Bangladesh’s imports may be costlier due to freight charges

December 12, 2020 08:53:15

| Updated:

December 12, 2020 09:30:09

Picture used for representation. Courtesy: ADB

The global shipping crisis has fuelled freight charges, thus making the country’s imported items costlier, businesses said on Friday.

Shipping schedules around the world were disrupted by the pandemic, compounded by the scarcity of empty containers.

Bangladesh is highly dependent on imports-industrial raw materials, intermediate goods and consumers goods.

Business people expressed the fear that the importers will pass the additional costs of higher freight charges on to the consumers.

Major ocean carriers or main liners have announced new charges in Europe and the Mediterranean to be effective from mid-December and the beginning of the New Year, according to an international news portal of shipping and maritime.

It said French shipping line CMA CGM will implement the new freight of all kinds of rates from North Europe and the Mediterranean to Kenya, Tanzania, Australia, New Zealand and the Indian Subcontinent from January 01.

Hapag-Lloyd will also impose a peak season surcharge (PSS) of US$1,000/TEU from Far East to North Europe and the Mediterranean, effective from December 15.

The new surcharge will apply to dry and refrigerated containers, as well as special equipment.

Additionally, MSC has unveiled new freight rates from the ports of Antwerp, La Spezia and Genoa, effective from January 1 until further notice, but not beyond January 30 2021.

Local businesses said they are already having impacts as exporting entries abroad are taking time or charging high.

They said the hike will deepen the crisis.

“We’re already hit hard as we are not getting containers for carrying iron scraps,” said Aameir Alihussain, managing director BSRM, the country’s biggest rod maker.

Bangladesh’s rod industry depends on imported scraps to make billet, an intermediate good for making steel.

He said the transportation cost has already increased by $100 a container.

Abul Bashar Chowdhury, chairman at BSM Group, told the FE that shipping freight fees have been raised in Australia, Canada and other exporting countries.

“This means the landing cost of goods will be high.” said Mr Chowdhury, a leading commodity importer of Bangladesh.

He said they came to know the problem is mainly the empty container shortage in the shipping industry.

“Our Ramadan is nearing, but we cannot get shipping space before February,” he said.

He said this may create disruption in the local market, urging the government to take immediate steps to address the situation.

He said a tonne of lentil usually costs at $570 including all charges up to the Chittagong Port, but it has now gone up by $20 per tonne because of hike in freight charges.

Sirazul Islam, a Dhaka-based fruit importer, told the FE that Bangladesh imports fruits from South Africa and China, but prices have increased due to the shipping costs.

“We used to pay a 20-kg carton of apple between $8.5 and $9.0 but it increased by $3.0 to $4.0 dollar due to the hike in freight fees,” said Mr Islam, also general secretary of the Bangladesh Fresh Fruit Importers Association.

“Ultimately, we’ll to have to pass that on to the end-consumers,” he said.

Charges of a reefer container, which carries perishable goods from South Africa to the Chittagong port, are now around $3,500 for a 40-ft container, up by nearly $2,000.

But shipping executives said the problem is global, which is bad for consumers who will ultimately pay for it.

AS Chowdhury, head of Seacon, a Singapore-based feeder service provider, said this crisis has erupted over the pandemic and many containers were stuck up at different ports, including Bangladesh.

He feared the situation is unlikely to normalise shortly.

Bangladesh has imported commodities worth over US$17.0 billion during the past four months of the fiscal year.

Local importers opened letters of credits worth $18 billion during the July-October period.

The share of industrial raw materials is around one-third of the total L/C opened during the period while consumer goods at $2.1 billion, capital machinery $1.6 billion, intermediate goods at $1.4 billion, petroleum products at $1.1 billion and others at $5.0 billion

Bangladesh imported merchandise worth $54.8 billion in the fiscal year 2020, down by nearly 13 per cent over the fiscal year 2019.

[email protected]


Leave a Reply

Your email address will not be published. Required fields are marked *