The United States is experiencing a steady decline in its share of cotton exports to Bangladesh, one of the world’s largest importers of cotton, primarily due to logistical challenges and lengthy shipment duration’s. Despite maintaining a reputation for high-quality cotton, U.S. exporters are losing ground to suppliers from West Africa, Brazil, and India, who offer more competitive logistics and faster delivery timelines. This trend is being compounded by recent U.S. tariff hikes on Bangladeshi goods, prompting both concern among exporters and a proactive response from the Bangladeshi government.
Current market dynamics
- Bangladesh Cotton Imports (MY 2023-24):
- Total: 7.8 million bales
- U.S. Share: 9% (down from 10% in MY23)
- First 7 months of MY25: U.S. share dropped to 6% from 11% YoY
- Emerging Leaders in the Market:
- West African countries: 41% share (1.9 million bales)
- Brazil: 970,487 bales (20% share)
- India: 887,600 bales (19% share)
Key factors behind U.S. market share decline
- Logistics and delivery delays:
- U.S. cotton is not sold “afloat” (i.e., in transit) as is common with South American and West African suppliers.
- Lack of nearby warehousing infrastructure (unlike competitors who use regional hubs in Singapore, Malaysia, and Sri Lanka).
- Result: U.S. shipments are slower and less flexible, hindering responsiveness to market demand fluctuations.
- Competitor advantages:
- Brazil: Competitive pricing, stable supply, and quick delivery timelines.
- West Africa: Ability to sell cotton while in transit (afloat), enabling importers to react quickly to price movements.
- India: Geographical proximity and cost competitiveness.
- Trade policy tensions:
- Trump’s 2025 reciprocal tariffs increased Bangladeshi export duties to the U.S. by 37%.
- Retaliation fears and overall strain on trade relations further complicate long-term cooperation.
Bangladesh’s strategic response
- Letter to U.S. trade representative:
Commerce Adviser Sk. Bashir Uddin assured increased imports of U.S. agricultural products, including cotton, to ease bilateral tensions. - Bonded warehousing initiative:
A bonded facility is being developed to provide duty-free access for U.S. cotton in Bangladesh, enhancing its logistical appeal.
Future Outlook
Despite the decline in U.S. market share, Bangladesh’s overall cotton demand is set to increase:
- Projected imports for MY26: 8.2 million bales (↑1.2% YoY)
- RMG industry recovery:
- Political unrest in 2024 disrupted production.
- Restoration of stability in 2025 has led to renewed international orders.
- Growth in orders is boosting cotton demand, offering U.S. exporters a window to regain market share if strategic adjustments are made.
Recommendations for U.S. cotton exporters
- Invest in regional warehousing:
- Establish cotton storage hubs in South/Southeast Asia (e.g., Malaysia, Sri Lanka) to shorten delivery times and offer flexibility.
- Adopt “Afloat” sales strategy:
- Compete with South American and African suppliers by offering cotton already in transit to respond faster to market needs.
- Engage in trade diplomacy:
- Support ongoing bilateral trade discussions.
- Leverage Bangladesh’s interest in increasing U.S. farm imports to renegotiate favorable terms.
- Collaborate on the ‘Bonded Warehouse’ facility:
- Proactively engage with Bangladesh’s government to utilize the new duty-free facility and streamline import processes.
- Target the resurgence in RMG:
- Promote high-quality U.S. cotton as a value-added input for Bangladesh’s premium garment exports amid their post-crisis recovery.
Conclusion
The U.S. is at a critical juncture in maintaining its cotton export relevance in Bangladesh. By addressing logistical shortcomings and engaging in strategic collaboration, U.S. suppliers can capitalize on the expected rebound in cotton demand. Without such action, the U.S. risks further marginalization in a market increasingly favoring agility, accessibility, and partnership.
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