The world’s second largest apparel exporter, Bangladesh had suffered a lot in the recent past due to shipping-related complications.
Take for example Chittagong-based BLP Warm Fashion, a consignment of which meant for a US buyer got stuck at Singapore port (a container transhipment hub), for good three weeks in May last year due to vessel shortage!Like BLP, scores of others had to bear the consequences of shipping crisis.
While many resorted to expensive air shipment to scamper and meet the delivery deadlines at the cost of already wafer thin profit margins,those, who could not, had to count losses.
“We have not got our payment from the US buyer as the consignment has not been delivered yet. Besides, we are incurring big losses because of the delay in shipment,” lamented an aggrieved garment exporter speaking to Apparel Resources earlier.
Even though there was no vessel congestion at Chittagong Port, many global ports experienced seven to 45 days of congestion, underlined BGMEA President Faruque Hassan, who drew solace from the fact that despite the shipping crisis, Bangladesh somehow managed to export a staggering US $ 35.81 billion worth of apparel in 2021, highest ever in a single year.
One year down the line, not only the shipping crisis is showing signs of easing out, many shipping lines are also increasing their focus on Bangladesh, which many in the know of things underlined might help boost exports as apparel shipments continue the growth trajectory.
Opening up new vistas to Europe…
Client of many European buyers, Rome-based RifLine Worldwide Logistics (a freight forwarder from Italy) initiated a move to introduce shipping service on the Chittagong-Italy route at the end of 2021 even as later RifLine’s sister concern, Kalypso Compagnia di Navigazione SPA, Italy, applied to Chittagong Port Authority (CPA) for plying vessels on the route.
Accordingly, the CPA gave permission to two of its chartered vessels, Cape Flores and Songa Cheetah (each of 1,200 TEU capacity) to ply for six months.
Initially under a trial voyage, Cape Flores arrived at the Chittagong Port from Ravenna Port in Italy on 24 December 2021 with some empty containers but did not take back any export container on the return leg of the journey.
Bangladesh has long been suffering from a lack of direct shipping services to Europe, its biggest export destination, mainly due to limited access to large ships at the Chittagong Port even as currently Italy-bound container ships from Chittagong first have to reach a European base port such as the Port of Rotterdam in the Netherlands, the Port of Antwerp in Belgium and the Port of Hamburg in Germany via transshipment ports, from where they can go to Italy.
Alternately, export containers are at first transported on small-sized feeder vessels to four transhipment ports — Colombo, Singapore, Tanjung Pelepas and Port Klang of Malaysia and some ports in China — after which the containers are loaded to bigger mother vessels connecting to Europe, the US and African destinations.
“There remains a risk of missing the mother vessel even if the feeder vessels are late for one day to reach the transshipment port. In many cases, ships leave the Chittagong port without taking the goods to get the schedule of the mother vessel. This makes it uncertain to send the product to the customers at the stipulated time,” underlined BGMEA Vice-President Rakibul Alam Chowdhury.
Introduction of a direct waterborne service between Bangladesh and Italy has now paved the way for opening up prospects for faster and cheaper direct container shipping from Bangladesh to Europe, as part of which Liberian flagged container vessel Songa Cheetah, which left the Italian Port of Ravenna on 17 January, reached the Chittagong Port and on the return leg of the journey, took around 1,100 TEUs (twenty-foot equivalent units) of export containers, mostly readymade garments to Italy, recently.
“From the concerned port in Italy, cargoes would be sent to different European destinations,” stated Mohammad Rashed, Chairman of Reliance Shipping and Logistics, which is the local agent for the Italy-based shipping company.
It takes 40 to 45 days or more for cargoes to reach Europe from Chittagong Port via transhipment ports, further underlined Mohammad Rashed, adding with the introduction of the new route, ships would reach Italy within 16 days.
What’s more, freight charges from Chittagong to Europe, which skyrocketed to over US $ 14,000 per 20-foot container lately, is also set to come down significantly on account of the same.
“…it will reduce costs by almost 40 per cent, opening a new horizon for Bangladesh’s foreign trade,” claimed the BGMEA President even as according to the garment makers’ body and the Bangladesh Shipping Agents’ Association, around 55 per cent of the overall export trade of Bangladesh is done with European countries and apparels account for some 82 per cent of Bangladesh’s total exports.
“Europe is the largest market for the garments industry of Bangladesh…It is very positive news for the country’s export sector,” underlined first Vice-President of BGMEA Syed Nazrul Islam even as President of Chittagong Chamber of Commerce and Industry (CCCI) Mahbubul Alam said the initiative would pave way for newer avenues in Bangladesh’s exports.
Freight charges will go down further…, claimed Syed Mohammad Arif, Chairman of Bangladesh Shipping Agents Association.
Maersk in thick of things…
Danish shipping company Maersk has in the meanwhile partnered with Ispahani Summit Alliance Terminals Limited (ISATL) to build a 200,000 sq. ft custom bonded warehouse even as the new warehouse will double the existing capacity at ISATL and add around 8 per cent additional space to the existing ecosystem at Chittagong, the coastal town, whose port is the national gateway and handles over 90% of Bangladesh’s exports and imports and about 98% of the container trade.
“Maersk’s commitment to connect and simplify our customers’ supply chains means that we look at long-term solutions for problems such as the longstanding congestion within the ecosystem. We tackled the situation in 2021 by deploying an additional vessel for evacuating export loaded containers,” underlined Managing Director of Maersk Bangladesh Angshuman Mustafi, adding, “The solutions provided immediate relief to the ecosystem, but there was a need for a comprehensive solution to optimise ocean shipping, port handling and inland logistics that would benefit trade in the long term. By partnering with ISALT, we are establishing a facility that has the potential to partially decongest the system and streamline the flow of cargo in and out of Bangladesh.”
Apart from adding capacity, the facility will offer several other benefits to Bangladesh’s exports. Amongst others, the new facility is being built by benchmarking international best practices when it comes to safety and other compliance guidelines even as Maersk will also offer customers Garment on Hanger facility, sorting, product audit, labelling, bar code and RFID scanning, amongst others.
Worries remain still?
Despite the endeavours, some concerns remain still,especially the one related to direct shipping between Bangladesh and Europe via Italy, which many felt, could have given a boost to exports to Europe, the biggest export destination for Bangladesh.
“…direct shipping with Italy is a very positive development. But it remains to be seen how successful this initiative becomes,” expressed apprehension a high-rung official of a renowned shipping company on condition of anonymity while adding only one shipping line starting the service would not be of much help for the industry as such, considering the significance of Europe as an export stronghold as well as the volume of shipments that reach the European shores from Bangladesh every year.
The Chairman of Bangladesh Shipping Agents Association, however is hopeful it’s just a matter of time before other main-line operators take active interest and start shipping on this route even as the BGMEA president on his part underlined, “More shipping lines from Europe and even transatlantic ones will join…this will add significant economic values to the economies,”to wind up on a positive note.