Coronavirus Hits Latin America Apparel Supply Chains

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Many thanks to Virginia Joplin: CEO, Verbio Group for sharing this article.

Coronavirus Hits Latin America Apparel Supply Chains
In Central America, where 200 million pounds of yarn thread and fabric are imported monthly to produce apparel, manufacturers are facing $300 million worth of feedstock delays.

MEXICO CITY — The coronavirus outbreak is causing supply-chain disruptions across Latin America, where factories exporting apparel to the U.S. are facing significant feedstock delays from China and scrambling to find alternative sources.

So far, some brands and sourcing partners consulted claimed merchandise deliveries are not facing delays.

In Central America, where 200 million pounds of yarn thread and fabric are imported monthly to produce apparel, manufacturers are facing $300 million worth of feedstock delays, said Alejandro Ceballos, president of top trade lobby Vestex in Guatemala.

“Chinese yarn factories are seeing dispatch delays and if they continue, we don’t have enough local production to make up for it,” said Ceballos, adding that of $500 million of apparel exported monthly from the CAFTA-DR free-trade block, 40 percent uses yarn that comes from Asia. “We could have a big problem.”

Ceballos said manufacturers in the region tying Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Dominican Republic into a free-trade corridor with the U.S. are not yet delaying apparel deliveries to big U.S. brands such as Nike, Under Armour, Walmart or Macy’s, but that if the situation continues for another two months, they may need to do so.

Central America buys much of its fabric from Hangzhou in China, ordering from the likes of Cangnan Weixiang, Spinning Factory and Dongguan Xinchao Textile Co., which are having trouble shipping products due to logistic disruptions stemming from the virus.

Ceballos said Central America also buys yarn from U.S. suppliers and other firms in Guatemala, El Salvador and Honduras, but capacity is insufficient to meet China’s capacity.

If shortages increase, “we could bring fabric from other countries, but they would not meet rules of origin [for free-trade status] and would be very expensive. China’s thread and texturized yarn is half the price” of alternatives found elsewhere, he noted. Read More