Bangladesh: faster and cheaper export to Europe from February

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Exporting from Bangladesh to Europe will have a much lower time and cost from February as a direct freighter service starts from Chattogram Port to Europe – the country’s largest apparel export destination. .

The first ship on the route, carrying export goods, will leave Chattogram for the port of Ravenna in Italy during the first week of next month.

Initially, two ships will carry export containers from Chattogram on the route every 25 days.

It will only take 16 days to reach Italy for a ship via this route, which currently takes around 40 days as they have to pass through several transshipment ports.

Businessmen and Chattogram port officials expect the direct route to reduce the cost of shipping by around 40%.

Italian shipping company Kalypso Compagnia di Navigazione SPA Italy will transport the Bangladeshi export goods via two container ships – the Cape Flores and the Songa Cheetah.

The Cape Flores is the flagship of the Marshall Islands with a draft of 8.66 meters – the depth of water needed for a ship to float – and a container capacity of 1,200 twenty-foot equivalent units (TEUs). Its length is 154.47 meters and its width is 25.19 meters.

The Songa Cheetah is currently en route to the port of Chattogram. The Liberian flagship with a draft of 6.2 meters will arrive in port on February 5.

Reliance Shipping and Logistics works as the local agent of both ships in Bangladesh.

Mohammed Rashed, President of Reliance Shipping and Logistics, said, “Songa Cheetah left the port of Ravenna, Italy on January 17 with 945 TEUs of empty containers and 7 TEUs of containers containing clothing and raw materials. It will reach the port of Chattogram on February 5. The ship will leave for Italy on February 7 or 8 with containers.

“The vessel will carry approximately 16,500 tons of export cargo in approximately 1,100 TEUs of containers. Of this number, 98% are ready-to-wear garments and the remaining 2% are handicrafts, leather and jute. Once the goods reach the port of Ravenna, they will be delivered to various destinations in Europe according to buyer demand.

The Cape Flores had already arrived at the port of Chattogram on December 24 with empty containers.

Currently, container ships bound for Italy from Chattogram port must first 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 such as Singapore, Colombo in Sri Lanka, Tanjum Palapas and Kelang in Malaysia and a few in China. From there they can travel to Italy.

In some cases, goods are transported to Italy in mother ships directly from transhipment ports. But, most of the time, the containers are unloaded in the European base ports in the absence of a schedule from the mother ship in Italy. From there, the goods are shipped to Italy in collector ships.

A boost for export trade

Traders said the move would reduce import-export trade costs, including the fixed operating cost of vessels, and strengthen Bangladesh’s position in the competitive market.

According to those concerned, 51% of Bangladesh’s export trade is with Europe.

Therefore, if this route becomes popular, it will create a new stage in the country’s export sector, they said, adding that it will attract new buyers and expand the country’s export sector.

Chattogram Port Authority (CPA) Chairman Rear Admiral M Shahjahan told The Business Standard that trial shipping on this route has already been successfully completed.

In April last year, around 25,000 Bangladeshi containers containing imported goods were stuck at transshipment ports in Sri Lanka and Malaysia, which affected traders as their production was halted as raw materials could not reach the factory in time. These containers were then brought to the port of Chattogram by additional supply ships.

Traders said Bangladesh’s import-export trade was affected due to congestion at transshipment ports.

According to data provided by Chittagong port authorities, the country’s top seaport handled over 15.25 lakh TEUs of export containers in 2021. Last December, it handled over 1.30 lakh TEUs of export containers.

Port sources told TBS that they do not have any statistics on the amount of these goods transported to Europe or other continents since they are shipped to their destinations after being unloaded at transshipment ports. .

However, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Association of Shipping Agents claim that 55% of the country’s overall export trade is with European countries.

Clothing accounts for about 82% of Bangladesh’s total exports. Therefore, considering that an average of some 1.27 lakh TEUs of export containers left Chattogram Port for various destinations every month last year, the average monthly export volume of garments in the year last was about 1.4 lakh TEUs, of which more than 57,200 TEUs went to Europe alone.

Syed Nazrul Islam, Senior Vice President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said, “Europe is the biggest market for the Bangladesh garment industry. The new route will cut current shipping costs in half. This is very positive news for the country’s export sector.

Syed Iqbal Ali Shimul, senior vice president of the Bangladesh Shipping Agents Association, said that at present, about 51% of Bangladesh’s export products are destined for Europe, 25% for the United States. States, 20% to Asia and 4% to Canada.

Sources with shipping companies said overseas buyers buy goods from Bangladesh on a free on board (FOB) basis, in which case buyers bear the shipping costs.

Currently, the price for transporting a 40-foot container ship from transshipment ports to Italy ranges between $10,000 and $14,000 depending on the shipping company, the people said, adding that the transport costs could be 6,000 to 7,000 dollars on the new route.

Chattogram Port accounts for 92% of Bangladesh’s total import-export trade. Also, 98% of container shipping is done here. However, exporters are sometimes forced to ship their products by air after missing the export vessel schedule. This increases the transport cost collector.

Rakibul Alam Chowdhury, Vice President of BGMEA, said, “There remains a risk of missing the mother ship even if the supply vessels are one day late in reaching the transshipment port. In many cases, ships leave Chattogram Harbor without picking up the goods to get the mother ship’s schedule. So it is uncertain to send the product to customers at the stipulated time. In this situation, the new sea route with Europe has created enormous potential for Bangladesh’s export sector.

Traders also suggested authorities create more routes for the direct movement of container ships to other ports in Europe and America.

Mahbubul Alam, President of the Chattogram Chamber of Commerce and Industry, said, “This is a great achievement for Bangladesh. Direct shipping with Europe will add a new dimension to the country’s export sector. However, the authorities must ensure that the service continues without any interruption.

Syed Mohammad Arif, President of Bangladesh Shipping Agents Association, said, “Various fees have to be paid at different stages to send products to Europe. Direct transport of goods will save a lot of money. Foreign buyers will benefit as the cost of transporting goods will be reduced. This will play a big role in creating new buyers.

What led to the initiative?

Main line operators (MLOs) had previously taken no steps to launch direct container services with Italy, as securing enough cargo would be a big challenge if such services were launched. Mainline operators are carriers that employ vessels on the main or primary routes of a traffic but do not participate in a consortium.

Rashed said trunk lines are not providing adequate containers amid the pandemic situation, leading to up to 10 times increase in freight charges in some cases.

“Directors are currently suffering because of these issues. They find it difficult to deliver the products on time even after spending extra money. So our principal decided to hire ships and transport the containers himself.

“In such a context, the direct transport of Chattogram-Italy containers has begun. It is expected that other mainline operators will also take initiatives to start shipping on this route. Then the shipping cost will decrease further.

Principal means the company or person who is the owner or charterer or manager of the vessel represented by a company and/or the carrier under the bill of lading in connection with which the services are provided by the company.

Most European countries have road connectivity between them, Rashed said, adding: “Once the goods arrive in Italy, the majority of them will be delivered to their destinations by road. Goods that need to be transported by water will be delivered to their destinations in supply vessels.

Large shipping companies still less interested

Ajmir Hossain Chowdhury, deputy general manager of the Mediterranean Shipping Company, told TBS that they view the issue of direct shipping with Italy in a positive light. But the success of this initiative remains to be seen, he added.

“Here the goods of a particular shipping company will be transported, the amount of which is very small. Also, motherships cannot anchor at Chittagong Port’s inner anchorage due to its shallow depth. Therefore, the goods have to be transported to Italy by small vessels. This involves the risk of accidents.

Mentioning that larger shipping companies are less interested in shipping to Italy with smaller vessels, he said shipping companies will come forward to transport goods directly to Europe once the Bay Terminal is operational.
Source: The Trading Standard

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