Export-import cost rises as sea freight amount trebles

January 16, 2021 Business
Both import and export costs have risen after the sea freight rate trebled in 8 weeks as a result of an acute shortage of empty containers and a growth popular on the Asia-Europe and transpacific routes.

More than 90 % of Bangladesh's $100-billon external trade is seaborne.

Businesses say they are already facing higher import and export costs due to the rising sea freight rates.

A lot of the mainline operators started raising freight costs in November because of the congestion at several ports in Europe and Southeast Asia for the coronavirus-induced lockdown, which created a good shortage of empty containers. 

Furthermore, the demand from US and European merchants rose before Christmas and New Yr and the Chinese New Year in February.

In line with the BBC Information, a surge in demand meant for imports and log-jam of empty containers happen to be creating bottlenecks at UK ports.

On December 1, CMA-CGM, the world's fourth-largest container delivery line, announced to improve freight costs to $1,175 per 20-foot containers and $1,375 per 40-foot container for the routes between North Europe and North-West India.

On January 8, the shipping series hiked a fresh rate on a single route to $2,000 for a 20-foot container and $2,500 per a 40-feet container.

Muntasir Rubayat, head of operations of shipping agent GBX Logistics, said the rebound in financial activities found in China and the peak popular for goods in the US and European markets before Christmas and New Year holiday seasons caused the shortage of containers globally.

"Chinese companies are rushing to fulfil orders and so are willing to pay larger freight rates," explained Rubayat, adding that led delivery liners and container owners to shift their containers to China to serve the inter-pacific routes between China and America.

As a end result, there is a severe shortage of containers for intra-Asia trades and other trade routes, he said.   

The slower return of containers from American ports has exacerbated the problem, as many liners usually do not want to recreate empty containers to Asia since it costs them. If Asian exporters prefer the containers, the liners can transfer the price onto them.

This is causing an extended delay in shipments from other origins.

Local importers who've initiated to import commodities such as chick peas, lentil, peas and wheat from Australia, Canada, Egypt and other countries eyeing for up coming Ramadan are facing problems in receiving timely shipments.

In November, Chattogram-based BSM Group opened letters of credit to import an enormous quantity of lentil, chickpeas and different goods from countries such as Australia, Russia, Canada and Ukraine. It is yet to obtain the shipment, stated its chairman Abul Bashar Chowdhury.

"It needs many hundred containers for taking those merchandise, and the suppliers informed that they might not be able to deliver the shipment before end of February because of the shortage of containers," explained the commodity importer.

"As a result of higher freight costs, the import expense of the products will go up by $20 to $25 per tonne."

Masudur Rahman Bhuiyan, a Chattogram-based fruit importer, is looking to import 70 containers of apple from China this month.

In October, he paid out $1,800 to $2,000 to bring each 40-foot refrigerated container from China, but now the freight charge reached $5,000.

"The increase import price will surely have an impact on the price tag on goods when they can be purchased," Bhuiyan said.

The hike in the shipping freight will also affect the country's export of readymade garment since the recycleables are imported.

Syed M Tanvir, a director of Pacific Jeans Group, a denim exporter, said the company was already counting larger import costs to get fabrics and other extras from China since suppliers were adding the hike on container freights with the price tag on the products.

"We must compromise on our profit percentage as we can't modify the higher expense to the price tag on our finished products which have been pre-ordered," explained Tanvir.

The delays in the shipment of the raw materials from China are disrupting development and forcing exporters to use expensive air shipment to meet the deadlines, he said.

If indeed they can't supply items within the agreed time, buyers may seek a discount.
Source: Thedaily Star

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