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Vessel congestion hits consumers

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Publication date: 16 August, 2017
Chittagong port

Vessel congestion hits consumers

SHAMSUDDIN ILLIUS, Ctg

Media: The Independent

Original URLVessel congestion hits consumers

E-paper  URL: Vessel congestion hits consumers

The congestion of container vessels at the outer anchorage of the Chittagong port is proving to be costly for traders and consumers. First, foreign vessels owners are charging the importers and exporters extra money. Second, they are counting demurrage every day for berthing the vessels at the outer-anchorage. So, the prices of imported goods are going up, eventually affecting the consumer.

Bangladesh imports over 4,500 items from different countries. These items include raw materials like clinker, limestone, rice, wheat, onion, garlic, and ginger. In the 2016–2017 fiscal year, Bangladesh imported 6.2 crore tonnes of different goods worth Tk. 32,000 crore. The prices of almost all imported goods are going up by the day.

Although foreign vessel operators’ organisations had earlier fixed the fare via a declaration, they have now changed the system. They are charging more under titles like Port Congestion Surcharge, Emergency Cost Recovery Surcharge, and Additional Fare.

According to the new tariff, they are charging an extra USD 150 for goods-laden containers and USD 75 for bringing empty containers to Chittagong from others ports.

The businessmen mostly import and export goods through ports like Singapore, Colombo in Sri Lanka, Kelang in Malaysia, and Shanghai, Ningbo, Guangzhou, and Shenzhen in China.

For waiting at the outer-anchorage, a container vessel has to cough up USD 7,000 to USD 12,000 every day as demurrage. Most vessels are being forced to berth for 12 to 15 days while the normal turnaround time is two to three days, said Chittagong Port Authority (CPA) and shipping agents.

As a result of the delay, businessmen are being made to pay high demurrage. This is having an impact on the overall imports of the country.

“The extra fare is pushing up the prices of goods,” said Mahbubul Alam, president of the Chittagong Chamber of Commerce and Industries (CCCI) and chairman of the Port Users’ Forum.

“The congestion at the port is now a national crisis. The container handling process is now totally unbalanced. Owing to the delay, the importers have to pay a high bank interest. They are failing to deliver the goods on time. In the end, the consumer is the biggest loser,” he added.

“There is no way to increase the capacity of the port,” said Alam.

He even suggested direct delivery of the goods.

On June 15, MCC Transport Singapore Limited, an associate company of the world’s top shipping company, Maersk Line Ltd, mentioned the vessel congestion at Chittagong port and declared that the Equipment Management Import Surcharge should be increased.

They said the fare of Chittagong-bound containers from China, North Asia, and East Asia would be USD 600, while it was USD400–450 last November.

MCC Transport Singapore Ltd is the leading company in Chittagong-bound container transportation. After it increased the fare, the other transporters followed, alleged the businessmen. However, shipping agents termed it as “fluctuation of freight”.

“The freight is fluctuating. The vessel turnaround time has actually gone down at Chittagong port. No surcharge has been imposed,” Bangladesh Shipping Agents’ Association chairman Ahsanul

Huq Chowdhury claimed.

A Singapore-based shipping organisation called the Asian Feeder Discussion Group (AFDG) has imposed another USD 150 per container for carrying goods to Chittagong port from June 19, 2017.

They are calling it the Emergency Cost Recovery Surcharge. Some other shipping companies have also imposed extra surcharge to take containers from Australia and New Zealand to Chittagong port.

On July 26, CMA-CGM, a French container transportation and shipping company, imposed the Port Congestion Charge for bringing containers to the Chittagong port. Wahid Alam, the general manager of CMA-CGM, said they have informed their head office about the negative impact of this hike. He added that their office has assured them that the matter would be looked into.

The readymade garments (RMG) sector is the worst sufferer of the congestion and freight rise. It has reduced the price advantage of the RMG traders of the country.

Anjan Shekhar Das, former director of Bangladesh Garments Manufacturers’ and Exporters’ Association and the director of CCCI, told The Independent: “Owing to the congestion, the garments industry is losing its lead time. The materials are not reaching the markets on time. Owing to the increase in the freight, the cost of business is increasing.”

“We have to send the goods by air now. So, Bangladeshi garments manufacturers are facing a crisis. We’ll fall behind our rival countries,” he said.

“To resolve the problem, the government has to treat the matter as a national priority. We are losing our capacity as well as image,” he added.

Shamsuddin Illius
Shamsuddin Illius is a print and online media journalist. He has been working in the field (fulltime) of journalism since 2010. He is very much passionate about journalism since his early age. Currently he is the Bureau Chief-Chittagong at The Business Standard.

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