Bangladesh's utilisation rate among US fashion companies declined sharply in 2026 as buyers intentionally maintain a diverse sourcing base prioritising capacity, flexibility, inventory agility and regional balancing in their sourcing strategy.
Besides, slow speed-to-market, limited supply chain flexibility and compliance concerns still remain major challenges despite the country's continued position as one of the world's leading apparel sourcing destinations, said a study report.
Bangladesh's utilisation rate dropped to 78.9 per cent in 2026 from 88.2 per cent a year earlier, according to the '2026 USFIA Benchmarking Study' released on Monday.
The USFIA study report said Bangladesh remained tied with Vietnam, Cambodia and Indonesia as the most-utilised apparel sourcing destination in 2026.
It, however, said utilisation rates among the major Asian sourcing destinations has declined compared with 2025.
Utilisation rate for China fell to 73 per cent and Vietnam to around 78 per cent from 100 per cent each.
Meanwhile, three non-Asian countries--Guatemala, Egypt and Jordan-- ranked among the top 10 sourcing destinations in 2026, with all recording higher utilisation rates in a year, the study revealed.
Protectionist US trade policies and tariff-related uncertainty remained the fashion industry's biggest business challenge in 2026, with 92 per cent of surveyed companies identifying them as their primary concern.
The average applied US tariff on apparel imports increased to 21.6 per cent in May 2026 from 15.2 per cent before the start of President Donald Trump's second term, it said.
The report also found that China and Vietnam were perceived to face the highest risk of future US import trade barriers, while Bangladesh, India and Cambodia are considered to face a moderate level of risk.
In contrast, suppliers in CAFTA-DR member countries and US domestic manufacturers were viewed as the least exposed to potential new trade restrictions.
The USFIA conducted the survey between April and June 2026 among 30 leading US fashion companies.
Bangladesh achieved a historic milestone by surpassing China in the US apparel market for the first time in decades, according to the survey.
During the first five months of 2026, Bangladesh accounted for 11.3 per cent of US apparel imports by value, after Vietnam's 22.2 per cent share, while China's share declined to 9.7 per cent.
Nearly 47 per cent of surveyed companies reported that Bangladesh represented more than 10 per cent of their total sourcing value or volume, highlighting the country's continued strategic importance to global buyers.
Despite such achievements, the report identified speed to market as one of Bangladesh's weakest competitive areas.
It said Bangladesh received a score of only 2.3 out of five for speed to market, reflecting persistent logistical constraints and the country's geographical distance from major consumer markets.
While Bangladesh continued to excel in cost-efficient, large-scale production, its longer lead times has become a competitive disadvantage as international retailers increasingly demanded faster inventory replenishment and shorter fashion cycles.
Despite the lower utilisation rate, the report presented an optimistic outlook for Bangladesh as it ranked the country as the second most popular 'rising star' for future sourcing expansion, with 46.7 per cent of respondents planning to increase sourcing from the country over the next two years, second only to Indonesia.
"Bangladesh is expected to remain a dominant force in global apparel sourcing through 2028," according to the study.
However, it said sustaining that position would depend on the country's ability to improve logistics, reduce lead times, strengthen domestic textile production, enhance labour and environmental compliance, and increase manufacturing flexibility while preserving its long-standing cost advantage.
Highlighting Bangladesh's limited flexibility in accommodating smaller and specialised orders, it said Bangladesh received a minimum order quantity score of 2.6, significantly below China's leading score of 4.0.
It indicated that Bangladesh remained primarily geared towards high-volume production of basic garments rather than smaller, more diverse production runs increasingly sought by international brands.
Although Bangladesh scored 3.4 for vertical manufacturing capability, outperforming several competing countries, it continued to trail China which scored 4.8, and India, which scored 4.0, it said, suggesting improvements in vertical integration.
According to the report, Bangladesh received a labour and social compliance score of 2.2 and an environmental compliance score of 2.4, which placed it among the lower-performing sourcing destinations in these areas.
Improving traceability, labour standards and environmental performance would be essential as international brands faced increasingly stringent regulatory requirements, including the Uyghur Forced Labor Prevention Act and emerging Extended Producer Responsibility laws, it noted.
Munni_fe@yahoo.com
