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BD-bound cargoes paying higher freight charges

Escalation is due to ships' overstay at Ctg seaport for jam, weather adversities

Jasim Udidn Haroon | October 08, 2017 00:00:00

Bangladesh-bound shipping cargoes entail higher freight charges for longer stay time of vessels in the country, forcing retailers to pay the price in a knock-on-effect, sources said.

The freight escalation is impacting mostly on imported goods, procured for local consumption, while the garment exporters, who are again importers of raw materials meant for making clothing, face less strain as cost is usually borne by buyers.

People both in shipping and import circles said freight charges on routes like Chittagong-China ports had already been doubled while on Europe and American routes rose by more than 50 per cent.

They also said bulk carriers which are facing downward freights across the globe were also charging higher while loading cargos for Bangladesh.

A 20-foot container earlier used to charge approximately US$400 on the China-Bangladesh route and now the charge shot up to around $800, an official working at a shipping agency told the FE Saturday.

Three major shipping players -- China Shipping, PIL and Maersk Line -- operate on the route, believed to be biggest in terms of cargo haulage.

The Europe-Bangladesh freight now stands at around $1200 from around $800, according to shipping-insiders.

However, shipping people said companies were charging higher rates not for profits rather for offsetting their losses for long stay in Chittagong.

They argue that a Singapore-Chittagong-Singapore voyage takes around eight days with a total operating cost equivalent to around $200,000. They said the vessels stay eight days at outer anchorage so they need to adjust their costs with freights.

But this time they are not imposing congestion surcharge or emergency charges rather negotiate it with the mainline operators.

Sahed Sarwar, executive director at K-Line, a Tokyo-based shipping line, told the FE that, on an average, each carrier increased their freights to compensate for their losses.

"How will we sustain when we stay eight days on an average at the outer anchorage to take berth in Chittagong port jetties?" Mr Sarwar said.

The Chittagong seaport, which handles over 90 per cent of the country's total external trade, has been facing shortage of equipment mainly because of collapse of its two gantry cranes in June last.

Officials at the Chittagong Port Authority (CPA) told the FE that they have some operational losses owing to bad weather this time. This is also to blame for such overstay of vessels.

"If we could repair the damaged gantry cranes, cargo handling from two additional vessels could happen. But, unfortunately, we failed to do this yet," said one official at its traffic department.

In the meantime, local think-tank Centre for Policy Dialogue (CPD) in a report on global competitiveness rankings said entrepreneurs were unhappy about seaport infrastructure as little improvement in the facilities occurred during 2016.

The CPD conducts a survey on behalf of the Davos Forum as part of preparing the Bangladesh chapter of the Global rankings.

It noted that high congestion in Chittagong seaport caused long turn-around time, extra time for unloading and re-loading, delay in shipment and extra shipment charges.

Captain AS Chowdhury, country head of Singapore-based feeder service-provider Seaconsortium, said this is a chronic issue at the port and that without improving its services there is little chance for coming out of the rising trend in freight.

However, apparel manufacturers said they are not directly involved with the freights and so they were little aware of the problem.

Anwar-Ul Islam Chowdhury Pervez, managing director of Evince Group, a leading clothing group in Bangladesh, said the buyers deal with all sorts of freight.

"Buyers ask us whether we can manufacture garments of a certain design at a certain price or not. If we give the green signal, then they proceed. So we are not directly involved with it," Mr Chowdhury said.

Kamruzzaman Kamal, director for marketing at leading agro-processing-group Pran RFL, told the FE that the import costs surged by around 20 per cent in recent months.

"We came to know that freights have surged 15-20 per cent," Mr Kamal said.

The group exports its products to all continents and imports many goods to make finished products both for local and export purposes.

Abul Bashar, chairman of the Chittagong-based BSM Group, told the FE that the freights applied for bulk cargos also shot up by around 6.0 per cent.

"I import commodities from Black Sea region to North American countries, and freights from all departures for Bangladesh-bound trips have increased 5.0-6.0 per cent," Mr Bashar told the FE.

The port handled around 100,000 TEUs last month (September) with over 100 calls.


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