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Bangladesh’s utilisation rate among US fashion companies fell sharply in 2026 as global buyers diversified their sourcing strategies, although the country remained one of the world’s leading apparel sourcing destinations, according to a new study.

The 2026 USFIA Benchmarking Study, released on Monday, showed Bangladesh’s utilisation rate declined to 78.9 per cent in 2026 from 88.2 per cent a year earlier.

The report said buyers are increasingly prioritising sourcing diversification, production capacity, flexibility, inventory agility and regional balance. It also identified slow speed-to-market, limited supply chain flexibility and compliance challenges as Bangladesh’s key weaknesses.

Bangladesh remained tied with Vietnam, Cambodia and Indonesia as the most-utilised apparel sourcing destination. However, utilisation rates declined across major Asian suppliers, with China’s rate falling to 73 per cent and Vietnam’s to about 78 per cent from 100 per cent a year earlier.

In contrast, Guatemala, Egypt and Jordan ranked among the top 10 sourcing destinations after posting higher utilisation rates.

The survey, conducted between April and June 2026 among 30 leading US fashion companies, found that protectionist US trade policies and tariff uncertainty remained the industry’s biggest concern, cited by 92 per cent of respondents.

It noted that the average US tariff on apparel imports rose to 21.6 per cent in May 2026 from 15.2 per cent before the start of President Donald Trump’s second term.

China and Vietnam were viewed as the most vulnerable to future US trade restrictions, while Bangladesh, India and Cambodia were considered to face moderate risks.

Despite the decline in utilisation, Bangladesh achieved a milestone by overtaking China in the US apparel market during the first five months of 2026. The country accounted for 11.3 per cent of US apparel imports by value, behind Vietnam’s 22.2 per cent, while China’s share fell to 9.7 per cent.

Nearly 47 per cent of surveyed companies said Bangladesh accounted for more than 10 per cent of their total sourcing value or volume, underscoring its continued importance in global supply chains.

The report, however, highlighted Bangladesh’s weak performance in speed-to-market, giving it a score of 2.3 out of five because of logistical constraints and long shipping times.

While Bangladesh remains competitive in large-scale, cost-efficient production, longer lead times have become a disadvantage as retailers increasingly seek faster inventory replenishment and shorter fashion cycles.

The study nevertheless offered a positive long-term outlook, ranking Bangladesh as the second most promising “rising star” for future sourcing expansion after Indonesia. About 46.7 per cent of respondents said they plan to increase sourcing from Bangladesh over the next two years.

“Bangladesh is expected to remain a dominant force in global apparel sourcing through 2028,” the report said.

It added that sustaining this position will depend on improving logistics, reducing lead times, strengthening domestic textile production, enhancing labour and environmental compliance, increasing manufacturing flexibility and preserving cost competitiveness.

The report also found Bangladesh less competitive in handling smaller and specialised orders, with a minimum order quantity score of 2.6 compared with China’s 4.0.

Bangladesh scored 3.4 for vertical manufacturing capability, ahead of several competing countries but behind China (4.8) and India (4.0).

In labour and environmental compliance, Bangladesh scored 2.2 and 2.4 respectively, among the lowest in the survey. The report said improving traceability, labour standards and environmental performance will be critical as global brands face stricter regulatory requirements.