Exports get costlier for airfreight hike

Severe carrier-capacity crunch has further pushed up airfreight rates for cargo transport from Dhaka to Bangladesh's main export destinations, disrupting air shipments, stakeholders say.
According to them, last month's political upheaval, which led to the formation of a new government, has seriously disrupted shipment of goods, including farm perishables, both by sea and air, resulting in cargo stockpile in seaports and airports.
As such, they have said, severe pressure on air shipment for increased volume of goods has been created, which also caused airfreight spiral.
According to freight forwarders, no freighters regularly carry goods from Bangladesh so air shipment mainly depends on cargo hold of passenger planes.
They say as the number of passengers from Dhaka to different destinations has lessened following more than three weeks of political turmoil in July and August, many airlines have squeezed the number of flights and cut down capacity to make business cost- effective.
Some airlines are also bringing narrow-bodied aircraft to Dhaka, which are good enough to carry passengers amid low turnouts for the unrest and travel restrictions.
According to stakeholders, a Middle East-based airline, which has a significant share in carrying passenger and cargoes from Dhaka, has nearly halved the number of daily flights to and from Bangladesh for passenger shortage.
Usually, the airlines had operated five flights a day to and from Dhaka a few weeks back which now fell to three a day, according to people familiar with the developments.
The same is happening in case of many other airlines operating to and from Dhaka, they said.
Nasir Ahmed Khan, Director, Bangladesh Freight Forwarders Association (BFFA), told the FE that as passenger flow fell, many airlines are now bringing small aircraft, which also have lower capacity in carrying cargoes.
"Thus," he says, "a severe capacity crunch has been created, especially for sending cargoes from Dhaka."
The airlines now have bumped up the freight rates further from what were three to four weeks back, he says, adding that they are now charging $6.5 per kilogram as freight cost to various destinations in the European Union and $8 per kg to the United States from Dhaka.
Mr Khan mentions many airlines have started avoiding Iran's airspace and so they need to fly additional miles to reach destinations, which increases their cost of operation and they increase both cargo-and passenger-flight charges.
Abul Kalam Azad, a garment-factory owner, told the FE in the case of emergency situation the factory owners are forced to make air shipment of exports.
"The recent political turmoil has also forced many factory owners to go for costly air shipment as sought by the buyers," he said about the trade exigency.
Mr Azad said if the airfreight continues rising, "making profit will be very tough for the exporters".
Also, the export of agricultural items has been facing multiple challenges for inadequate space on air-cargo flights as well as container congestion at Chittagong seaport.
According to the Export Promotion Bureau (EPB), agro-processors and exporters made shipments worth $846 million during the July-May period of fiscal year 2023-24, reflecting an 8.0-percent year-on-year growth.
The Bangladesh Agro-Processors Association (BAPA) said they suffered Tk 1.2 billion ($8.0 million) worth of losses during the curfew since July till August 05.
BAPA secretary Md Iktadul Haque said some factories remained shut even after the August 05 student-mass uprising due to security concerns, leading to further significant losses.
"Exporters have failed to ship goods for the past one week due to container jam at the Chittagong port," he said.
According to him freight charges for EU-bound containers have risen sharply to $7,000-$10,000 per twenty-foot equivalent unit (TEU) from the previous rates of $3,000- $4,000 per TEU, further hindering export trade.
"Although exports showed a slight rise in FY24 compared to FY23, maintaining this growth would be challenging in FY25 due to higher freight charges and mounting container congestion," he predicts.
Arif Azad, an exporter of processed farm produce, reported that they had been unable to export vegetables during the July-August period for lack of space on air-cargo flights.
He said mango had significant export potential, but shipments completely halted in July due to student movement, internet shutdown, and curfew imposed by the then government.
The high prices of vegetables, fruits, spices, betel leaf and other products in the domestic market also acted as deterrents to boosting exports, he observed.
Manjur Ahmed, an adviser for the Bangladesh Fruits, Vegetables and Allied Products Exporters Association, said disruptions during the movement and internet blackout had impacted exports worth over Tk 1.0 billion until August 05.
He suggests that the government provide air-cargo facilities for the sector with an eye to achieving desired shipments.

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