“There are some garment manufacturers, mostly the big ones, who never purchased fabrics from local sources and they are repeatedly asking us for fabrics,” said Khorshed Alam, Owner of Little Star Spinning Mill while underlining that the reason for the same is the higher prices of fabrics in the importing countries, who further went on to add that rise in freight costs and the unavailability of containers made importing fabrics more difficult. While Managing Director of Classic Fashion Concept Shahiduallah Azim said sourcing fabrics from the local market is more convenient and hassle-free.
“This brings down the cost of business and lead time. That is why we are buying more from the local manufacturers than in the past,” explained Shahiduallah while Managing Director of Giant Group Faruque Hassan, on his part underlined that China is the prime source for the apparel sector’s raw materials but the supply chain has been disrupted due to pandemic and to ensure timely shipments, manufacturers are procuring from the domestic market.
Bangladesh is the second largest apparel exporter globally after China, but when it comes to raw materials, especially fabrics; it is still some distance from achieving self-sufficiency.
If reports are something to go by, at present, local fabric manufacturers can meet around 35 per cent of the demand for woven fabrics from garment exporters and 90 per cent for knitwear. The dependency on overseas destinations, particularly China — Bangladesh imports some 60 per cent of its woven fabrics from China (according to an assessment report of the Bangladesh Trade and Tariff Commission-BTTC) and 15-20 per cent of raw materials and 80-85 per cent of dyeing chemicals and accessories of the knitwear sector comes from China while some 40 per cent of raw materials for garment accessories and the packaging manufacturing industry also comes from China every year — for raw materials did not augur well for Bangladesh during the Coronavirus pandemic.
As per reports, even as the pandemic had started to wreck havoc in China in the initial days before spreading globally, it resulted in a supply chain disruption, which impacted the garment makers in Bangladesh. It is a different story though that Bangladesh had to suffer more subsequent to the pandemic taking the entire world in its grip that resulted in shutdowns, order cancellations, export debacles, etc.
“In general, we are possibly going to take a hit for three to four months,” reportedly stated the President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Dr Rubana Huq then even as Senior Vice-President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Mohammed Hatem, while speaking to the media underlined, “I am forced to airship fabrics and raw materials to meet deadlines,” even as he went on to add that due to the short supply, prices of different raw materials increased between 30 per cent and 40 per cent then.
However, even as Bangladesh had to endure some very tough times on account of the same, on the other hand, the aftermath of the pandemic reportedly also gave Bangladesh’s textile manufacturers the requisite thrust — demand for locally-manufactured fabrics witnessed around 20 per cent increase — which gives hope that achieving the much-needed self-sufficiency, in terms of fabric production, is perhaps not so far away.
What fuelled more the demand for locally-manufactured fabrics is the rise in freight charge amid the unavailability of containers, delays in receiving imported raw materials and the increased prices of fabrics abroad, all of which helped turn things around for the country’s primary textile sector.
It may be mentioned here that as per industry insiders, on an average, the prices of raw materials such as fabrics, yarns, cotton and packaging materials, edged up by 5 to 10 per cent in the last few months.
“Every week, the prices of materials are rising,” maintained SM Khaled, Managing Director of Snowtex Group even as another garment maker on his part underlined, “Unfortunately, we have seen in the past years that though the production costs have increased manifold for different reasons, many buyers did not increase the prices. So, ultimately the manufacturers have to bear the brunt, which should not be the case.”
Further, the sudden and sharp increase in freight charges lately due to the adverse effects of COVID-19 on the global shipping sector, which witnessed all major mainline operators increasing freight rates citing acute shortage of empty containers following a surge in demand for imports, have also pushed the cost up for the garment makers, who were already are forced to deal with the supply chain disruptions.
“As most of our raw materials are imported, the freight charge hike will increase the import cost. The export cost will also be raised for the same reason,” said Nasir Uddin Chowdhury, Chairman of the standing committee on port and shipping of BGMEA, adding the hike in freight rates would impact the country’s garment exports.
To add to the increase in shipping charges, air cargo charges have reportedly almost doubled in the last few months. According to reports, apparel exporters have been dealt a fresh blow by a doubling of air shipment rates for cargoes flying out of Dhaka’s Hazrat Shahjalal International Airport as airlines raised the rates subsequent to the growing demand for air shipment amid improving global outlook and squeezing of carrying capacity from the Hazrat Shahjalal International Airport by 60 per cent on the back of suspension of cargo and passenger flights by some international flight operators.
Fabric prices also increased from importing countries with price going up by at least US $ 1 a yard, while the freight charge spiralled to US $ 3,000 from US $ 900 a container, according to the garment makers.
The combined effect of all these has reportedly led to rise in demand for the locally-made fabrics with apparel makers calling for ramping up fabric production further.
Even though, the prices of fabrics went up in Bangladesh as well but it is reportedly lower than elsewhere, said Alam, also a former Director of BTMA. “Now, we have more orders than capacity,” said BTMA President Mohammad Ali Khokon, who went on to add that everyone has enough work orders for fabrics and there are no unsold fabrics or stock even as he underlined, “The primary textile sector is now in a better state than what it was a few months ago.”
“This is a good sign for us as the strong backward linkage improves value addition as well as the industry’s strength in competing well in the global market,” said Hassan, also a former Senior Vice-President of BGMEA, who also urged the fabrics manufacturers not to set unusual prices so that exporters do not shift their sourcing to another country.
Experts and textile sector people also called upon the garment manufacturers to continue with their patronisation of the domestic textile sector for their raw material needs.
To become the leading garment supplier to the world from its current number two position, Bangladesh needs a strong backward linkage industry for both woven and knitwear fabrics, said the Executive Director of the Policy Research Institute (PRI), Ahsan H Mansur.
To this end, fabrics manufacturers have to improve quality standards, Ahsan reportedly added even as on the other hand, the garment exporters have to change their mindset and help the local manufacturers to grow, felt the industry insiders even as the BTMA President called upon the Government to provide policy support so that Bangladesh can become self-reliant in fabrics.
Given the recent turn of events, one would hope that things are going to get better for the country’s primary textile sector soon and, a little more support and patronage from the stakeholders will definitely go miles towards becoming self-reliant in fabric production, the need for which was once again brought to the fore and rather strongly by the Covid crisis.