Bangladesh's apparel industry is coming under mounting pressure as rising yarn and cotton prices, coupled with higher freight costs and longer lead times, continue to erode profit margins, entrepreneurs say.
Industry insiders say the ongoing turmoil in the Middle East has disrupted global supply chains, pushing up the cost of key raw materials used in garment production.
At the same time, manufacturers are struggling with shortages of diesel needed to run backup generators during load-shedding.
Sector leaders warn if the situation persists, many mills could lose competitiveness on the global market, where buyers remain highly price-sensitive.
Denim producers say the price of open-end yarn has surged to $2.50 per pound from $1.80, sharply increasing production costs.
Yarn alone accounts for nearly 60 per cent of the cost of a pair of denim pants, making the spike particularly difficult to absorb.
Cotton prices have also risen across major varieties.
Better Cotton Initiative (BCI) cotton climbed to 94 cents per pound from 79 cents, West African cotton per pound to 78 cents from 70 cents, and Brazilian cotton per pound to 83 cents from 74.5 cents.
US cotton, however, has remained relatively stable at around 78 cents per pound.
Textile millers say the cost escalation is hard to manage as export orders are typically booked at fixed prices at least three months in advance.
"Textile mills are facing a major challenge in adjusting to rising costs," says Engr Kutubuddin Ahmed, a textile entrepreneur.
"Once orders are confirmed, there is very little room to revise prices, even if raw-material costs increase sharply."
Beyond raw materials, rising freight charges and longer shipping times are adding to operational strain.
Industry stakeholders say the Middle East conflict is creating ripple effects across global trade.
Shipping disruptions are driving up freight rates, while volatility in petroleum prices is raising the cost of synthetic fibres and man-made materials.
Polyester staple fibre (PSF) prices on the local market have risen from around 90 cents per kilogram to about $1.22.
The prices of other synthetic inputs, such as spandex, lycra and elastic yarn, have also been fluctuating, adding further uncertainty.
Shofiqur Rahman, executive director (marketing) of Zaber and Zubair Fabrics, says petroleum-based materials account for nearly half of the inputs used in blended fabrics.
"The prices of synthetic fibres have increased sharply, with filament costs rising by around 32 per cent," he says.
"This could push fabric costs up by about 10 per cent, or roughly 19-20 cents per garment."
He adds that overall apparel costs may rise by 10-15 cents per piece, requiring renegotiation with buyers.
"Otherwise, it may affect overall sales," he warns.
Industry leaders also caution that rising global oil prices could further increase the cost of liquefied natural gas (LNG) and other fuels, adding up to production expenses.
Showkat Aziz Russell, president of Bangladesh Textile Mills Association (BTMA), mentions that higher oil prices are pushing up the cost of petroleum by-products.
"As primary textile producers, we will pass the additional costs on to garment manufacturers," he says, adding that the burden will ultimately fall on consumers in a domino effect.
He notes that prolonged instability in oil-producing regions could weaken demand for man-made fibre (MMF)-based apparel as consumers may shift toward cotton products, although cotton prices could also rise due to higher freight costs.
Mohammad Hatem, president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), says yarn prices have increased by 35 to 40 cents per kilogram due to the conflict.
He says 30-single yarn - a widely used category in the knitwear sector - was priced around $2.75 per kilogram a month ago but now rose to $3.35.
Hatem notes that production costs in the knitwear sector have already increased 10-12 per cent, while profit margins remain thin at 2-5 per cent.
"Many exporters are operating at a loss, hoping to recover in the future," he says.
He adds that the closure of the Strait of Hormuz has pushed up global fuel prices and created supply shortages.
"As a result, Bangladesh is also facing a diesel shortage, disrupting factory operations and hampering production. This is negatively affecting our exports," he says.
"We urge the government to prioritise fuel supply to the industrial sector and provide policy support to help businesses offset losses."
Md Shahrier, president of Bangladesh Garment Packaging and Accessories Manufacturers and Exporters Association, says raw material prices in his sector have increased 30-35 per cent.
Meanwhile, global shipping companies are raising freight rates to offset higher fuel costs, with several carriers introducing additional surcharges.
Ashikur Rahman Tuhin, managing director of TAD Group, says rising fuel prices are directly driving up freight charges.
"Any adjustment in domestic fuel prices will further intensify cost pressures."
Rakibul Alam Chowdhury, former vice-president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), says freight rates on the China-Bangladesh route have already increased more than $500 per container, on top of the existing costs of $1,450-1,500.
"If the conflict persists, freight charges could surge to Covid-era levels - from around $4,000 to as high as $18,000 per container," he forewarns.
MA Jabbar, managing director of DBL Group, says raw-material prices are rising, while diesel shortages are also disrupting production.
"We are concerned about what may happen in the coming days and how we will continue doing business under such conditions," he says.
He also mentions that the Prime Minister's Office has invited him to a meeting of the Private-Sector Advisory Council (PSAC) on Saturday (today) at 10:30am.
He hopes the meeting will address the overall business situation and explore possible ways forward.
newsmanjasi@gamil.com