Home ›› 03 Oct 2021 ›› Front
Prices of apparel goods exported to the United States of America from Bangladesh declined by over 8 per cent in August compared to the same month a year earlier as cost of doing business increased due mainly to the rise in freight charges caused by the ongoing Covid-19 pandemic.
According to Bangladesh Garment Manufacturers and Exporters Association (BGMEA), apparel goods exported to the US from Bangladesh saw an 8.04 per cent during the period.
Since August 2020, Bangladesh saw a rise in prices by 2.46 per cent and 0.08 per cent respectively in June and July of 2021 but it returned to the negative in August.
In December 2020, the prices of apparel products declined highest by 17.92 per cent.
As per the data of the Office of Textiles and Apparel (OTEXA), Bangladesh apparel exports to the US posted a 28 per cent growth to $3.7 billion as of July 2021, which was $2.90 billion in the same period a year ago.
“US brands and retailers lower prices of apparel goods imported from Bangladesh citing the rise of doing business costs due to spike in freight cost and extra expenses to maintain the health safety issue,” BGMEA Vice President Shahidullah Azim told the Business Post.
Though there are more orders the prices are less even than the production costs, he added.
“Buyers cut prices to adjust freight cost, which went up to $12,000 to $30,000 amid the pandemic,” Abdullah Hil Rakib, a BGMEA director explained.
“Even amid the ongoing Covid-19 pandemic, we’re taking steps and making the investment to make the supply chain sustainable and working with our workers to meet the buyer’s needs,” BGMEA President Faruque Hassan told the Business Post.
In the given context, an 8.04 per cent cut in prices of apparel goods exported to the US market raised the question about the responsibility of buyers, he said.
On the other hand, during the Covid-19 pandemic, exporters faced massive work orders cancellation, bringing the ethical buying practice into the spotlight, he said.
“As we’re recovering from the Covid-19 pandemic, it is our earnest call to the brands and retailers as well as manufacturers to become more careful about price calculation,” said the BMEA leader.
Selling goods at lower prices than the production costs would not be good for both the suppliers and importers rather it would destabilise the supply chain, he said.
On top of that, Hassan also asked the manufacturers to become more cautious in price negotiation and move towards product diversification.
He also suggested not increasing the capacity in such products, which is already saturated as overcapacity is a great weakness for us.
Meanwhile, economists urged the manufactures to say no to orders if it does not match with the expected price level.
“Prices of raw materials soar while the buyers are offering low prices. So, amid the ongoing crisis, the decline in prices is not expected right now,” Centre for Policy Dialogue (CPD) Research Director Khondaker Golam Moazzem told the Business Post.
“The exporters cannot avoid the apparel price cut as they sometimes compromise with the prices to get the orders.”
The exporters should not accept the prices until the price level could not reach the expected level, he said.
Moazzem also suggested improving negotiation skills and moving towards products diversification.
