Bar on fractional shipment, container shortage slow down RMG recovery

The country’s export-oriented apparel makers are now facing great difficulties in importing raw materials such as yarn and fabrics from India due to the suspension of fractional shipment facilities through land ports aided by a global container crisis.

The crisis comes at a time when the sector is now trying to recover from the losses caused by the Covid-induced lockdowns amid the pandemic.

Talking to The Business Post, RMG owners said due to a bar on partial shipment facilities by the National Board of Revenue (NBR) since FY2005-06, together with high rental costs of containers and unusual delays at the Benapole-Bangaon land Port, have increased their lead time in meeting export deadlines.

Due to this crisis, it takes nearly 25 days for a shipment from India to arrive in Bangladesh through the route compared to a maximum of 19 days during pre-Covid period.

“Benapole (Benapole-Bangaon inland port) has been facing truck congestion due to special measures taken by the Indian port authority to prevent the spread of Covid-19. Therefore, it takes 10 to 15 days more for a truck to cross the Indian border into Bangladesh,” Apurba Sikdar, director of Wisdom Attire, told The Business Post.

Exporters claimed that if partial shipment was allowed, they would have been able to receive their raw materials from India within a week.

“If the government had lifted the bar on partial shipment facilities through land borders, we would have been able to save at least $0.05 to $0.07 per kilogramme of yarn and receive our materials quickly. At the same time, the government should allow the railway to bring raw materials from India to ease the pressure on the land ports,” Fazlee Shamim Ehsan, vice president of Bangladesh Knitwear Manufacturer and Exporters Association (BKMEA), told The Business Post.

Around 75 per cent of Bangladesh’s apparel manufacturing is based on cotton and around 99 per cent of required cotton is met through imports.

In the knitwear sector, around 80 per cent of yarn demand was being met through domestic sources, which has become much costlier since last September.

During pre-Covid-19 period, 30s (single) yarn per kilogramme was around $2.30, but that has risen to $4.30 at domestic mills due to global supply crisis, according to the BKMEA. 

With high prices and low supply in the domestic market, the country’s exporters turned to India to meet their demand with lower costs.

The RMG owners said Indian exporters often fail to deliver shipment on time, and in many cases the shipments arrive around 10 days late.

At the same time, the rental costs of shipping containers have gone up as India has been hit hard by a global container crisis since the beginning of the coronavirus pandemic.

“We cannot maintain a short lead time and it is putting us behind our competitors,” Fakir Kamruzzaman Nahid, managing director of Fakir Fashion told The Business Post.

However, the Bangladesh Garments Manufacturer and Exporters Association (BGMEA) sent a letter to the Indian High Commissioner on August 2, to take measures to solve this issue.

In the letter, BGMEA President Faruque Hassan said that Bangladeshi manufacturers are facing a challenge to meet their lead time due to several delays in transit of import goods from India.

“We are hearing from the Clearing and Forwarding agents in Benapole that security measures and lack of manpower at Indian customs point, particularly at Bangaon, has been causing long delays and the transit time has been getting very long for trucks to cross the Bangaon-Benapole border,” he said in the letter.

Looking for alternative sources

Due to this crisis, Bangladeshi exporters are looking for alternative sources to import raw materials without facing such delays.

Some manufacturers are now importing yarn and fabrics from Turkey, Indonesia, Hong Kong, China, among others, but a shortage of shipping containers also makes it more costly. 

“But India is our nearest sourcing country. If the government can solve the barrier, we will be able to meet our short lead time,” Fazlee Shamim Ehsan, vice president of BKMEA told The Business Post.

“In the whole world, partial shipment is allowed but not in Bangladesh. I cannot understand why they (NBR) issued these rules, which is totally contradictory to ease of doing business,” BGMEA Vice President Shahidullah Azim said.

“The government should withdraw the barrier on partial shipment and negotiate with Indian authorities to solve the issues at the land port,” he added. 

However, the Ministry of Commerce said they are yet to receive any formal complaint from the stakeholders of the sector regarding issues with India while importing raw materials.

“Stakeholders need to inform us formally of any issues they are facing to enable us to take action in this regard. However, we are yet to receive any such letter from the RMG sector. But, I have been verbally informed by BGMEA President Faruque Hassan regarding the bar on part shipment and I have discussed the matter with the commerce secretary,”  AHM Shafiquzzaman, additional secretary (Imports and Internal Trading) at the Ministry of Commerce, told The Business Post.

“It is true that we have several issues regarding imports from India, but we are working to solve them,” he added.