Apparel / Textiles & Accessories

Recently, news about the early arrival of the peak retail season in the United States has attracted the attention of foreign trade and logistics companies. Which commodities are imported into the US market ahead of the peak season and how long? The JOURNAL OF COMMERCE, June 10, published Ari Ashe's signed article, "America's Top Shippers: Apparel Retailers Order Early to Avoid Trans-Pacific Shipping Delays," providing insights into U.S. apparel and footwear import trends analyze.

U.S. apparel retailers and wholesalers surged imports last year and demand is expected to remain strong this year, but continued port congestion and fears of further disruption to West Coast labor talks are forcing shippers to keep more inventories and dump orders from Asian suppliers in advance.

What happened to the legendary "peak season arrives early"?

Importers, concerned about out-of-stocks due to cargo being stuck at sea, marine terminals or inland railroads, are building up inventories of clothing and footwear for the school season and even the holidays ahead of the traditional peak transpacific season.

That makes it harder for retailers to predict how much of a given product they should order and puts additional pressure on their supply chain, according to a senior policy vice president at the American Apparel and Footwear Association (AAFA).

"The holiday season accounts for more than 50% of sales, so addressing the shipping crisis while ensuring availability for the holidays creates a difficult situation," reflects AAFA.

"Companies are trying to get a lot of products early, but also trying to figure out what the hot products will be. It's also created a litany of inventory issues storing those products, and storage capacity issues across the U.S."

Competition heats up in U.S. apparel and footwear markets

Soaring shipping costs (with trans-Pacific spot freight rates up nearly 150% year-on-year in early May) are also a major concern for apparel and footwear companies, many of which are already operating on razor-thin profit margins, AAFA said, according to Xeneta. Some companies have raised prices on their products to offset sharp increases in shipping costs, but stiff competition among a slew of brick-and-mortar stores and online retailers hasn't given much room to recover shipping costs.

"The barriers to entry into this industry are very low, and e-commerce has made such barriers almost non-existent in the past 10 years. There are too many competitors and too many choices for buying clothes and shoes," AAFA explained.

According to PIERS, total U.S. apparel imports in 2021 will increase by 18% to 1.87 million TEU. Last year's increase in imports was helped by an 11.4% drop in 2020 figures, making sales in 2021 up 4.6% from pre-COVID-19 2019.

Worries over inland transport push importers to place orders earlier

A clothing and footwear importer, who asked not to be named, said it placed orders for holiday season goods from Asian manufacturers in January and February, rather than in the spring, to make up for widespread disruptions across the trans-Pacific supply chain. Ships queued outside major U.S. cargo ports, and inland container transit times were further extended by erratic international intermodal rail services.

As a result, a choice for shippers is to either ship the boxes by rail with the potential for long delays - either transshipment or full Inland Point Intermodal (IPI), or truck with the possibility of long delays There are additional charges.

“It used to take four to five days to get a container from Los Angeles to Chicago, but now it takes twice as long,” said one garment shipper, “but I see containers on IPI taking 20 or 21 days to get to Chicago. I've seen some IPI trains stop in Southern California for two or three weeks and not be able to move forward."

Shippers say these choices are made on a product-by-product basis. For seasonal products that need to arrive within a given time frame, the company hires a team of trucks to deliver shipments from the Port of Los Angeles to Chicago within two days, while other products opt for transshipment or full domestic intermodal shipments based on urgency.

Supply chain risk or diversion of apparel orders in Asia

Some apparel importers are looking to diversify their sourcing to reduce exposure to and reliance on Asian manufacturing and the highly disrupted trans-Pacific trade.

Another clothing and footwear shipper, who did not want to be named, claimed that buying more from Central America has significantly reduced the company's port-to-port transit times and overall shipping costs.

"It's four days from Honduras and two weeks from Asia, so it's much faster," the shipper explained. “The cost of trans-Pacific shipping will not return to pre-pandemic levels. Higher rates will be the new normal, so it will be much cheaper to use Central America.”

However, the shipper said shifting purchases from Asia to Central America has its own risks, mainly due to geopolitical instability and a higher incidence of severe weather events such as earthquakes and hurricanes.