Now ship liners line up to adjust charges upward

After the enhancement of tariffs and various charges by the Chittagong seaport authority, berth operators and container-depot owners come up now the ship liners for upward cost adjustments, foreshadowing domino effect on Bangladesh's foreign trade, sources say.
"We are planning to make adjustment of the costs raised by port and other parties involved. We will soon send a letter to the Chittagong Port Authority (CPA) in this regard," says Syed Mohammad Arif, chairman, Bangladesh Shipping Agents' Association (BSAA).
"It is very usual that when the port authority raises charges, we will also have to make the adjustment," adds the leader of ship operators who handle freight vessels in Bangladesh ports, to justify their move.
"It's because we won't pay the increased charges to the port authority from our own pocket. We have to realise the money from the shippers," he told The Financial Express on Wednesday.
The CPA enhanced port tariffs by around 40 per cent, effective September 15. Bangladesh Container Shipping Association (BCSA), however, finds the overall increase in port charges by nearly 70 per cent.
Moreover, the privately owned inland-container depots in Chittagong have raised charges by 44 per cent with effect from September 1 while the berth operators have increased rates by 35 per cent recently.
The BCSA in a letter to the CPA chairman Wednesday denounced the sudden hike in port charges, without providing a breathing space.
General Secretary of BCSA Shamsuddin Ahmed Chowdhury, in the letter, mentions that the sudden increase in port charges "has caught our member shipping lines off guard, as it was published without any transition period".
"Indeed, implementation has taken effect before we were even informed of the SRO."
He also writes: "This escalation is unprecedented and far exceeds what could reasonably be regarded as a fair adjustment. It is important to note that most CPA tariff items are out-of-pocket costs borne directly by shipping lines."
Mr Chowdhury has further stated that severe congestion at Chittagong port is causing heavy losses through vessel delays (US$15,000 to $20,000 per day), empty container storage, and idle equipment piles.
"The situation has become increasingly unfavourable for shipping lines to continue supporting Bangladesh trade whilst remaining financially sustainable," the letter of complaints reads.
He maintains that any immediate reflection of these increased costs in freight charges is not practicable, as freight rates are generally fixed in advance through contracts--sometimes for a year--through quotations or published tariffs agreed with buyers.
"Sudden changes risk breaching agreements, damaging customer trust, and undermining competitiveness on a global market where freight rates are closely scrutinised," he notes.
Mr Chowdhury also writes that as cargo remains in transit for weeks, shipping lines have no practical means of adjusting freight to reflect a tariff increase implemented almost immediately.
"In view of the above, the cost increase will impact the entire supply chain, including cost increase to the importers and exporters," he alerts about the knock-on effect of the hikers.
Fazlee Shamim Ehsan, Executive President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), predicts that not only the exporters or importers, all the people of the country will be affected when port charges go up.
"The shipping agents will pay the additional charges to the port by realising from the port users, not from their own pocket. So, the import and export will be costly, thus consumers will suffer," he told The Financial Express.
Mr Ehsan notes that the foreign buyers will ask the exporters to pay the additional charges to shipping agents. "Because, they won't bear the additional charge due to enhancement of port charges, thus our cost of doing business will increase further."
He questions the rationale of port authority raising charges now when the port is making good profit every year.

syful-islam@outlook.com