BGMEA seeks support from global buyers amid supply chain disruptions

Apparel industry leaders sit down with representatives from global buyers today

MONIRA MUNNI
| Published: July 28, 2024 11:02:51 PM

Garment industry leaders are meeting with representatives of international garment buyers in Dhaka today (Monday) to discuss current issues and possible solutions to the supply chain disruptions caused by the anti-quota movement.
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) will also seek support from the buyers’ forum and request them not to demand discounts due to delays in deliveries caused by factory closures due to the violent curfew, sources said.
Factories and production schedules have been disrupted by shutdowns and communication failures, requiring adjustments to offset losses, so the sector needs support from buyers, they added.
When asked, Arshad Jamal Dipu, Vice Chairman of BGMEA, said: “We are meeting with the buyers forum today (Monday) to discuss the current issues.”
He said they will request the forum to provide full support to the member factories by not imposing “system-generated” discounts for delayed deliveries.
He explained that discounts of 5.0 to 10 percent will be automatically generated by the systems of major buyers if there is a delay of 15 days. They will also ask buyers to consider reducing air freight shipments.
Mr Dipu, who is also the chairman of Tusuka Fashions Ltd, further said that many are resorting to costly air freight to meet deadlines. “As of Sunday, my company had to make air freight worth Tk 35 million to send 80,000 garments,” he noted.
According to industry insiders, this is the peak season for sweaters and winter clothing and significant losses will occur if air freight is chosen.
An exporter said air freight to the European Union now costs US$5.00 per kg of garments, compared to just US$1.70 per kg in India.
Winter clothing such as jackets will face significant losses compared to other garments such as jeans due to higher shipping costs, he noted.
Exporters fear that work orders for the next season will shift to other countries due to the internet shutdown. This could send a negative signal to buyers and lead to a loss of confidence.
Though export and import activities have resumed at the ports, exporters are now facing a shortage of containers, authorities said, and are also facing additional charges for demurrage at Chattogram port due to the internet outage, which was not their fault.
Currently, there are around 37,000 containers stuck at the ports, of which 13,000 are ready-made garment containers. As a result, the garment industry is incurring around Tk 100 million in port demurrage charges, the exporters said.
The BGMEA leader said they will address all ongoing challenges and request buyers not to transfer work orders to other countries.
Earlier, on July 25, the Ethical Trading Initiative (ETI), a UK-based alliance, called on buyers to adapt their expectations and sourcing practices to the exceptional circumstances in Bangladesh as a result of the anti-quota movement.
The ETI said production lead times may need to be extended due to factory closures caused by unrest and state-imposed curfews.
Once communication channels are restored, responsible companies sourcing from or operating in Bangladesh should engage with their suppliers to understand the potential impact of the unrest on their orders and agree on manageable and realistic adjustments in line with ETI’s recommended responsible sourcing practices, the report said.

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