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July 25, 2023

Southeast Asia Sectoral Cost Indices

Southeast Asia Sectoral Cost Indices

Flexport Research

July 25, 2023

Sectoral Costs Largely Stable in the Second Quarter

Flexport’s Southeast Asia Sectoral Cost Indices (SEASCI) helps to answer the questions of what comparative advantage looks like in practice and how costs are shifting across key supply chain sectors and countries. The latest report shows stability in costs across furniture, auto components and electronics, but slightly larger changes and wider dispersions in costs across the apparel category. The measure for multi-sourcing between China and Vietnam showed preferences to pay more for furniture weakening from the previous quarter and slightly strengthening for apparel.

The Methodology: Flexport’s Southeast Asia Sectoral Cost Indices (SEASCI) provide a comparison of the wholesale cost of US imports for apparel, electronics, furniture and automotive components from Mainland China (hereafter China) and select Southeast Asian countries. Calculations are based on identical stock-keeping units (SKUs) imported to the US from each country available in the Flexport database for at least two quarters. While coverage may therefore change from quarter-to-quarter, our methodology is meant to minimize composition effects.

Update - July 25, 2023
The latest SEASCI includes data for Q2 2023.

Apparel: New SEASCI Countries Show Convergence Among Key Exporters

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Wholesale costs of U.S. apparel imports from Vietnam declined for the fifth straight quarter, ending Q2 2023 down 6.7% year-on-year and 9.8% from the start of the series in Q1 2019. Apparel costs from India, meanwhile, rose by 1.2% over Q1 after small drops in the previous two quarters. They were up 16.2% since hitting a series low in Q4 2020.

Elsewhere costs mostly remained stable.

China’s costs fell by 1.1% QoQ and for the ninth consecutive quarter remained below its base quarter costs. They were up a slight 0.1% from the same quarter in 2022.

Thailand’s costs were down 0.2% QoQ, but remained 9.5% above the same quarter last year.

Bangladesh’s and Sri Lanka’s costs were both up 3.8% from their base quarters (Q1 2020), with Bangladesh seeing a 0.9% QoQ rise and Sri Lanka seeing a 0.3% rise.

Furniture: Rising Almost Across the Board

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After rising for most countries covered from Q2 2021 onwards into the end of 2022, furniture costs have mostly leveled-off through the first two quarters of 2023. Costs from China, the world’s largest furniture exporter, increased by 0.5% QoQ and were up 1.0% over the same period last year. From Vietnam, which has increased its share of U.S. imports over the past three years, costs fell 0.6% QoQ but remained 3.4% above last year’s levels.

Among the other three countries, costs moved little.

India’s costs increased 0.1% QoQ and 3.4% year-on-year; they have increased just over 7% since hitting a series low in Q4 2021.

Taiwan’s costs continued to come down in small increments from the Q4 2022 high. They were 0.5% lower QoQ in Q2 but were still 11.5% above the base quarter costs.

Indonesia’s costs saw the largest QoQ drop at 0.8%, but they were still above 2.4% above last year’s levels and 5.2% above the base quarter.

Electronics: Continued Divergence

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Malaysia’s costs rebounded from an 18-month low last quarter, increasing by 0.8% QoQ, though they were still 5.9% below the same quarter last year and 9.7% lower than the base quarter. Vietnam’s costs, meanwhile, rose for the twelfth consecutive quarter, ending the period up 7.8% over Q2 2022 and 14.0% from the base quarter.

China’s costs fell for the second quarter in a row; they were down 1.1% QoQ and 2.2% year-on-year.

Taiwan’s costs increased a slight 0.3% QoQ to end the period up 1.6% year-on-year. Costs from Taiwan have risen in each of the last ten quarters dating back to Q1 2021, although the cumulative increase was only 3.3% above the base quarter.

Auto components: Minor Changes Only

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Some care is required in interpreting results with auto components, given the breadth of products it includes, ranging from steel-heavy components, such as body panels, to brake pads and airbags.

Taiwan’s costs, which have increased the most since Q1 2019 among the three countries covered by the SEASCI, were unchanged last quarter and year-on-year.

China’s costs were the only costs to decline, albeit by just 0.1%. They were down for the fifth straight quarter, however, ending the period off just 0.3% from the base quarter.

Vietnam’s costs were stable for the third consecutive quarter after rising steadily from the second quarter of 2021 to Q4 2022. They were up 3.1% year-on-year.

Relative Import Costs: Widening in Furniture, Narrowing in Apparel For Multi-sourced Products

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Comparing identical products sourced by the same company in the same quarter from China and Vietnam provides an overview of the import cost patterns of multi-sourcing firms. The dots in the figure above show individual multi-sourced products with the vertical axis scaled as the Chinese sourcing cost divided by the Vietnam cost for products that are sourced from both locations. The greater a point's vertical distance from 1.0 (up or down), the greater the ratio of costs the corresponding firm is paying for multiple sources of supply.

The solid lines represent an average of the dot readings.

When the lines are below 1.0 that is an indication that, within our sample, firms are willing to pay more to source from Vietnam or to source from both locations. One way to interpret the results for furniture (seafoam blue line) is that, over the past two quarters, firms became less willing to pay higher costs to source from Vietnam in Q2 than they had been the previous quarter. In apparel, they became slightly more willing to do the same. Due to seasonality, which tends to be most apparent in Q3, we will be watching this closely.

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To illustrate the dispersion of costs over time, the above is an 80-20 plot of the quarterly cost ratios for both categories. This shows the difference between the cutoff for cost ratios in the top 20% and cost ratios in the bottom 20% each quarter.

For apparel, the ratio was the highest it has been in a second quarter since the series began. For furniture the ratio in Q2 2022 was higher but the figure is nevertheless elevated for the time of year.

The figure also reveals that cost dispersion may be especially seasonal for furniture, with a strong dispersion peak in the third quarter of the past two years. Again, we are watching this indicator for signs of a solidifying trend.

The Flexport SEASCI is published quarterly, with the next update - including data for Q3 ’23 - scheduled for October 2023.

Please direct questions about the Flexport SEASCI to

Disclaimer: The contents of this report are made available for informational purposes only and should not be relied upon for any legal, business, or financial decisions. Flexport does not guarantee, represent, or warrant any of the contents of this report because they are based on our current beliefs, expectations, and assumptions, about which there can be no assurance due to various anticipated and unanticipated events that may occur. This report has been prepared to the best of our knowledge and research; however, the information presented herein may not reflect the most current regulatory or industry developments. Neither Flexport nor its advisors or affiliates shall be liable for any losses that arise in any way due to the reliance on the contents contained in this report.


Indicator Release Date Release
Southeast Asia Sectoral Cost Indices October 22, 2021 View PDF
Southeast Asia and Supply Chains July 22, 2021 View PDF

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Flexport Research

July 25, 2023

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