Home ›› 04 Aug 2021 ›› Back
Container shipping prices have reached a record high some 18 months after the outbreak of the coronavirus pandemic which disrupted maritime logistics chains and drove demand sky-high.
Simultaneously, the fare for domestic goods transport has also increased drastically in the wake of frequent enforcement of lockdown–all leading to almost twice the cost of doing business in Bangladesh,
The cost of shipping a container of goods has risen by almost 80 per cent since early November and has nearly tripled over the past year. There’s been a massive shortage of empty containers, they are in the wrong place, they are stuck in ports and not in Asia ready to be loaded.
In the midst of the epidemic and the lockdown, the existing transport modules have been totally reversed.
Against such a backdrop, the goods transportation cost has increased in an effortless manner while the exporters are trying hard to keep their respective shipments uninterrupted to their designated destinations.
Sources concerned also claimed that currently, there are no rules and policy in fixing the cost of transporting goods domestically and internally despite there being fixed fares for the goods transportation even before the pandemic.
Since the epidemic began in early 2020, the cost of transportation in the international shipping sector has tripled to four times, and in the domestic sector, the cost of transporting goods by road has doubled to triple.
Moreover, the situation has become more critical due to congestion of goods and ships at Chittagong port, the country’s prime gateways.
Container fares on USA or European routes, which were $ 2,500 before the outbreak of Covid-19 in 2020, have risen to $8,000 to $10,000 in many areas.
The fare of a goods laden truck from Chittagong port to Dhaka was Tk 8,000 to Tk 10,000 while it is now around Tk 20,000 to Tk 22,000.
Because the unusual fare hike occurred domestically and internationally as well as the extra time being spent for the shipment of goods in the ports across the world, has altogether almost doubled the cost of doing business in Bangladesh, said Mahabub ul Alam, president of Chattogram Chamber of Commerce and Industries.
The shipping sector, which accounts for 90 per cent of the global shipments, has been hit hard by the epidemic as it now takes a long time for the shipment of goods.
According to shipping agents, freight rate augmented gradually for many reasons such as berthing delay in ports including Singapore, Port Klang, Colombo and Chittagong too and due to this delay, mother vessels are also skipping these ports, which lead the operators incurring extra costs. Omitting ports by mother vessel not only leads to losing the opportunity costs but also subsequently increased export and import freight rate.
“In April 2020, the freight rate was around $2000 to $2500 per 40 feet long container, but the freight fares started to increase gradually during last one year because of the container crisis and the subsequent delays at the ports following the covid outbreak in the European countries. said Muntasir Rubayat, head of operation GBX Logistic Ltd, also director of Bangladesh Shipping Agent Association, while talking to The Business Post.
He also explained, “Besides, if the carriers started to avoid sailings of their ships to the designated ports, the rate started to increase gradually during the last one year. That is how the fare is going up and now it stands for around $10000 for any European ports.”
The Chittagong port, 58th busiest port, out of 100 top ports in the globe, has also been hit hard by the turmoil in the global shipping sector due to Covid-19.
Although several lockdowns have been imposed round the year since the coronavirus outbreak in the country from March 2020, the Chittgang port has remained open. Nevertheless, as the country’s economic activities came to a standstill amid severe lockdowns, the delivery of goods from the port at various times has been drastically reduced.
To avoid container congestion at the port, port authorities have had to make a number of decisions, including giving priority to exports and moving imported goods to private container depots. This, while beneficial in some cases, has increased the cost to product owners on the other.
Bangladesh-ready-made garment exporters, the leading port users, said that they have to pay more for using the port yard compared to the private ICDs for shipments.
“While it costs Tk 4277 to deliver a 20-foot container of imported goods from the port yard, it costs Tk 13,755 to take delivery from a private Inland Container Depot. On the other hand, a 40-foot container costs Tk 5,988 to deliver from the port yard while it costs Tk 18,092 to pick it up from the ICD,” said Sayed Nazrul Islam, first vice president of BGMEA.
“In the past, all garment export products had to be shipped from the ICDs and now many new imported goods are to be unloaded from here, which has added extra cost to the readymade garments sector, ‘’ he added.
In order to reduce export congestion, the Chittagong Port has been recently giving priority to feeder vessels on the Colombo route and has approved six more new ships for this route.
Chittagong Port, therefore, increased waiting time for vessels in other corridors by imposing and continuing priority for the Colombo route, causing upset in shippers who are already facing trouble with their supply chain models, said Bangladesh Shipping Agents Association in a recent statement.
Apart from the increased cost of delivery of goods from the port, domestic truck fares to various destinations in the country have also increased manifolds, said BSAA statement.
During the last week, the truck fare on the Dhaka-Chattogram route was Tk 20,000 to Tk 25,000 which was Tk 10,000 to Tk 12,000 at the same time last year.
Bangladesh Covered Van, Truck, Prime Movers and Transport Owners Association secretary general Zafar Alam said, “A lot of time is now being spent on just loading and unloading of goods at every point which leads to an increase in the fare of trucks and covered vans.”
Although it takes seven to eight hours to transport goods from Chattogram to Dhaka, the trucks need to wait in a long queue for being loaded at the port and private container depots, and the goods are not even received on time when the goods are unloaded. These are the reasons behind the increased fares, he added.
CCCI President Mahbub Alam said, “The cost of transporting goods is to be borne by a consumer till the end in Bangladesh as the country is an import-dependent country. Such a transport fare hike is putting extra pressure on the people and the economy as a whole. The overall burden of transportation costs has overwhelmed us with the coronavirus
epidemic.”
