Feeder vessels impose extra surcharges, limit voyages

Published in the Financial Express on 7, August 2017

Monira Munni

The country’s export-import activities are facing severe blow as feeder vessel operators have imposed additional surcharge as congestion in Chittagong port has mounted.

The operators have also limited the number of their voyages to the port, industry people said.

A West African shipping company has informed the local counterparts that until the situation in Chittagong port returns to normal, it has no other choice but to restrict number of its trips to this destination.

“We, therefore, regret to say that we can’t accept any more bookings to Chittagong from West Africa for the time-being,” the company said.

Feeder vessel operators bound for Chittagong from Australia, Singapore and Colombo ports have imposed additional surcharge following the ongoing congestion in Chittagong port, they added.

ANL, an Australian shipping company that is also a part of the CMA CGM Group, the third largest container shipping line in the world, has imposed Port Congestion Surcharge (PCS) of $150 per TEU for all imports into Chittagong where congestion is reaching a ‘critical level’ there.

The additional PCS came into effect from July 20.

“All shipping lines calling Chittagong terminals are heavily impacted, with vessels waiting for an additional 07 to 10 days on an average above the normal berthing,” the ANL said in a notice to its customers.

These delays stem from lower yard productivity due to heavily-congested terminal yards, it added.

The Asian Feeder Discussion Group (AFDG) has also imposed an ’emergency cost recovery’ surcharge of $150 per TEU for laden containers and $75 per TEU for empty containers, effective from July 01, from Singapore/Port Klang and Colombo to Chittagong.

Top officials from Spanish fashion retailers Inditex in a meeting held on July 31 with the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) leaders expressed concern over the present crises both in airports and Chittagong seaport.

The retailer, which has expressed willingness to increase sourcing from Bangladesh gradually, informed that they might re-think over their sourcing decision if the complexities continue in the country’s air and seaports.

Port conditions in Chittagong have deteriorated causing increased berthing time and poor productivity, they said adding feeder vessel operators have imposed additional charges to compensate the increased operating costs caused by schedule delays, berthing restrictions and reduced load factors.

Chittagong port needs 26 gantry cranes whereas it has only four, two of which are now out of order while 52 rubber tyred gantry cranes are required but it has only 23, according to sources.

Only 87 container loading and unloading equipments are in operation against the required 299 while 285 cargo handling equipments are functional against the required 895.

About 92 per cent of the country’s exports and imports are routed through the port while the equipment shortage is severely affecting exports and imports as it causes regular delays in shipment of goods, they added.

Textile millers, jute spinners and shippers have expressed their concern over the imposition of additional surcharge while leaders of the country’s apparel makers expressed fear of shifting work orders to other competitors.

They opined that the ongoing bottleneck in the Chittagong port would severely affect the country’s competitiveness in merchandise shipments.

Cotton exporters informed the local millers that although Bangladesh is a growing market, its port congestion and lack of direct services add complexity to their supply chains.

Bangladesh is now the world’s second largest garment exporter and it largely depends on imports of raw cotton.

The country is mainly served by feeder services unlike Vietnam and China.

“Following the congestion in Chittagong port, both our imports and exports are seriously affected and it will surely impact our competitiveness,” Tapan Chowdhury, president of Bangladesh Textile Mills Association told the FE recently.

Supply of raw materials has been affected resulting in a negative impact on production, delivery and finally finished goods shipments, Minhazul Reaz, director of Youth Spinning Mills Ltd, said.

The situation might have created an opportunity for Indian yarn to be flooded in the local market, he opined.

Siddiqur Rahman, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said if the situation continues to be critical, it would create an adverse impact on the sector as the port handles around 80 per cent of the total apparel exports.

It might cause failure in meeting the lead time, resulting in shifting of orders to competitor countries like Ethiopia, India, Myanmar and Vietnam, he said adding the feeder vessels are leaving the port without using their full capacity, which had never happened before.

He pointed out that it was the worst congestion created due to the feeder vessels’ departure from  the port with less number of containers than their respective capacities.

He urged the government to take immediate steps to resolve the crisis for averting possible damage to the export-oriented industry.