• Friday, Jul 10, 2020
  • Last Update : 03:41 pm

Apparel exporters see 62% drop in new orders

  • Published at 10:03 pm June 15th, 2020
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File photo of Chittagong Port Md Manik/Dhaka Tribune

According to BGMEA data, the number of fresh orders dropped to 172 in March-May period, which was 454 in the same period last year

Apparel exporters have seen a sharp decline in new orders, as nearly 62% orders shrank in the last three months to May due to slower demands in export destinations and supply chain disruption caused by the Covid-19 pandemic.  

According to Bangladesh Garment Manufacturers and Exporters Association (BGMEA) data, the number of fresh orders dropped to 172 in March-May period, which was 454 in the same period last year. 

During the July-May period of the current fiscal year, earnings from apparel export raked in $25.70 billion, down by 19 % against $31.73 billion in the same period last year.

On the other hand, the global retailers have canceled work orders totaling around $3.15 billion during the period.

In March, apparel manufacturers under BGMEA received 87 work orders, which were 138 last year. In April and May, they received 8 and 77 work orders, which was 136 and 180, respectively last year.    

“Covid-19 pandemic has cast a devastating impact on the global fashion industry. Sales of clothing items fell sharply as global outlets are closed due to the lockdown”,  BGMEA Senior Vice President Faisal Samad told Dhaka Tribune.  

“As the second largest exporter of clothing goods, Bangladesh faced the worst impact of Covid-19.”

According to a recent research by Wazir Advisors, an India- based consulting and advisory firm, the consumption of apparel goods in the EU market will fall by 59%, US 63% and Japan 20% in 2020, due mainly to the pandemic.

Besides, imports of clothing goods will decline by $128 billion this year and consumption by $328 billion next year by the EU nations, US and Japan, it adds.

Exporters say a turnaround in work orders will depend on how fast the life gets back to normalcy in the export destinations and the virus comes under control or the vaccine is invented.  

Turnaround to be delayed

Turnaround in work orders will depend on how fast life gets back to normal in export destinations and the virus comes under control or a vaccine is invented.

“Until there is stability in the health issues of export destinations, it will be very difficult to gear up work orders from the global buyers. If you look into the trend of reopening economies, it is just to start, as they reopened despite no decrease in infection rates,” Sharif Zahir, managing director of Ananta Denim Technology Ltd, told Dhaka Tribune. 

Consumers will remain panicky, fearing second wave of virus until an invention of vaccine and they won’t buy a lot, rather just as much to survive, said Zahir, also a director of BGMEA. 

In October, the order flow may increase ahead of Christmas to some extent, but the third quarter of the year will remain dull, said the business leader.

“In returning to the peak as it was in 2019, we might have to wait till 2022,” he predicted.

Though there is a ray of hope in health related textile goods, it is very minimal and we are not ready to capture it because of lack of preparedness regarding its production processes, he added.

On top of that, there is little chance to recover dues if the ongoing negotiation to reinstate the canceled orders are successful.

As per BGMEA data, so far over 1,150 factories have faced export cancellation worth $3.15 billion.

From the BGMEA as well as there is strong negotiation with the buyers to get back the orders previously canceled by the buyers, said business leaders as well as factory owners.

“If the buyers ethically respond to our call and follow the best buying practices, it will help the sector to sustain manufacturers and help thousands of workers retain their jobs,” Zahir observed.

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