Consumers, businesses under pressure due to increased tariffs

Businesses are growing increasingly concerned about the upcoming 35 per cent retaliatory tariff imposed by US president Donald Trump From 1 August.

On the same day, new container handling tariffs at private depots will also come into effect. The news of increased tariffs across all services at the Chattogram port has only added to the anxiety of traders.

Business leaders point to two major consequences of the simultaneous fee hikes. First, for imported goods, the additional cost will ultimately be passed on to consumers, potentially driving up product prices and inflation. Second, the increased transportation cost for export goods may weaken exporters’ competitiveness in the global market.

Selim Rahman, first vice president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Managing Director of KDS Group, told Prothom Alo: "We are already uneasy about Trump’s retaliatory tariffs. And now comes the announcement of higher charges at container depots. Increasing port tariffs without final discussions with users cannot be justified. In exports, every cent counts during negotiations. These additional charges will reduce our competitiveness in the export sector."

The two primary sources of tariff revenue at Chattogram Port are service charges for ships and cargo handling. According to the port's audited financial statements, these two categories generated revenue of Tk 39.12 billion under the existing tariff structure in the fiscal year 2023-24.

Port officials have stated that the new tariff rates will come into effect following the publication of the official gazette. If the increased rates are implemented, revenue collection is expected to rise by approximately 40 per cent, which would mean an additional Tk 15 billion in income for the port. Since port tariffs are collected in US dollars, any rise in the dollar’s value could further increase this revenue.

Earlier, on 15 July, the Private Container Depot Association issued a circular announcing increased container handling charges, ranging from 30 per cent to 100 per cent, depending on the service. These new rates are scheduled to take effect on 1 August. According to the association, this adjustment could raise users’ annual costs by around Tk 3 billion.

In total, the combined impact of increased tariffs in both public and private sectors will amount to an estimated additional expenditure of Tk 18 billion. This burden will fall on businesses involved in importing and exporting goods through Chattogram Port, which handles 99 per cent of the country’s seaborne container trade. As a result, the cost increases will primarily affect container-based trade.

Fayaz Khondker, Chairman of the Bangladesh Container Shipping Association and Managing Director of the Japan-based container shipping line Ocean Network Express (ONE), told Prothom Alo that container operators and shipowners typically pay the bulk of port-related charges upfront. These companies will then pass on the additional costs to importers and exporters. In short, importers and exporters will ultimately bear this increased financial burden.

The Private Container Depot Association announced it would raise container handling charges from 1 August without consulting users. At the same time, the government was also in the process of increasing tariffs at Chattogram Port.

Earlier, on 2 June, the shipping ministry held a meeting with stakeholders to discuss the issue. It was agreed that users would submit proposals by 30 June on what level of tariff adjustment would be reasonable. A second round of discussions was to follow, based on these proposals, before finalizing the new tariff rates.

User groups, including the Shipping Association, submitted proposals suggesting a reasonable increase of 10 per cent to 20 per cent. However, no further discussions were held on those proposals. Syed Mohammad Arif, president of the Shipping Agents Association, confirmed this to Prothom Alo.

In the middle of the consultation process, the finance ministry approved the proposed tariff hike last Thursday. News of a sudden average increase of more than 40 per cent left users stunned.

Yet, while visiting the port last Friday, shipping adviser M Sakhawat Hossain told journalists that the decision was not made unilaterally by the ministry.

According to him, the increase followed inter-ministerial discussions and consultations with users. He noted that this is the first tariff hike since 1986 and that the new rates are still lower than in many ports around the world.

However, the abrupt decision to raise tariffs has drawn criticism from business leaders. While Chattogram Port is already a profitable entity, some believe the hike was made to benefit foreign port operators.
When asked, Amirul Haque, Managing Director of Seacom Group, told Prothom Alo that the tariff hike seems to be part of the process of awarding the New Mooring Terminal to DP World.

He argued the increase was made to favour foreign operators. “Instead of raising tariffs, recover the losses caused by mismanagement and corruption over the past 15 years in the port sector,” he said. “There’s no need to increase tariffs — the port is already profitable.”

The simultaneous tariff hikes by both public and private entities are affecting every stage of the import-export process. For instance, once an exporter moves goods from the factory to a private container depot, the depots will begin collecting the increased fees. They already announced on 15 July that the new rates will take effect from 1 August.

Next, when export containers are transported from the depot to the port, the port authorities will impose their own increased charges—these will be enforced following the official gazette notification.

If the export destination is the United States, those goods will also be subject to the 35 per cent retaliatory tariffs announced by former US president Donald Trump, also taking effect from 1 August.

The same applies to imports. When an import vessel arrives at the port, higher tariffs will first be charged on the ship. Then, at each subsequent step—container unloading, storage, and handling—additional charges will apply.

Most of these increased charges are initially paid by shipping agents, who later recover the costs from importers and exporters. Ultimately, importers pass the burden on to consumers by adding the extra cost to the final price of goods.

Distinguished fellow of the Center for Policy Dialogue (CPD), Mostafizur Rahman, told Prothom Alo that any increase in tariffs—whether from public or private sectors—should be based on reasonable justifications and determined through consultations with users.

He said, “There is already uncertainty surrounding exports due to Trump’s retaliatory tariffs starting 1 August. At such a time, the decision to increase tariffs should be reconsidered. Higher charges could reduce export competitiveness and place additional financial pressure on consumers by increasing import costs.”