Airfreight rate nearly doubles in a month

Bypassing conflicts-ridden Red Sea

SYFUL ISLAM | Monday, 12 February 2024

Airfreight costs for sending exports from Bangladesh to its main export destinations have nearly doubled in a month amid mounting pressure for having to bypass conflicts-ridden Red Sea area.
The proxy wars in the main global shipping route force container and bulk-carrier ships to travel additional two to three weeks, stakeholders say, leading to the missing of lead time in export shipment.
As such, Bangladeshi exporters, willy-nilly, are rerouting their exports to the western markets by air.
The Middle-East crisis thus created an extra burden on both exporters and importers in the country, they noted.
Exporters are forced to make costly air shipment avoiding lengthy sea route to send goods in time when production gets delayed or there is possibility of delay in transporting goods through seaways.
However, the fighting in the Middle East, between western forces and Houthi rebels, pushes the ships to avoid Red Sea, Gulf of Aden and Indian Ocean boundaries or the Persian/Arabian Gulf of Oman Sea to dodge collateral damage.
Ships from Asia now travel to Europe and the United States through Cape of Good Hope and so they need to travel an additional three weeks or extra 3,500 kilometres to avoid war-zone risks.
Thus, the buyers who need goods in time ask the exporters to send them by air.
Stakeholders say due to the pressures from buyers, many exporters in January were forced to make air shipment and thus export-cargo load on Hazrat Shahjalal International Airport in Dhaka increased significantly.
In December last year, some 10,410 tonnes of goods were sent through the Dhaka airport which increased to 14,451 tonnes in January. Officials concerned say most of these cargoes were garment and sent to the USA, Europe, Turkey, and the Middle East.
With the air-shipment pressure increasing, stakeholders say, airfreight rate has nearly doubled in a month. The airfreight for each kilogram of cargoes destined for Europe from Dhaka now costs up to US$3.5 compared to $2.0 in the previous month.
Also, airfreight rate shot up towards the US from Dhaka, to $4.5 per kg in January from $3.0 in December.
Shahidullah Azim, vice president, Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told the FE Sunday the airfreight rate increased as pressure of goods in air transportation increased as shipping the same would require an additional three weeks.
"The major reason for rise in air shipment is war-zone-risk alert in the Red Sea and war in the Middle East which enhanced transit time for ships by an extra 25 days and so buyers ask to send goods by air," he said.
However, Mr Azim said, in this case buyers themselves bear the additional costs involved.
"But when manufacturers send goods by air due to their own delay, they pay from their own pocket," he said.
Rafayet Selim, a top official of a garment factory, told the FE that in late December and January apparel manufacturers were under tremendous pressure to send goods by air.
"The pressure still continues and may persist until the sea route, especially the Red Sea area, becomes safe place for vessels to ply," he said.
Nasir Ahmed Khan, Director, Bangladesh Freight Forwarders Association, says a volatile situation is prevailing in the Red Sea and so war-linked risks have been created, forcing the ships to sail extra miles by spending additional two to three weeks.
He notes that the winter season was ending and so many buyers needed additional volume of goods immediately and an additional pressure was created at the transit points before the Chinese New Year holiday. So both the airfreight rate and volume from Dhaka increased.
Mr Khan mentions that presently no freighter plane comes to Dhaka to carry goods and thus air shipment depends on passenger planes.
"As volume of goods has increased suddenly, freight rates have shot up automatically," he says.

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