Export-import trade: Costs rise due to delayed shipping
MV Meghna Adventure, a vessel carrying the Bangladeshi flag, is now en route to Chattogram with soybean seeds on board from the US. Instead of taking the shortest route through the Suez Canal and the Red Sea, the ship had to divert to the Cape of Good Hope in Africa due to the ongoing tension in the Red Sea.
The new route extended the distance by one and a half thousand nautical miles and the period by five to six days.
According to ship tracking website Vessel Finder, the ship was seen heading towards Chattogram via Madagascar and Africa on Saturday evening. Its voyage commenced from Darrow port on the Mississippi River in the United States on 27 December and is supposed to reach the Chattogram port after 53 days on 14 February.
Mustafizur Rahman, distinguished fellow of CPD, advised entrepreneurs to explore more convenient and cheaper alternatives to mitigate the adversities.
Meghna Group of Industries (MGI), a business conglomerate in Bangladesh, owns the vessel and the 59,000 tonnes of soybean seeds on board.
Asked about the impact of the extended route, the group’s chairman, Mustafa Kamal, said they are counting additional costs for the extended route and shipping time. The daily operation cost of the ship ranges from USD 10,000 to 12,000, while the additional amount is being added to the overall import costs.
In January, the shipping lines imposed surcharges on commodity imports in containers. The overseas suppliers initially borne the surcharge but are now adding it to the commodity price. It led to a rise in import costs from Europe, the USA, Egypt, and Turkey by $30 to $35 per tonne, affecting both imports and exports.
On 15 December, four of the world’s five largest container shipping companies suspended vessel operation through the Red Sea as the Houthi rebels of Yemen started attacking the ships crossing the sea.
More than 50 days have elapsed since then, but the major shipping lines are still rerouting their vessels around the African continent.
Pressure on cargo flights
The Hazrat Shahjalal International Airport in Dhaka recorded a significant surge in air freight exports in January, totaling 14,851 tonnes of goods valued at $185.5 million. In the previous year’s corresponding month, the exports were 4,450 tonnes worth $70 million.
It represents a 165 per cent year-on-year surge in cargo exports through the airport. Here, a majority of 60 per cent exports went to the European Union countries, the United States, Turkey, and Egypt.
For instance, Tusuka Group exported 386,000 pieces of clothing worth nearly $3.8 million through cargo flights to the US and the European countries.
Masum Hossain, an official of Tusuka Group, cited two reasons behind the exports through cargo flights. Firstly, there was a delay in the production process due to the labour protest in Gazipur in November. Secondly, they have opted for cargo flights to ensure quick delivery to the buyers amid the crisis in the Red Sea
Asked about the crisis, Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue (CPD), said there will be extra pressure on exports due to the crisis, while the imports will suffer partially. The consumers of the relevant sectors may see their costs increased.
He also advised entrepreneurs to explore more convenient and cheaper alternatives to mitigate the adversities.