retail global sourcing update

Global Sourcing Update Facts & Insights

Produced by:

Q3 2013 - Global Sourcing Update CORESOLUTIONS

1 www.coresolutions.com [email protected]

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FOREWORD

[GLOBAL SOURCING UPDATE]

Core Solutions’ Retail Global Sourcing Update provides research and

analysis aimed at informing global sourcing and buying decisions. Each

issue provides a snapshot of key information impacting global sourcing,

including container shipping prices, currency exchange rates, commodity

costs, PMI Indices and other data along with our own insight and analysis

from customers and analysts.

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Contents Purchasing Manager’s Index ........................................................................................................ 3

Major Economic Indicators ........................................................................................................... 4

China Minimum Wage Snapshot ................................................................................................. 5

Global Low Cost Sourcing Country Wage Snapshot ................................................................ 6

Container Freight Rates for Major Routes ................................................................................... 7

Currency Exchange Rates ............................................................................................................ 9

Global Commodity Rates............................................................................................................ 10

Crude Oil .................................................................................................................................... 10

Rubber ........................................................................................................................................ 10

Metals ......................................................................................................................................... 11

Wood .......................................................................................................................................... 12

Wool, Hides, Cotton .................................................................................................................. 12

Plastics and Fibers ..................................................................................................................... 13

Apparel Sourcing Trends ............................................................................................................. 14

Sourcing Geographies of the Future ......................................................................................... 15

Nearshoring: The Rise of the U.S. as an Export Manufacturing Destination .......................... 16

Topic Spotlight: India .................................................................................................................... 17

Topic Spotlight: Sustainability ...................................................................................................... 17

About Core Solutions ................................................................................................................... 18

CBX Sourcing Solution .................................................................................................................. 18

Next Steps ...................................................................................................................................... 19






Purchasing Manager’s Index To help understand industry and economic conditions in a country, the PMI Index

tracks variables such as output, new orders, stock levels, employment and prices

across the manufacturing, construction, retail and service sectors.

A reading below 50 indicates contraction from the previous month, while a

reading above 50 indicates growth. Currently 22 countries and regions conduct

the PMI survey and compilation, based on an internationally standardized

methodology.

This update looks at a selection of emerging economies and key sourcing

countries, providing indicators for recent months.

COUNTRY May

2013

June

2013

July

2013

August

2013

INDICATORS

Brazil 50.4 50.4 48.5 49.4 Tough economic conditions are driving further

declines in output and subdued demand.

China 49.2 48.2 47.7 50.1 First expansion of PMI in 3 months with signs of

improved market conditions, but slight growth.

Egypt 48.5 47.5 41.7 42.2 Further sharp declines in output and new orders

driven by fragile political conditions

India 50.1 50.3 50.1 48.5 Business conditions continue to decline with both

output and new orders falling at faster rates.

Indonesia 51.6 51.0 50.7 48.5

Output, new order and export business all

contracted as PMI fell to 15 month low.

Mexico 51.7 51.3 49.7 50.8 Slight improvement in manufacturing in August

following contraction in July and rising input costs.

Poland 48.0 49.3 51.1 52.6 Business conditions continue to improve as

output, new orders and export business grow at

fast pace.

Russia 50.4 51.7 49.2 49.4 Downturn in Russia’s manufacturing economy

continued in August, despite pick-up in output.

South

Korea

51.1 49.4 47.2 47.5 Business conditions deteriorated for third

consecutive month reflecting weaker output and

new orders.

Turkey 51.1 51.2 49.8 50.9 Production levels continued to expand with

increasing exports and purchasing activity.

Vietnam 48.8 46.4 48.5 49.4 Profitability remains under pressure as output and

new orders fall and input prices rise at sharp

pace.

PMI Index Source: HSBC, Markit

CFLP






Major Economic Indicators As China exits low cost manufacturing, a number of Asia locations are filling the void.

Cambodia saw a significant increase in their apparel exports based on recovery in

export markets such as the US and the EU. Vietnam also saw an increase in their apparel

exports. The Bangladeshi government has stepped in amid ongoing concerns over the

country’s garment sector and the country’s exports are still growing at a healthy pace.

Consumer Price

Index

(%yoy growth)

Jan

2013

Feb

2013

Mar

2013

April

2013

May

2013

June

2013

July

2013

Bangladesh 6.6 7.8 7.7 8.4 8.0 8.1 7.9

India 10.8 10.9 10.4 9.4 9.3 - -

Pakistan 8.1 7.4 6.6 5.8 5.1 5.9 -

Cambodia - 1.6 2.5 1.8 1.7 1.0 1.0

Indonesia - 5.3 5.9 5.6 5.5 5.9 8.6

Philippines - 3.4 3.2 2.6 2.6 2.7 2.5

Thailand - 3.2 2.7 2.4 2.3 2.3 2.0

Vietnam - 7.0 6.6 6.6 6.4 6.7 7.3

Exports

(%yoy growth)

Jan

2013

Feb

2013

Mar

2013

April

2013

May

2013

June

2013

July

2013

Bangladesh 18.8 13.2 16.2 10.0 15.4 16.3 -

India 0.8 4.2 7.0 1.7 -1.1 - -

Pakistan 5.6 -8.7 8.2 -4.4 0.8 - -

Cambodia - 16.2 11.9 36.1 5.3 27.2 45.6

Indonesia - -4.3 -12.9 -8.7 -4.1 -4.5 -

Philippines - -15.8 0.1 -11.1 -0.8 4.1 -

Thailand - -5.8 4.6 3.0 -5.2 -3.4 -

Vietnam - 22.0 19.8 16.0 16.7 15.1 -

Imports

(%yoy growth)

Jan

2013

Feb

2013

Mar

2013

April

2013

May

2013

June

2013

July

2013

Bangladesh 4.8 -4.6 -4.9 18.8 - - -

India 6.1 2.7 -2.9 11.0 7.0 - -

Pakistan 3.1 -2.3 5.4 4.0 11.7 - -

Cambodia - 7.7 11.7 24.7 2.7 7.7 5.5

Indonesia - 3.0 -10.0 -3.7 -2.2 -6.8 -

Philippines - -5.8 -8.4 7.4 -2.4 - -

Thailand - 5.3 -15.2 7.3 -3.5 3.0 -

Vietnam - 14.1 17.7 17.0 16.8 15.6 -






China Minimum Wage Snapshot For the past few decades wages have been a key variable in global sourcing. This is

changing as labor costs are increasing across most low cost sourcing countries.

Wages in China vary widely by province, but across the country have followed a trend

over the past decade of an annual rise of over 10%. This trend is continuing. Export

focused regions such as Zhejiang and Guangdong have raised the minimum wage by

12% and 19% respectively in 2013. The central government plans to continue pushing for

wage increases in the coming years to balance out the wealth gap.

According to some analysts, such as Deutsche Bank, growth as economic growth has

slowed to below potential, so wage growth has been slower in inflation adjusted terms.

Part of the issue is reduced demand for exports, but also a demographic issue where

qualified people are hard to find.






Global Low Cost Sourcing Country Wage Snapshot Below is a snapshot of minimum wages in key Asia sourcing locations, with the addition

of Egypt and Ethiopia. Wages often vary by region or province and in some cases might

include costs other than the base wage. In some cases with a distinct variance, we

provide an average. With greater visibility into social conditions and increasing unrest

and union pressure, wages in traditional low cost sourcing countries are on the rise.

BANGLADESH CAMBODIA CHINA EGYPT ETHIOPIA

$38/month US$ 83/month US$ 188/month US$ 105/month US$ 23/month

In the garment industry

the minimum wage is Tk

3,000 US$ 38 per month.

Garment worker unions

demanding an increase

to Tk 8,000 (US$ 103).

Notable changes in

minimum wage

1994 2006 2010

Tk 940

↑ 48%

Tk 1662

↑ 77%

Tk 3000

↑ 80%

Breakdown

US $ 55 – Regular

+ US $ 6 –living

+US$ 10 – Attendance

+US$ 5 – Health

+US$ 7 – Transport

Total = US$ 83

Unions are demanding

minimum wages to

start in 2013 at US$ 120

Set locally, ranges

from US$ 138 per

month in Jiangxi

Province to US$ 238

per month in

Shenzhen, Guangdon

g Province.

Currently there is only

one national minimum

wage; there are no

sectorial rates or

occupation-based

rates. Only one

national rate: EGP 700

Some government

institutions and

public enterprises

set their own

minimum wages:

public sector

employees, the

largest group of

wage earners,

earned a monthly

minimum wage of

US$ 23

INDIA INDONESIA LAOS MALAYSIA MYANMAR

US$ 60/month US$ 71-230/month US$ 79 per month US$ 297 per month US$ 75-120/month

From April 1, 2011 the

Minimum Wage was

raised to US$ 1.73 /day.

Wages vary by region.

US$ 2.18 per day in Bihar

to US$ 3.40 per day in

Haryana.

The rupee hit an all-time

low of 60.76 against the US

dollar on 26 June.

Depends on region. 17

areas have different

minimum wage. E.g.

Jakarta: US$ 230

Solo: US$ 109

Central Java: US $ 71

Rupiah depreciated to

new low: closed at

10,297 against the US

dollar on 14 August

Expecting US$ 120 at

end of June 2013 –

negotiating

Need to increase as

to reduce migration

to Thailand

US$ 79 per month;

employers required to

pay US$ 1 meal

allowance per day.

70%-80% of textile

workers are foreigners

US$ 297 per month on

the Peninsula Malaysia,

and US$ 261 per month

for the states of Sabah,

Sarawak, and Labuan

Inclusive of taxes

and benefits

Skilled worker at

Yangon.

PHILLIPPINES SRI LANKA THAILAND VIETNAM

US$ 190- 220 /month US$ 63 US$ 300/ month US$ 89 - 125 /month

Garments are made in 3

regions and wages range

from $6-8 per day.

In 2013 minimum wages

will be replaced with a

two-tier system. 1st tier:

Minimum floor wage for

new hires/ low skilled. 2nd

tier: productivity – based

system.

In the industrial sector,

minimum wages are

varied depending on

the worker category.

Semi-skilled: US$ 55 –

US$ 63

Skilled: US$ 59 – US$ 75

Last increase was in

April 2012, up 40%

Automotive industry

expansion means

textile workers will

migrate

US$ 300 per month

applies from 1st Jan

2013

US$ 67 – US$ 96

(previous minimum)

US$ 85 -95 per month

(urban), US$ 67-74 per

month (rura) for

unskilled laborers at

private enterprises

New minimum wage

could be postponed to

September 2013.

Sources: WageIndicator.org, SAFSA, Wikipedia






Container Freight Rates for Major Routes The rates below are supplied by The World Container Index - which reports actual

spot container freight rates for selected East-West trade routes – and Xeneta

which relies on data inputted by companies, allowing users to cross-reference

prices. All indices are reported in USD per Forty Foot Container. We report on

historical rates for key Asia-Europe and Asia-U.S. routes.

Analysis: After seeing sharp increases in late 2012, rates have followed a

downward trend since January 2013, falling 41 percent since the end of the first

quarter and are now in the same range as this time last year. While Asia-U.S.

routes are now more stable, Asia-Europe rates are still weakening.

Source: www.worldcontainerindex.com



http://www.worldcontainerindex.com/

https://www.xeneta.com/why-xeneta

http://www.worldcontainerindex.com/




Source: www.xeneta.com Hong Kong to Hamburg

Shanghai to Antwerpen

Shanghai to Rotterdam



http://www.xeneta.com/




Currency Exchange Rates Following are 90 day exchange rates and one year indicators for major currencies

commonly factoring in global sourcing.

EURO to USD:

Euro to RMB:

USD to RMB:

EUR/USD - % change

2 years -7.09%

1 year 5.75%

6 months 2.20%

3 months 3.38%

30 days 0.71%

Source: Oanda

USD/RMB - % change

2 years -3.27%

1 year -2.72%

6 months -1.87%

3 months -0.23%

30 days -0.09%

Source: Oanda

EUR/RMB - % change

2 years -10.13%

1 year 2.88%

6 months 0.19%

3 months 3.09%

30 days 0.62%

Source: Oanda

The Euro has gained marginally

on the USD in the past 90 days

and is trending up.

The Euro has gained on the RMB

in recent months, on negative

signs in the Chinese economy.

The USD is following a continuing

trend of steady weakening

against the RMB.






0.00

50.00

100.00

150.00

200.00

Au

g-1

2

Se

p-1

2

Oc

t-1

2

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Ma

r-13

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-1

3

Rubber, Singapore Commodity

Exchange, No. 3 Rubber Smoked Sheets,

US cents per pound

Global Commodity Rates Moderate economic growth is expected for the remainder of 2013 which should

translate into stable commodity prices.

Oil supply is expected to meet demand for the remainder of 2013, even as global

economies continue to recover. Some uncertainty is felt by ongoing tension in the

Middle-East including the potential Syrian conflict. Prices for aluminum and copper are

expected to continue downward with over supply and weak demand from China.

Crude Oil

Rubber

90.0095.00

100.00105.00110.00

Au

g-1

2

Se

p-1

2

Oc

t-1

2

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Ma

r-1

3

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-1

3Crude Oil Price index, 2005 = 100,

three spot prices; Dated Brent, West

Texas Intermediate, and the Dubai Fateh

95.00

100.00

105.00110.00115.00

120.00

Au

g-1

2

Se

p-1

2

Oc

t-12

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Ma

r-1

3

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-13

Oil - Dated Brent, light blend 38

API, fob U.K., US$ per barrel

90.00

95.00

100.00

105.00

110.00

115.00

Au

g-1

2

Se

p-1

2

Oc

t-1

2

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Ma

r-1

3

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-1

3

Oil - Dubai, medium, fob Dubai

Fateh 32 API, US$ per barrel

80.00

90.00

100.00

110.00

Au

g-1

2

Se

p-1

2

Oc

t-1

2

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Ma

r-1

3

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-1

3

Oil - West Texas

Intermediate 40 API, Midland

Texas, US$ per barrel

Facing ongoing weak demand,

rubber prices continue on a

two year downward trend.

Commodity Price Sources: IMF data,

Index Mundi, Plasticker






Metals

150160170180190200210

Au

g-1

2

Se

p-1

2

Oc

t-1

2

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Ma

r-1

3

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-1

3

Metals Price Index, 2005 = 100, includes

Copper, Aluminum, Iron Ore, Tin, Nickel,

Zinc, Lead, and Uranium Price Indices

1600.00

1700.00

1800.00

1900.00

2000.00

2100.00

2200.00

Au

g-1

2

Se

p-1

2

Oc

t-1

2

No

v-1

2

De

c-1

2

Ja

n-1

3

Fe

b-1

3

Ma

r-13

Ap

r-1

3

Ma

y-1

3

Ju

n-1

3

Ju

l-13

Zinc, high grade 98% pure, US$ per

metric ton

0.00

5000.00

10000.00

15000.00

20000.00

25000.00

30000.00

Au

g-1

2

Se

p-1

2

Oc

t-1

2

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Ma

r-1

3

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-1

3Tin, standard grade, LME spot price,

US$ per metric ton

1600.001700.001800.001900.002000.002100.002200.00

Au

g-1

2

Se

p-1

2

Oc

t-1

2

No

v-1

2

De

c-1

2

Ja

n-1

3

Fe

b-1

3

Ma

r-13

Ap

r-1

3

Ma

y-1

3

Ju

n-1

3

Ju

l-13

Aluminum, 99.5% minimum purity, LME

spot price, CIF UK ports, US$ per metric

ton

0.00

500.00

1000.00

1500.00

2000.00

2500.00

Au

g-1

2

Se

p-1

2

Oc

t-12

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Ma

r-1

3

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-1

3

Lead, 99.97% pure, LME spot price,

CIF European Ports, US$ per metric

ton

0.00

50.00

100.00

150.00

200.00

Au

g-1

2

Se

p-1

2

Oc

t-12

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Ma

r-1

3

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-1

3

China import Iron Ore Fines 62% FE

spot (CFR Tianjin port), US dollars per

metric ton

6500.00

7000.00

7500.00

8000.00

8500.00

Au

g-1

2

Se

p-1

2

Oc

t-12

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Ma

r-1

3

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-1

3

Copper, grade A cathode, LME spot

price, CIF European ports, US$ per

metric ton

14000.00

15000.00

16000.00

17000.00

18000.00

Au

g-1

2

Se

p-1

2

Oc

t-1

2

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Ma

r-1

3

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-1

3

Nickel, melting grade, LME spot price, CIF

European ports, US$ per metric ton






Wood

Wool, Hides, Cotton

0.00

50.00

100.00

150.00

200.00A

ug

-12

Se

p-1

2

Oc

t-1

2

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Ma

r-1

3

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-1

3

Soft Logs Average Export price for

Douglas Fir, US$ per cubic meter

240.00260.00280.00300.00320.00340.00

Au

g-1

2

Se

p-1

2

Oc

t-1

2

No

v-1

2

De

c-1

2

Ja

n-1

3

Fe

b-1

3

Ma

r-13

Ap

r-1

3

Ma

y-1

3

Ju

n-1

3

Ju

l-13

Soft Sawnwood, average export

price of Douglas Fir, U.S. Price, US$

per cubic meter

0.00

100.00

200.00

300.00

400.00

Au

g-1

2

Se

p-1

2

Oc

t-1

2

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Ma

r-1

3

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-1

3

Hard Logs, Malaysian meranti,

import price Japan, US$ per cubic

meter

780.00800.00820.00840.00860.00880.00900.00

Au

g-1

2

Se

p-1

2

Oc

t-1

2

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Ma

r-1

3

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-1

3

Hard Sawnwood, Dark Red

Meranti, C&F U.K port, US$ per cubic meter

900.00

1000.00

1100.00

1200.00

1300.00

Au

g-1

2

Se

p-1

2

Oc

t-1

2

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Ma

r-1

3

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-1

3

Wool, Coarse, Australian Wool

Exchange, US cents per kg

0.00

500.00

1000.00

1500.00

Au

g-1

2

Se

p-1

2

Oc

t-1

2

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Ma

r-1

3

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-1

3

Wool, fine, Australian Wool

Exchange, US cents / kilogram

70.00

80.00

90.00

100.00

110.00

Au

g-1

2

Se

p-1

2

Oc

t-1

2

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Ma

r-1

3

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-1

3

Hides, Heavy native steers,

wholesale dealer's price, fob

Shipping Point, US cents / pound

70.00

80.00

90.00

100.00

Au

g-1

2

Se

p-1

2

Oc

t-1

2

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Ma

r-1

3

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-1

3

Cotton 'A Index', Middling 1-3/32

inch staple, CIF Liverpool, US cents /

pound






Plastics and Fibers

A selection of plastic related prices is provided below. These are calculated from offer

prices in the Plasticker Material Exchange. These are not necessarily true transaction

prices. Prices have continued on a downward trend through 2013 based on falling

demand and surplus supply in China.

0

0.5

1

1.5

2

Se

p-1

2

Oc

t-1

2

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Ma

r-1

3

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-1

3

Au

g-1

3

Nylon - Price of PA 6.6

Regrind/ Flakes (Euros/kg)

0

0.2

0.4

0.6

0.8

1

Se

p-1

2

Oc

t-1

2

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Ma

r-1

3

Ap

r-13

Ma

y-1

3

Jun

-13

Jul-1

3

Au

g-1

3

Polyester - Price Development

of PET Regrind/ Flakes (Euro/kg)

0

0.2

0.4

0.6

0.8

1

Se

p-1

2

Oc

t-1

2

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Ma

r-1

3

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-1

3

Au

g-1

3

ABS Price Development of ABS

Regrind/ Flakes (Euro/kg)

0

0.2

0.4

0.6

0.8

Se

p-1

2

Oc

t-1

2

No

v-1

2

De

c-1

2

Ja

n-1

3

Fe

b-1

3

Ma

r-13

Ap

r-1

3

Ma

y-1

3

Ju

n-1

3

Ju

l-13

Au

g-1

3

PVC - Price Development of

PVC-h Regrind/Flakes (Euro/kg)

0

0.2

0.4

0.6

0.8

Se

p-1

2

Oc

t-1

2

No

v-1

2

De

c-1

2

Ja

n-1

3

Feb

-13

Ma

r-13

Ap

r-1

3

Ma

y-1

3

Ju

n-1

3

Ju

l-13

Au

g-1

3

PP - Price Development of PP

Regrind/Flakes (Euro/kg)

0

0.2

0.4

0.6

0.8

Se

p-1

2

Oc

t-1

2

No

v-1

2

De

c-1

2

Ja

n-1

3

Fe

b-1

3

Ma

r-13

Ap

r-1

3

Ma

y-1

3

Ju

n-1

3

Jul-13

Au

g-1

3

PS - Price Development of PS

Regrind/Flakes (Euro/kg)

Source: Plasticker






Apparel Sourcing Trends According to the Seventh Annual Excellence in Global Sourcing Survey, produced by

Kurt Salmon and Apparel Magazine, costs are still a top concern in global sourcing. This

includes raw material and labour costs. As a result companies are looking at other

sourcing countries, but they are also looking at their ability to fulfill customer

expectations and improving efficiency, responsiveness and operational effectiveness.

Survey Points to Rise in Apparel Sourcing Costs

A new survey by Cowen and Company indicates that

apparel sourcing costs in the U.S. are expected to increase in

the low single digits.

67% of respondents predict a rise in apparel sourcing

costs

Key concerns are rising labour costs (56%), increased

compliance (33%), and increasing energy costs (11%).

Higher material costs are viewed as less of an issue.

China labour is expected to increase by 15-20%.

What is a world Class supply chain? Key Metrics to measure supply chain success

Source: Kurt Salmon Associates, 2013

“Businesses without

improvements to their

product cycle, channel

dynamics or supply chain

efficiency will be hard

pressed to meet their

targets.”

Source: Cowen and Company, 2013






Sourcing Geographies of the Future According to the authors of a new report from Stratfor titled, The Post-China16, there are

16 countries best suited to replace China as the world’s low-cost, export oriented

economies. To come up with this list, the consultancy looked at indicators for where

manufacturing is moving based on apparel production and mobile phone assembly,

businesses. These two manufacturing sectors are historically the first movers to lower

price markets since they are so price sensitive and production is

relatively simple.

Much of the new activity is focused on the Indian Ocean Basin,

which includes countries such Tanzania, Kenya, Uganda in Sub-

Saharan Africa and Sri Lanka, Myanmar and Bangladesh on the

Asian side of the Indian Ocean. The list of 16 also includes countries

in South and Central America such as Peru, Dominican Republic,

Nicaragua and Mexico.

sou

Source: Stratfor Global Intelligence, July 2013

“China is at the

fringes of its low-

wage, high-growth

era. Other countries

will replace it.”






Nearshoring: The Rise of the U.S. as an Export

Manufacturing Destination Manufacturing is a little known high spot of the U.S. economy. U.S. exports have been

growing seven times faster than GDP since 2005. According to Boston Consulting Group

research, this is just the beginning

Figure 1

Source: Boston Consulting Group research, 2013

“We are probably the most

competitive, on a global

basis, that we’ve been in

the past 30 years.” -- GE

CEO, Jeff Immelt

As a share of the U.S. economy, exports are at the

highest point in 50 years.

U.S. textile mills are expected to produce around

$55 billion in goods this year, the fourth

consecutive year that these figures have remained

stable or increased.

The combined total value of both textiles and

apparel shipments should reach $71 billion.

The U.S. is expected to capture $70-115 billion in

annual exports from other countries by 2020.

This could result in 2.5 million to 5 million American

factory and service related jobs.

The biggest impact should be on industrial

products such as transportation equipment,

chemicals, machinery, computer and electronic

products.

Historically low outbound freight costs provide are

making U.S. exports more attractive. The average

cost to ship goods from Yokohama to Rotterdam in

2012 was $3,900 per Forty Foot Equivalent Unit

(FEU). The comparable rate from New York City to

Rotterdam was $1,400.

Factoring in logistics, shipping and other costs

associated with an extended global supply chain,

By 2013 Average labor costs will be around 16%

lower in the U.S. than in the U.K., 18% lower than

Japan, 34% lower than Germany and 35% lower

than France and Italy.






Topic Spotlight: India

Global apparel buyers to expanding sourcing from India

Due to persistent improvement in factory compliance in India, global apparel buyers are

exanding their sourcing from India. Some of them are switching from Bangladesh to

India because of concerns about safety standards there.

According to the Apparel Export Promotion Council (AEPC), factory-compliant

manufacturers in India have seen an unprecedented surge in export orders in 2013. With

a flow of new orders into the country, Indian exporters are expected to fetch an

additional US$ 3 billion in the current fiscal year amid a market rebound in the US and a

weak Indian rupee.

The Ministry of Textiles has set a target of bringing 2,900 apparel factories under the

DISHA (Driving Industry towards Sustainable Human Capital Advancement) program in

the country’s 12th Five-Year Plan (2012-17).

Key Numbers:

8% - the amount of U.S. apparel imports that come from India (worth $3.3 billion,

according to the AEPC)

40% - the amount of India’s knitwear garment exports which originate from Tiripur

Topic Spotlight: Sustainability U.S. Suspend GSP Privileges for Bangladesh

The U.S. administration, reacting to the poor working and safety conditions in the

Bangladesh garment industry, announced on June 27 the suspension of its General

System of Preferences (GSP) program which allowed duty-free imports of Bangladesh

products. This will only affect a fraction of Bangladesh exports, since it does not cover

garments, which make up 90% of exports to the U.S. from Bangladesh.

New International Labour Standard

A new initiative to set an international labour standard for the global apparel industry is

underway. The Garment Industries Transparency Initiative (GITI) was proposed by

Mohammad Yunus of the Grameen bank and German retailer, Otto Group. The aim is to

agree on parameters for good labour practices covering fire safety, minimum wages,

collective bargaining, child labout and other issues.






About Core Solutions Core Solutions (CORE) helps retailers, brands and suppliers streamline their supply chains,

from Concept to Delivery. CORE’s extended supply chain management platform (CBX)

enables organizations to drive greater speed, agility and efficiency and profit in bringing

private label and branded merchandise to market.

The CBX platform includes modules for Planning, Product Development, Buying,

Sourcing, Order Management, Logistics and Finance.

CBX Sourcing Solution Provides automated request for quotes for one or more products.

Vendors receive email notifications and reminders automatically.

Vendors complete quotes online or via Excel interface.

Side-by-side quote comparison, with configurable Estimated Landed Cost (ELC)

What-If analysis enables staff to adjust cost components to refresh ELC.

Facilitates quote review, shortlisting and confirmation between buyers, category

managers and sourcing team.

Vendor can upload photos/images and product documentations (e.g.,

instructions, certifications and 3rd party test reports)

Reduce overheads in issuing RFQs and processing quotes.






Next Steps

Are you a retailer or a brand interested in:

Streamlining your sourcing operations?

Scaling your direct sourcing?

Growing your private label program?

Driving greater visibility through your supply chain?

Increasing profitability for your company?

Click below to learn more about how Core Solutions can help:.

Request a Callback

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Email: [email protected]

Or call us directly:

Americas: 1.908.898.1880

Europe: 44.20.8133.0328

Asia: 852.2378.6300



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