Data by The Cotton Textiles Export Promotion Council (TEXPROCIL) reveals, India’s textile exports to China declined by 74 per cent to touch $90 million during the April-June quarter this year. China’s share in India’s total exports of cotton textile products also halved to 6.9 per cent during the quarter as against 14 per cent in the corresponding quarter last fiscal.

This decline is a result of reciprocal measures carried out by Indian and Chinese governments such as detailed shipment inspections at ports, delaying clearing of goods, thereby also contributing to decline in exports, says KV Srinivasan, Managing Director, Premier Mills. Substitution of textile imports from China as well as contemplation of anti-dumping duties on certain Chinese products may further impact these imports, he said.

Overall, India’s cotton textile exports during the first quarter declined by 47 per cent to $1.29 billion against $2.42 billion in the same quarter last year. One of the main reasons for the decline was supply chain disruptions. Delays in documentation, especially Certificates of Origin in countries like China, Vietnam, Thailand and Malaysia also delayed deliveries, hitting exports, said Siddhartha Rajagopal, Executive Director, TEXPROCIL.

The Cambodian Footwear Association (CFA) has appealed to the European Commission to postpone partial withdrawal of its Everything but Arms (EBA) trade benefits. As per CFA, the withdrawal will cause economic damage well beyond what has been foreseen when the European Council undertook its assessment in 2019 and issued its Cambodia EBA decision in early February 2020.

COVID-19 has already resulted in the loss of 30,000-40,000 jobs in the country’s footwear sector. According to a recent membership survey by CFA, footwear production volumes in the first half of 2020 declined on an average 20-40 per cent per factory compared to 2019, and sectoral employment reductions led to loss of 30,000-40,000 jobs.

The survey forecasts worse outlook for the second half of 2020. There is not a single member factory that reported an increase in orders compared to the first half of the year, with most factories forecasting a further drop in production for an overall decline of 40-60 per cent for full year 2020 compared to 2019.

Based upon existing order volumes for the second half of 2020, 70 per cent of member factories are preparing to cut jobs or suspend production. Most of the remaining 30 per cent have already reduced employment and forecast production only at already reduced levels.

Disruptions caused by COVID-19 is inducing 57 per cent textile and apparel organizations to diversify their sourcing away from Asian countries like China, Vietnam and Bangladesh, says the Supply Chain Resilience Report 2020 by BCI. Many apparel companies plan to shorten their supply chains due to the pandemic, with Asia becoming the biggest casualty, says the BCI report. Around 30 per cent companies intend to reduce their sourcing from Asia, while another 13.2 per cent expect to reduce their sourcing from China.

The BCI Coronavirus Preparedness report published in March also revealed that within two months of January-March, the number of organizations who moved to local sourcing jumped from 16.3 to 36.4 per cent. The figure further surged to 66.2 per cent in June.

Companies to scrutinize suppliers locations, documents

Widespread global shutdowns have made it extremely important for companies to know the geographical location of their suppliers. The BCI report suggests, while 63.4 per cent respondents are aware of the location of their critical Tier I suppliers, only 36 per cent know the location of their Tier II suppliers. Post COVID, around 60 per cent respondents intend to do a deep analysis of all their suppliers, while 45.3 per cent organizations intend to determine the location of all their Tier-II suppliers. Some respondents also plan to scrutinize the documents of suppliers to determine their success rate, says Rachael Elliot, Head-Thought Leadership, BCI.

AI for demand forecasting

The report also analyzes respondents’ plans for future inventory holding. Around 46.1 per cent intend to maintain the same inventory level as usual whereas 19.6 per cent plan to increase their inventories. Of those planning to retain inventory levels, 58.1 per cent plan to change their supplier base to quicken the speed of their deliveries.

Apparel retailers plan to leverage their predictive capabilities to determine changing consumer trends. While 43.7 per cent already use demand forecasting, 26.8 per cent plan to adopt this technique in future. Thirty-eight of the organizations also plan to add inputs such as AI into their demand forecasting. These techniques can help organizations mine data from multiple inputs more effectively. Around 73 per cent retailers believe AI and machine can add significant value to their demand forecasting processes. Majority of small organizations do not use any dedicated logistics services. In case of larger organizations, 31.9 per cent have their own in-house logistics, 30.8 per cent use a third-party logistics (3PL) company and 30.2 per cent use a combination of in-house and 3PL.

Post-COVID, 79.7 per cent organizations intend to retain their third party logistics services providers, while 7.8 per cent intend to reduce their dependence on them and instead opt for in-house logistics services.

In April’20, the Lithuanian Association of Clothing and Textile Companies (LATIA) predicted one third of its clothing and textile companies would go bankrupt and a quarter of people would lose their jobs. The association welcomed the government’s post-quarantine assistance measures, in particular the subsidies provided to these sectors for up to six months. However, to maintain sustainable jobs, the share of these subsidies needs to increase, especially in the fifth and sixth months, viewed Kestutis Dauksys, President, LATIA. In addition, export guarantees and support for companies with over 250 employees also needs to be increased, he added.

Consumption decline leads to loss of export orders

COVID-19 restrictions have severely impacted apparel and textile production volumes in Lithuania. The country exports around 80 per cent of its textile and apparel products to Europe. In 2019, its tailors sold 70 per cent of their products to five European countries namely Germany, Sweden, the United Kingdom, Denmark and Norway. Decline in consumption in any of these markets results in reduced orders for Lithuanian clothing manufacturers. The pandemic has caused a significant decline in clothing consumption in Germany which has adversely impacted the performance of many Lithuanian clothing and textile companies.

A shift to casual clothing and other market

To deal with this situation, LATIA members urge textile and clothing companies to diversify their activities. Vidas Butkus, Head, Kauno Baltija AB recommends a shift to casual wear which is currently in high demand. The company currently produces certified work and medical clothing. It has also diversified exports from Scandinavia to Germany.

The pandemic has neither affected the volume of work for Omnitekas UAB nor its income. Though the company recorded 20 per cent sales decline in the first half of this year, it aims to stabilize operations by diversifying to new markets and products. It focuses on customers’ needs and opportunities and plans to launch its Autumn collection depending on the weather and pandemic situation.