Bangladesh Shipbuilders back to life with Tk.5,000cr orders

[Bilal9]

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The country's shipbuilding industry is witnessing a significant boost as three of its largest companies have secured orders to build around two dozen vessels worth approximately Tk.5,000 crore.

This surge in orders comes after a year of increased inquiries by buyers, which has expanded the industry's potential for acquiring additional orders.

Dr Abdullahel Bari, President of the Association of Export-Oriented Shipbuilding Industries of Bangladesh (AEOSIB), told The Business Standard (TBS), "The shipbuilding sector is emerging as a shining star in the country's economy, with three major companies currently holding combined orders worth Tk5,000 crore."

Bari, who is also the owner of Ananda Shipyard, said, "We [Ananda] also received a substantial number of inquiries last year, indicating a higher likelihood of obtaining more orders. We have received orders totaling about Tk.700 crore."

Khulna Shipyard, one of the country's leading shipbuilders, has secured orders valued at around Tk2,300 crore, while Karnaphuli Ship Builders Limited (KSBL), has orders worth nearly Tk2,000 crore.

Captain Al Amin Chowdhury, general manager (Design and Planning) of Khulna Shipyard, told TBS, "We got work orders to build a 70-meter cruise ship, two tugboats for Payra Port, four 24-inch dredgers for the Bangladesh Inland Water Transport Authority (BIWTA), five 60-meter patrol craft, three landing craft tanks for the Navy, three diving vessels, a modern floating crane with a 70-tonne capacity for the Coast Guard, two diving boats for the Coast Guard, two ferries, and a survey boat."

"We are also working on several other smaller orders. These vessels will be delivered to buyers at different times by June 2024," Chowdhury added.

Engineer Abdur Rashid, managing director of Karnaphuli Ship Builders Limited (KSBL), said that the firm is currently working on several orders, including building a mother vessel with a helipad, four coastal ships, three cruise ships, a few survey vessels, and other smaller vessels.

Rashid said all these orders were secured last year, requiring to be delivered by 2024.

Dr Bari, chairman of Ananda Shipyard, said his company is building two 24-inch dredgers for the BIWTA, two cargo ships with a capacity of 1,200 tonnes each, a multipurpose 5.5m container ship for India, and five medium and small-sized ships, along with some repair works.

He said these orders are scheduled for delivery next year.

While the shipbuilding industry faced a challenging year in 2020 and 2021 due to reduced orders and payment difficulties, it managed to rebound in 2022.

Dr Bari said that immediately after the pandemic in 2021, the industry encountered decreased orders and halted ongoing projects due to payment failures. However, the situation improved significantly the following year, with a substantial influx of orders.

Although the Russia-Ukraine war posed a crisis in late 2022, it lasted only a few months, and the industry is currently not facing major issues, he noted.

Regarding the industry's potential, Bari said, "Bangladeshi shipbuilders have established a reputation for producing high-quality vessels at competitive prices and this has created a strong demand for their products abroad, leading to increased buyer interest and positive industry trends."

Regarding the dollar crisis and its impact on the shipbuilding industry, Al Amin Chowdhury of Khulna Shipyard said the crisis regarding opening Letters of Credit (LCs) only lasted for a few months last year. Fortunately, the government promptly resolved the issue, and currently there are no problems in this regard.

Expressing similar sentiments, Engineer Rashid of Karnafuly Ship Builders, said they are currently not encountering any obstacles in opening LCs for importing materials and machinery required for shipbuilding.

However, the situation differs for Ananda Shipyard. Its Chairman Dr Bari claimed that his company continues to face hurdles in opening import LCs.

"I need to procure certain necessary equipment, but due to the dollar crisis, we are unable to proceed with the imports," he added.

 

[bluesky]

Engineer Abdur Rashid, managing director of Karnaphuli Ship Builders Limited (KSBL), said that the firm is currently working on several orders, including building a mother vessel with a helipad, four coastal ships, three cruise ships, a few survey vessels, and other smaller vessels.

Two questions below:

1) Is it the first time that a BD company building such a large vessel as a Mother Ship? Or
2) Mother vessels were built before, but this is the first time that a helipad is placed on it.

In both cases, it is a long step for our country. I believe that the shipbuilding industry has more potential than even today's textile industry.

BD is full of rivers and Sea shores. All suitable venues for building all kinds of ships.

 

[leonblack08]

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Khulna Shipyard, one of the country's leading shipbuilders, has secured orders valued at around Tk2,300 crore, while Karnaphuli Ship Builders Limited (KSBL), has orders worth nearly Tk2,000 crore.

Captain Al Amin Chowdhury, general manager (Design and Planning) of Khulna Shipyard, told TBS, "We got work orders to build a 70-meter cruise ship, two tugboats for Payra Port, four 24-inch dredgers for the Bangladesh Inland Water Transport Authority (BIWTA), five 60-meter patrol craft, three landing craft tanks for the Navy, three diving vessels, a modern floating crane with a 70-tonne capacity for the Coast Guard, two diving boats for the Coast Guard, two ferries, and a survey boat."

Nice to see Navy and coastguard getting some new ships.

 

[Bilal9]

Two questions below:

1) Is it the first time that a BD company building such a large vessel as a Mother Ship? Or
2) Mother vessels were built before, but this is the first time that a helipad is placed on it.

In both cases, it is a long step for our country. I believe that the shipbuilding industry has more potential than even today's textile industry.

BD is full of rivers and Sea shores. All suitable venues for building all kinds of ships.

Let me do some digging - I will come back with answers.

 

[mb444]

Very happy to see dredgers being built in country. We need loads of them to keep waterways clear and functioning.

 

[Bilal9]

Very happy to see dredgers being built in country. We need loads of them to keep waterways clear and functioning.

Dredgers have been built in Bangladesh for the last two decades.

The mechanical parts and cutter suction mechanism are made overseas (EU/USA) and imported.

 

[mb444]

Dredgers have been built in Bangladesh for the last two decades.

The mechanical parts and cutter suction mechanism are made overseas (EU/USA) and imported.

This I know...but we have also seen them being bought from overseas in recent years. We need produce them in house as much as possible. Export substitution in every aspect is what i hope for BD.

Good to see shipbuilding taking off again, its been a quite few years.

 

[Bilal9]

This I know...but we have also seen them being bought from overseas in recent years. We need produce them in house as much as possible. Export substitution in every aspect is what i hope for BD.

Good to see shipbuilding taking off again, its been a quite few years.

We have to be on the lookout for fifth columnist agents who work for the neighboring country. This is what happened in the recent past to disrupt shipbuilding which you are talking about.

Also - the AL govt. was not keen to fund this activity period. There should have been a 500 Million dollar (or even 200 Million dollar) superfund to bankroll shipbuilding supplies, store them locally and have them at the ready to assemble ships pronto when orders come in, instead of waiting for back-to-back L/Cs and the two month delay for shipbuilding supplies from overseas.

As usual the uzboog chetona idiots did not see the crying need and value for these steps.

The lack of repeat orders is because of delays in delivery in the past and delays were because of mainly back-to-back LC delays and the banks not releasing funds for L/Cs on time. Thanks to them being foreign agents, AL idiots were able to ensure running a promising industry into the ground.

Chetonabadi fifth columnist deshdrohis (and foreign agents) in Hasina's cabinet also completely debunked our efforts to market Bangladesh as a shipbuilding destination in foreign shores (especially in Dubai/UAE), when shipbuilding activity in our shores is far older than anyplace in the vicinity. We all know which other nation's payroll AL deshdrohis work for.

People who do not want to see Bangladesh' rise as an industrial powerhouse will always try to disrupt and halt any shipbuilding activity here. They will try 24/7/365 to do this. I can mention dozens of evidences as proof.

When Indian ambassador and Navy chiefs visited Western Marine 3 times in as many months a few years ago - you could for sure assume that they had cast their bad-nazar on it. Western Marine finally almost shut down couple of years after those visits. Indians were able to convince Hasina that Bangladesh should not have a strong shipbuilding industry. Any promising industry like this needs govt. financial support.

Right now the only thing WMS is working on is a Norwegian Fishing Trawler (so far the largest built in Bangladesh).

Norwegian Fishing Trawlers – Western Marine Shipyard Ltd.

www.wms.com.bd

Hasina is a curse to our nation's rise an an industrial power.

 

[bluesky]

Dredgers have been built in Bangladesh for the last two decades.

The mechanical parts and cutter suction mechanism are made overseas (EU/USA) and imported.

I have been always telling that BD companies are not technology oriented. They cannot produce technology/ mechanical goods, BD people lack talents to do so.

I personally expect a few famous foreign companies build shops in BD and produce technology good related to machinery.

I believe the time is approaching when they will choose BD to establish shops here and our people will work there.

 

[mb444]

We have to be on the lookout for fifth columnist agents who work for the neighboring country. This is what happened in the recent past to disrupt shipbuilding which you are talking about.

Also - the AL govt. was not keen to fund this activity period. There should have been a 500 Million dollar (or even 200 Million dollar) superfund to bankroll shipbuilding supplies, store them locally and have them at the ready to assemble ships pronto when orders come in, instead of waiting for back-to-back L/Cs and the two month delay for shipbuilding supplies from overseas.

As usual the uzboog chetona idiots did not see the crying need and value for these steps.

The lack of repeat orders is because of delays in delivery in the past and delays were because of mainly back-to-back LC delays and the banks not releasing funds for L/Cs on time. Thanks to them being foreign agents, AL idiots were able to ensure running a promising industry into the ground.

Chetonabadi fifth columnist deshdrohis (and foreign agents) in Hasina's cabinet also completely debunked our efforts to market Bangladesh as a shipbuilding destination in foreign shores (especially in Dubai/UAE), when shipbuilding activity in our shores is far older than anyplace in the vicinity. We all know which other nation's payroll AL deshdrohis work for.

People who do not want to see Bangladesh' rise as an industrial powerhouse will always try to disrupt and halt any shipbuilding activity here. They will try 24/7/365 to do this. I can mention dozens of evidences as proof.

When Indian ambassador and Navy chiefs visited Western Marine 3 times in as many months a few years ago - you could for sure assume that they had cast their bad-nazar on it. Western Marine finally almost shut down couple of years after those visits. Indians were able to convince Hasina that Bangladesh should not have a strong shipbuilding industry. Any promising industry like this needs govt. financial support.

Right now the only thing WMS is working on is a Norwegian Fishing Trawler (so far the largest built in Bangladesh).

Norwegian Fishing Trawlers – Western Marine Shipyard Ltd.

www.wms.com.bd

Hasina is a curse to our nation's rise an an industrial power.

Very interesting perspective.

I was aware of LC issues these guys were having. Its a very capital intensive industry where huge loans are taken to bring in steel sheets, engine, sensors etc for the ships that the Govt and banks were not too keen on particularly as some shipbuilders failed to pay back loans. Loan defaulting occurred in some cases as the companies tried to scale up and i think in the case of western marine also due to issues amongst the partners.

I agree with you here. BD needs to support this sector by creating bonded warehouse model that lead to the growth of the RMG sector. But conversely where $100m bonded facility would give a huge boost to RMG where production of the end good is quicker and customers so diversified a $100m bonded facility would be like 6-8 ships or not even that. The risk to the public purse may have been too great even though potential earnings was also great.

The better way is for all public sector need...navy, coastguard, river and port authorities etc should all go to incountry shipbuilders without any question. I think this is what is happening. If bonded facility is out of the question which to be honest would really need $Bs rather than $Ms the government should atleast reduce duties where possible.

Lastly offcourse we need to start producing naval grade steel. Again not cheap but needed to develop a strong manufacturing sector for shipbuilding and beyond.

I hope BD achieves critical mass of internal and external demand sooner rather than later where these action will be taken.

With stronger alignment with Korea and Japan we need to also seek some FDI. They really helped establish and support vietnam and there is no reason it can not be replicated in BD.

 

[Bilal9]

Agreed on all points.

Not only should all public sector needs should all go to local Bangladeshi shipbuilders - govt. should provide serious tax and duty incentives to local yards whereby they can satisfy demands by local container shipping, bulker and tanker owners to purchase, and use ships built in local yards. For ships displacing less than say 8000 DWT this is (like you said) already the norm.

Problem is that local companies (such as HRC and Akij for example) who do INTERNATIONAL container shipping, bulker and tanker operations usually need ships that are far larger (say around 30,000 DWT and up) which we don't yet build at any of our yards. No local slipway and any of our yards can accommodate builds of that size. There is one exception where Karnafuly is building a drydock in Majhirghat Chittagong for builds of that size (Korean designers are involved) and work is continuing. More yards need to follow this process.

What could happen there (if the bright govt. amlas get to realizing this at some point) is that we have to remedy this "chicken and egg" situation by starting the process of forcing local builds of up to say 35,000 DWT (and 3000 TEU container ships) which are the majority of regional container shipping, bulker and tanker fleets. We can enlist some help by say either Chinese or Korean yards by putting in conditions that certain purchases by local freight companies will need to be built here (by using local govt. tax and other incentives) and sweeten the pot that way to move the industry one step forward.

Instead of letting things run as they are, the govt. (shipping ministry) needs to identify this sector as a thrust sector and provide some serious incentives a la Korean and Chinese govt. initiatives which attracted investors and builders like Damen and Fincantieri to those shores.

Design wise too - we need to attract foreign ship designers to our facilities to do research on ship hull design, especially shallow draft designs for shallow draft ports. There is a yard and designer in Japan - Tsuneishi Shipbuilding, who are experts in this sector. A recent build (by another yard) of this low draft design (draft is 7.5 meters) is Maersk's MCC Chittagong, which is a frequent visitor to Chittagong.

The Tsuneishi "Chittagong Max" Design can be built in Chittagong, provided the govt. wants to kick start the process of building 3000 TEU container carriers locally, which are the perfect size to carry containers to both Singapore and UAE ports, and even as far afield as Italian ports in the Mediterranean, all routes which are being fed by Bangladeshi feederliners at this time.

2,806 TEU Type Container Carrier (Geared)｜Products｜TSUNEISHI SHIPBUILDING Co.,Ltd.

Tsuneishi Shipbuilding Company develops and builds a variety of bulk carriers, tankers, and container carriers that meet the market needs of the Asia region, as a supplier of ships to customers around the world. The company also has a growing role in ship

www.tsuneishi.co.jp

If we do not push things this way - then we will never have a viable shipbuilding industry at a scale we deserve. Building 8000 DWT tankers and bulkers will be fine, but the profit margin for building these are not that great when compared to say 30,000 plus DWT freight vessels.

I remember that just a few months ago, Akij and HRC put in huge orders for large bulkers at Chinese yards, unhindered by any govt. requirement to use our own yards and our own labor. I mean we love Chinese products for the reasonable price points and adequate quality, but at some point we also have to feed our own laborers. There has to be happy medium where all parties benefit, especially when our shipbuilding labor is one third as expensive as Chinese labor, or any Asian labor in that segment.

 

[Bilal9]

Lastly offcourse we need to start producing naval grade steel. Again not cheap but needed to develop a strong manufacturing sector for shipbuilding and beyond.

That is a great idea, but not quickly achievable in the short term. Local steel producers will have a hard time meeting the standards, given their tech maturity level. What we can have though is (like you said) a bonded warehouse local storage situation which is replenished quickly by repeat orders to the source (maybe China) so that steel shipbuilding plate is available round the clock without running dry.

Meanwhile we also have to incentivize production of shipbuilding grade steel plate where demand is consistent and stable, which is not the case right now. Majority of inland vessels are built with recycled ship-breaking steel plates. This would be unacceptable in builds for naval use or even high grade International freight vessels for overseas export.

 

[Bilal9]

Even Indians are assisting their shipbuilders financially (Shipbuilding Financial Assistance Management System) - please review and discuss why they are and why we are not.

SFAMS

Here are the Indian guidelines and policy. We will also review the Chinese and Korean policy in this regard.

https://www.shipbuilding.nic.in/assets/cms_files/1631084761_ADMIN00001.pdf

 

[bluesky]

Even Indians are assisting their shipbuilders financially (Shipbuilding Financial Assistance Management System) - please review and discuss why they are and why we are not.

SFAMS

Here are the Indian guidelines and policy. We will also review the Chinese and Korean policy in this regard.

https://www.shipbuilding.nic.in/assets/cms_files/1631084761_ADMIN00001.pdf

It is imperative that the BD govt assists a rising industry. A time comes when the shipbuilding industry will get many orders and be able to stand on its own feet.

The govt will then be able to collect taxes once the factories become solvent and earn profits.

 

[Bilal9]

Brave Royal Shipping in Bangladesh has nine such bulker ships as below, each with 48,000 DWT capacity. They are expanding, as are quite a few other shipping companies in Bangladesh, majority of them operating large bulkers.

Future orders need to come with ToT agreements so some yard collaboration can happen with Chinese/Korean/Japanese yards just like what happens in Vietnam and the Philippines, both of which have large/robust shipbuilding sectors. If Bangladesh govt. does not put local manufacture (or even assembly from sub-assemblies overseas) in as a regulatory demand, local shipbuilding will not prosper. This is timely, because local shipping company activity is growing by leaps and bounds, even container shipping.