SARAH JONES | March 19, 2024

Four years after the pandemic upended apparel supply chains and forced companies to pivot, the industry remains focused on disruption-proofing as it faces continued challenges.

Sourcing Journal’s “Sourcing State of the Industry Report,” which dives into the global situations shaping the soft goods market, indicates that fashion’s primary risk mitigation move is diversification. Transportation bottlenecks—including drought-related traffic restrictions in the Panama Canal and Houthi attacks in the Red Sea—are causing shippers to adopt contingency plans such as rerouting or using costlier air freight. Meanwhile, difficulties tied to sourcing from China have ushered in a “China plus one” strategy that shifts some manufacturing away from the production power. 

Among the most notable movements happening in the apparel industry is the evolution of the sourcing map. China had long been the U.S.’s top export partner across categories, but this streak ended in 2023 as Mexico moved up to the top spot. For years, U.S. companies have been diversifying away from China in response to the trade war that raised tariffs on imports from the nation. But the added potential for goods to be detained by Customs and Border Protection under the Uyghur Forced Labor Prevention Act has furthered the decline in China sourcing. Where the industry remains reliant on China is for raw materials, with Chinese mills supplying international finished garment manufacturers with fabrics.

Meanwhile, amid the industry’s ongoing quest for shorter supply chains, Mexico is looking to boost its position in apparel manufacturing. The country has a number of advantages as a nearshoring destination including quality production and economical pricing, according to Julia Hughes, president of the United States Fashion Industry Association (USFIA). Although nearshoring is mentioned frequently, there is still room to grow.

“Everyone keeps talking about it,” Hughes said. “It’s just not as big as we want it to be.”

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