Hike in freight forwarding charge faces stiff opposition

Deep frustration has gripped freight forwarders as they have failed to raise their charges in the face of stiff opposition from garment manufacturers over the last seven months, top Bangladesh Freight Forwarders' Association (BAFFA) leaders said.
The BAFFA first wanted to implement the new charges by raising fees to the extent of 75 per cent since September 01 last.
The freight forwarders wanted to implement the charges from October in 2013. But due to political turmoil, the BAFFA and its members did not give effect to the same in October last as well.
Later, they vowed to implement the same from February 01 last. But all their moves failed as the National Board of Revenue (NBR) had intervened.
The ready-made garment (RMG) industry, the country's largest industrial sector in export earnings, has been opposing the hike in freight forwarding charges, popularly called NOC (no objection certificate).
The apparel makers argued that this rise would raise the import cost of fabrics and other accessories significantly.
Badrul Huq Chowdhury, a director at the BAFFA told the FE that its members had been pressing them hard to implement the new charges.
"The members are now really frustrated and they are constantly pressurising us on the issue," Mr. Chowdhury said.
The freight forwarding firms made their last hike varying between Tk 500 and Tk 2000 for each consignment in late in 2009.  They now want charges to increase to Tk 3,500 for issuing each NOC required for a consignment.
The Customs authority had intervened asking all freight forwarders not to enforce the latest charges until all parties concerned reach a consensus on the new charges.
A committee led by NBR member Farid Ahmed met both the parties several times since February last but such meetings did not yield any result.
Mahbub Anam, BAFFA president told the FE that they would make a fresh move this month (April).
ABM Rafiquzzaman, a vice president at the BAFFA said they will again start their efforts on the issue.
He said the existing tariff is the lowest in South Asia.
"Our tariff is even lower than that of charges in Myanmar," he noted.
He urged the Board of Revenue to conduct a study on it.
Mr Mahbub Anam said moves taken by the authorities concerned to fix the charges are totally unacceptable.
He said: "We're in a free market economy. Here the importers have full freedom as to whether they will take services or not."
He said many importers are getting their goods through direct shipping without taking any services from the forwarders.
Mr. Anam said they have fixed the highest charges at Tk 3,500 for each consignment.
The garment factory owners said, the forwarders cannot raise a single penny as per the government laws.
"We've been protesting the moves of raising forwarding charges as they cannot do it." Nasiruddin Ahmed Chowdhury, BGMEA vice president, told the FE.
He argued that the forwarders could get the enhanced service charges from their respective principals abroad.
Mr Chowdhury told the FE, costs associated with 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 Badrul Huq Chowdhury, however, said the association had proposed to increase the charges considering inflation and other costs associated with the 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.