Freight forwarders enforce new RMG handling charges

The freight forwarders have triggered a row with readymade garment exporters as the former raised their charges to the extent of 75 per cent from February 01.

However, the Customs authority has intervened asking all freight forwarders not to enforce the latest charges until today (Sunday).

The Chittagong Customs House (CCH) will meet all stakeholders today on the issue at its office in the port city over the new service charges imposed by the freight forwarders.

But, sources said the freight forwarders will not succumb to any pressure saying they had wanted to implement the hike in charges at least five months earlier.

Freight forwarders continued to realise charges at higher rates ignoring the CCH request.

Some of the freight forwarders hinted that they might start a legal battle against garment factory owners as none can fix rates under a free-market economy.

Mahbub Anam, president of the Bangladesh Freight Forwarders Association (BAFFA) told the FE that moves taken by the authorities concerned to fix the charges are totally unacceptable.

"We're in a free market economy. Here the importers have full freedom as to whether they will take services or not," Mr. Anam said.

He said many importers are getting their goods through direct shipping without taking any services from the forwarders.

Mr. Anam said they had fixed the highest charges at Tk 3,500 for each consignment to inject a competition in the sector.

The ready-made garment (RMG) industry, the country's largest industrial sector in export earnings, is opposing the hike in freight forwarding charges, popularly called NOC (no objection certificate). It says this would raise the import cost of fabrics and other accessories.

The garment factory owners said, the forwarders cannot raise a single penny as per the government laws.

"For this reason, we're protesting the fresh hike in the charges," Mr Nasiruddin Ahmed Chowdhury, BGMEA vice president told the FE.

The country's garment factories, however, take much of the services from the forwarders.

Mr. Chowdhury said the forwarders can get the enhanced service charges from their respective principals abroad.

The forwarders earlier wanted to implement the charge hike from September 1 last. It deferred the decision by one month as the stakeholders opposed it.

The authorities concerned, however, intervened asking both the parties to fix it amicably.

But, the garment owners and the authorities concerned did not talk about the issue since September last.

Later, the freight forwarders wanted to implement the charges from October in 2013.

But due to political turmoil, the BAFFA and its members did not implement the same since October.

On the other hand, ABM Rafiquzzaman, BAFFA vice president said, "We waited for several months, but we did not get any response from them."

Badrul Hoque Chowdhury, a director at BAFFA told the FE since no initiative was taken by the National Board of Revenue and others, we imposed the charges from the first day of February.

The freight forwarders used to pay Tk 2000 for a document (NOC) for whatever the cargo volumes may be until the introduction of the new charges.

Mr Chowdhury told the FE, costs associated with the handling of cargoes have surged manifold over the years. "For this reason, we need to raise the charges."

"This is an issue of our survival," he said.

Freight forwarders are actually the carriers of apparel products and they deliver the goods to their counterparts from the local manufacturers.

Mr Chowdhury said the association had proposed to increase the charges considering inflation and other costs associated with business.

Freight forwarders, in a general meeting in August, proposed the hike, which they deemed necessary to survive in the key shipping sector.

There are nearly 800 freight forwarders in operation in the country. They got their operating licences from the government in 2009.

Freight forwarders stated that the national board of revenue (NBR), garment manufacturers and trade body leaders last September decided to re-schedule the charges in a tripartite meeting within three months, that is, November 30, 2013 but the meeting was not held.

Director of BAFFA Amiyo Shankar told the Financial Express that the decision was taken in the annual general meeting (AGM) of the BAFFA held on July 31, 2013.

Meanwhile, the national board of revenue has called a meeting of BAFFA, BGMEA, Chittagong Chamber of Commerce and Industry and the Custom House at the CCH building on Sunday morning.

The BAFFA leaders said the enhanced charges are currently being realized through negotiation between the concerned parties and in some cases both the parties are not so rigid in doing business.

BAFFA implemented the enhanced rate from February 1, last although the decision was taken last July in the AGM of the association.

On January 15, 2010 the BGMEA, Freight Forwarders and the national board of revenue decided to fix the charge at Tk 2000 from Tk 1500 through negotiations.

The charge was however fixed at Tk 2500 during the last caretaker government which was reduced to Tk. 2000.