75 ) [countries] => Array ( [0] => 179 [1] => 220 [2] => 248 [3] => 311 [4] => 239 [5] => 370 [6] => 366 ) [industry] => 15 [business_units_bu-related] => Array ( [0] => 19 ) [collection] => 3575 [quoted_persons] => [products] => [customer_sector] => Array ( [0] => 5109 ) [topic_tags] => Array ( [0] => 5225 [1] => 5197 ) [format] => article ) )
		Array
(
)
	
		Array
(
)