Bangladesh: Faster, cheaper export to Europe from February

[Homo Sapiens]

Bangladesh: Faster, cheaper export to Europe from February​

Bangladesh: Faster, cheaper export to Europe from February | Hellenic Shipping News Worldwide

www.hellenicshippingnews.com

in Port News 31/01/2022

Bangladesh’s export to Europe is going to have a much less lead time and cost from February as a direct freight service is starting from Chattogram port to Europe – the country’s biggest apparel export destination.

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

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

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

Businessmen and Chattogram port officials expect that the direct route will reduce the shipment cost by around 40%.
Italian shipping company Kalypso Compagnia di Navigazione SPA Italy will transport Bangladeshi export goods via two container vessels – the Cape Flores and the Songa Cheetah.

The Cape Flores is the flagship of the Marshall Islands with a draught of 8.66 metres – 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 metres and width 25.19 metres.

The Songa Cheetah is currently on its way to Chattogram port. The Liberian flagship with a draft of 6.2 metres will arrive at the port on 5 February.

Reliance Shipping and Logistics is working as the local agent of the two ships in Bangladesh.
Mohammed Rashed, chairman of Reliance Shipping and Logistics, said, “Songa Cheetah left the port of Ravenna, Italy on 17 January with 945 TEUs of empty containers and 7 TEUs of containers with garments and raw materials. It will reach Chattogram port on 5 February. The ship will sail for Italy on 7 or 8 February with containers.”

“The ship will carry about 16,500 tonnes of export goods in around 1,100 TEUs of containers. Of this, 98% are readymade garments and the remaining 2% are handicraft, leather and jute products. Once the goods reach the port of Ravenna, they will be delivered to various destinations in Europe as per the demand of the buyers.”

The Cape Flores had already arrived at Chattogram port on 24 December with empty containers.
Currently, Italy-bound container ships from Chattogram port first have to 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 go to Italy.

In some cases, goods are carried to Italy in mother vessels directly from the transhipment ports. But, most of the time, containers are unloaded at European base ports in the absence of the mother vessel’s schedule in Italy. From there, goods are shipped to Italy in feeder vessels.

A shot in the arms for export trade
Traders said this initiative will reduce costs in export-import trade including the fixed operating cost of ships and strengthen Bangladesh’s position in the competitive market.

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

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

Rear Admiral M Shahjahan, chairman of the Chattogram Port Authority (CPA), told The Business Standard, experimental shipping on this route has already been completed successfully.

In April last year, about 25,000 Bangladeshi containers with imported goods were stuck at transshipment ports in Sri Lanka and Malaysia which affected traders as their production was stopped as the raw materials could not reach the factory on time. These containers were later brought to Chattogram port by additional feeder vessels.

Traders said the import-export trade of Bangladesh is being affected due to congestion in transshipment ports.
According to data provided by the Chittagong Port authorities, the premier seaport in the country 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 as to how much of these goods is transported to Europe or to other continents since they are shipped to their destinations after being unloaded in transshipment ports.
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Shipping Agents’ Association, however, say 55% of the overall export trade of the country is done with European countries.

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

Syed Nazrul Islam, first vice-president of Bangladesh Garments Manufacturers and Exorters Association (BGMEA), said, “Europe is the largest market for the garments industry of Bangladesh. The new route will halve the current shipping cost. It is very positive news for the country’s export sector.”

Syed Iqbal Ali Shimul, senior vice president of Bangladesh Shipping Agents Association, said at present, about 51% of Bangladesh’s export products go to Europe, 25% to America, 20% to Asia and 4% to Canada.
Sources with shipping lines said foreign buyers take products from Bangladesh on Free on Board (FOB) basis, in which case the buyers bear the shipping fare.

At present, the fare for transporting a 40-foot container ship from the transhipment ports to Italy ranges between $10,000 and $14,000 depending on shipping lines, people concerned said, adding the freight charge could be $6,000-$7,000 on the new route.

Chattogram port accounts for 92% of the total export-import trade of Bangladesh. Besides, 98% of the container shipment is done here. However, the exporters are sometimes forced to send their products by air after missing the schedule of the export ships. This increases the transport cost manifold.

Rakibul Alam Chowdhury, vice president of BGMEA, said, “There remains a risk of missing the mother vessel even if the feeder vessels are late for one day to reach the transshipment port. In many cases, ships leave the Chattogram port without taking the goods to get the schedule of the mother vessel. This makes it uncertain to send the product to the customers at the stipulated time. In this situation, the new shipping route with Europe has created huge potential for Bangladesh’s export sector.”

Traders have also suggested the authorities create more routes for direct container ship movement to other ports in Europe and America.
Mahbubul Alam, president of 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 disruption.”

Syed Mohammad Arif, chairman of Bangladesh Shipping Agents Association, said, “Various charges have to be paid in different stages to send products to Europe. Direct transport of goods will save a huge amount of money. Foreign buyers will be benefitted as the cost of transporting goods will be reduced. This will play a big role in creating new buyers.”

What led to the initiative?
The main-line operators (MLOs) previously did not take any steps to launch direct container services with Italy because getting enough cargo would be a big challenge if such services were launched. Main-line operators are carriers employing vessels in the main or principal routes in a trade but not participating within a consortium.

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

“The principals are currently suffering because of these issues. They are struggling to deliver products on time even after spending extra money. So our principal has decided to hire ships and carry the containers themselves.

“Against such a backdrop, the Chattogram-Italy direct container shipping has started. It is expected that other main-line operators will also take initiatives to start shipping on this route. Then, freight charges will go down further.”

Principal means the firm 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 services are provided by the company.

Most of the European countries have road connectivity between them, Rashed mentioned, adding, “After the goods arrive in Italy, a majority of those will be delivered to their destinations by road. The goods that need to be transported by waterway will be delivered to their destinations in feeder vessels.”

Large shipping lines still less interested
Ajmir Hossain Chowdhury, assistant general manager of Mediterranean Shipping Company, told TBS that they view the issue of direct shipping with Italy in a positive light. But it remains to be seen how successful this initiative becomes, he added.
“Here goods of a particular shipping line will be transported, the amount of which is very low. Besides, mother vessels cannot anchor at the inner anchorage of the Chittagong Port because of its shallow depth. Therefore, goods have to be transported to Italy by small ships. This involves the risk of accidents.”

Mentioning that large shipping lines are less interested in shipping to Italy with smaller ships, he said the shipping lines will come forward to transport goods directly to Europe once the Bay Terminal becomes operational.
Source: The Business Standard

 

[Bilal9]

Chittagong is a low draft port so low draft ships have been designed for Chittagong. MCC Chittagong is an example.
Vessel draft is 7.9 m and total DWT is 37,000.

 

[peagle]

Chittagong is a low draft port so low draft ships have been designed for Chittagong. MCC Chittagong is an example.
Vessel draft is 7.9 m and total DWT is 37,000.

Which is the deepest draft port in Bangladesh?
I recognise much of Bangladeshi coastline is essentially a heavy river delta region with large amount of sedimentation, so that probably limits the available sites, except I suppose the eastern areas south of Chittagong.

 

[Bilal9]

Which is the deepest draft port in Bangladesh?
I recognise much of Bangladeshi coastline is essentially a heavy river delta region with large amount of sedimentation, so that probably limits the available sites, except I suppose the eastern areas south of Chittagong.

Yes you are exactly right. Not all spots South of Chottagong are suitable, though.

The Japanese companies were given a contract to develop a deep sea port at Matarbari, which is about 20 KM North of Cox's Bazaar.

That area has almost 18.5 meters worth of draft, the deepest in Bangladesh. The port jetties are complete and other facilities are being constructed. Test vessels already docked there last year.

18.5 meters draft is not unlike draft at very large ports like Singapore, and which can accommodate the huge NeoPanamax class Container Carriers (~14,500-TEU) which have about 15 metres draft. If these mother vessels can dock at Matarbari directly, there will be no need to off-load containers to lighterage vessels/barges at outer anchorage (in deeper draft waters) to reduce draft in order to dock. Here is a NeoPanamax vessel and you can judge the size,

This way, container cranes a the docks can off load and load containers to these huge ships in less than a fourth/fifth of the time needed currently. Container throughput of Bangladesh ports will go up in spectacular fashion. CTG already handles more containers than all the Indian East Coast ports combined. Only JNPT in Mumbai and Adani Ports in Gujarat handles more Containers in South Asia.

 

[Bilal9]

Direct RMG shipping from Bangladesh to Europe reduces shipment time and cost significantly

A direct vessel from Europe arrived in Bangladesh on February 5, setting a significant milestone for the country and opening a new horizon in expanding international trade.

The container vessel Songa Cheetah reached the shore of the Chittagong port all the way from the Italy’s Port of Ravenna.

BGMEA President Faruque Hassan termed the occasion as historic moment for Bangladesh, saying it would usher in a new era for the country as the direct route would significantly enhance Bangladesh’s trade with Europe.

It is estimated that the direct route will reduce the cost by almost 40% as goods can reach the European port within just 16 days.

“I hope more shipping lines from Europe and even transatlantic will join the path because this will add significant economic values to the economies in the West who trade with us. It would make Bangladesh’s RMG industry more competitive by reducing time and cost,” Faruque Hassan said while visiting the container vessel on February 6 at Chittagong Port together with Chairman of Chittagong Port Authority (CPA) Rear Admiral M Shahjahan, Ambassador and Head of Delegation of the European Union to Bangladesh Charles Whiteley and Ambassador of Italy to Bangladesh Enrico Nunziata.

BGMEA First Vice President Syed Nazrul Islam, Vice President Shahidullah Azim, Vice President (Finance) Khandoker Rafiqul Islam, Vice President Md. Nasir Uddin, Vice President Rakibul Alam Chowdhury and Directors Abdullah Hil Rakib, A.M. Shafiul Karim (Khokon), Md. Hassan (Jacky) and M. Ahsanul Hoq were also present there.

BGMEA President Faruque Hassan said, “This occasion comes in a moment when Bangladesh is celebrating her golden jubilee of independence and our graduation from LDC status. This is also happening in a moment when the world trade and supply chain is crippled by the pandemic. So this is a clear message to the world that we are addressing all the issues required to add value to global trade by supplying to the buyers and traders who kept faith on us.”

Moreover, Bangladesh is gearing up to accelerate its economic growth and bolster trade with the world.

“The Government of Bangladesh is implementing several mega projects, most importantly establishing 100 special economic zones including Bangabandhu Industrial Park in Mirsarai, the Padma Bridge, Metro Rail, Karnaphuli Tunnel, elevated expressway, the third terminal at Dhaka airport and bringing the whole country under railway network. These would add tremendous strength to our capacity, and many of these projects are near about completion,” Faruque Hassan said.

He requested the EU and Italian Ambassadors to tell these stories in their respective countries so that businessmen and investors become aware of the opportunities and value of doing business with Bangladesh.

 

[Bilal9]

Direct RMG Container export shipping started to EU region (Ravenna, Italy)

 

[Bilal9]

 

[Bilal9]

 

[bluesky]

Mr. Abdullah Zahir said many positive things in the interview. But, even if one or two ships are in the service arranged by the Italian exporters, we should not expect America or European countries to arrange similar specialized ships.

Note that the freight is paid by the exporters and is expressed in C&F/ CIF prices. So, it is the responsibility of the BGMEA itself to arrange for Oceanic ships with low drafts (8m). Only with this arrangement, a continuous short-time shipment to other destinations is possible.

Otherwise, I can see the present arrangement will be limited to Italy only.

 

[damiendehorn2]

Yes you are exactly right. Not all spots South of Chottagong are suitable, though.

The Japanese companies were given a contract to develop a deep sea port at Matarbari, which is about 20 KM North of Cox's Bazaar.

That area has almost 18.5 meters worth of draft, the deepest in Bangladesh. The port jetties are complete and other facilities are being constructed. Test vessels already docked there last year.

18.5 meters draft is not unlike draft at very large ports like Singapore, and which can accommodate the huge NeoPanamax class Container Carriers (~14,500-TEU) which have about 15 metres draft. If these mother vessels can dock at Matarbari directly, there will be no need to off-load containers to lighterage vessels/barges at outer anchorage (in deeper draft waters) to reduce draft in order to dock. Here is a NeoPanamax vessel and you can judge the size,

This way, container cranes a the docks can off load and load containers to these huge ships in less than a fourth/fifth of the time needed currently. Container throughput of Bangladesh ports will go up in spectacular fashion. CTG already handles more containers than all the Indian East Coast ports combined. Only JNPT in Mumbai and Adani Ports in Gujarat handles more Containers in South Asia.

Your right, the lack of a deep sea port increases the transportation/shipping costs by over 45%. With the rapid increase in exports and trade, its become essential we build a efficient large deep sea port directly connected to a rail network.

 

[Bilal9]

Your right, the lack of a deep sea port increases the transportation/shipping costs by over 45%. With the rapid increase in exports and trade, its become essential we build a efficient large deep sea port directly connected to a rail network.

Long time no see @damiendehorn2 bhai, welcome back.

 

[damiendehorn2]

Long time no see @damiendehorn2 bhai, welcome back.

Good to be back @Bilal9 bhai, missed you guys.

 

[Bilal9]

Another video,

The discussion is centering around profitability now, to have return container cargo coming from Egypt (Port Said) and Pakistan (Karachi) so container freight carrying is profitable both ways. Maybe we can import agri-goods or other Pakistani exports to diversify import sources away from single countries.

If the ship can touch these ports in the incoming leg, and carry freight from these ports, then the route may be attractive for a lot of European freight shippers. Return leg to EU ports (direct) is not a problem at all, with 3.2 Million TEU's ready to go every year from Chittagong to EU ports every year. And 16 days direct to EU is cutting the shipping time via trans-shipment in S'pore to half, which normally takes 4 to 6 weeks.

Interesting thing is - we have already built and exported multiple dozens of low-draft small coastal container carriers and bulk carriers like this (about 900 TEUs or 10,000 DWT) to EU buyers recently. If needed - we can fabricate dozens of these customized container carriers for these EU routes.

Here is a bulk carrier (one of many) Western Marine in CTG made for a German firm. It can go up to river ports in the Danube.