Readymade garment exporters in Bangladesh have been dealt a fresh blow
by a doubling of air shipment rates for cargoes flying out of Hazrat Shahjalal
International Airport (HSIA). The rate hike has piled additional
pressure on the garment manufacturers
who have been struggling for nearly a
year to stay afloat amid a rush of order
cancellations and rate decrease during
the pandemic.
Airlines say they raised the rate because
the growing demand for air shipment
amid improving global outlook and
squeezing of carrying capacity from the
HSIA by 60 per cent over the last three
months because of suspension of cargo
and passenger flights by some
international flight operators.
International airlines are also imposing a higher rate to make up the losses
incurred between March and September because of the suspension of
international flights and hiring staff at higher costs to load and unload goods
at the airports.
Airlines are charging between $3.20 and $3.30 per kilogramme (kg) from
the HSIA to any airport in the European Union without trucking facility.
Europe is the largest export destination for Bangladesh with a concentration
of more than 60 per cent of the national export and 64 per cent of the
garment shipment.
The rates are $3.55 to and $3.65 per kg with trucking facility – a facility
provided by airlines to carry goods from the airports of destinations to
buyers. In March, the rates were $1.70 to $1.80.
Suppliers who ship goods to North American markets have not been spared.
Airlines are realising $5.90 to $6.20 per kg from the HSIA to airports in the
US, way higher than $2.80 to $2.85 in March.
The higher shipment of masks, personal protective equipment (PPE),
Covid-19-related gowns, bedsheets and isolation bed sheets coupled with
the garment shipment have fueled the demand for air shipment from the
HSIA.
Currently, 400 tonnes of cargos are transported through air from the airport
every day, with garment accounting for 80 per cent. The volume was 900
tonnes before the pandemic hit the country in March. About 40 local and
international airliners used to carry the goods. Nearly 50 per cent of them
have either suspended carrying goods or stopped flights from HSIA as they
deem them unprofitable as they do not get enough goods to carry.
In 2020, the air shipment of garment items declined 33.68 per cent to
134,806 tonnes from 203,256 tonnes in 2019, according to data from the
Bangladesh Garment Manufacturers and Exporters Association.
"A month ago, I even asked one of my European buyers to cancel work
orders when he asked me to send the goods through air, which is more
expensive than my production costs and profit," said Ahmed F Rahman,
managing director of Kappa Fashions. "I will face a major loss if I send the
goods to him via air. Luckily, the buyer agreed to bear the air shipment cost."
The shipping charges through sea have also surged from last month on the
excuse of higher port operational costs, the entrepreneur said.
Currently, the shipment to carry a 40-foot equivalent unit through seas is
being charged $6,000 from $2,000 a month ago, Rahman said. "Since many
international airlines have suspended carrying cargoes from the HSIA,
passenger flights have been turned into cargo flights in some cases," said an
executive of an international cargo airliner working at the HSIA.
The air shipment of garment items has increased as buyers want quick
delivery, he said. In some cases, buyers bear the cost of the expensive air
shipment. But in most of the cases, the suppliers have to pay the expenses,
he said. The air shipment charge may go higher when the transportation of
Covid-19 vaccines begins, the airline executive said.
Since there is no option to carry cargoes in passenger flights, goods are
flown out through cargo freighters. The freighter rate is always higher than
the passenger flight, he said.
Syed Ershad Ahmed, country manager and managing director of Expeditors
(Bangladesh), said because of the coronavirus outbreak, important supply
chains in the logistics and transportation industry have been hampered.
He said gross value-addition for the global logistics industry dipped by 6.1
per cent. The estimated impact of Covid-19 on logistics markets varies
country to country, from a 0.9 per cent decline in China to an 18.1 per cent
fall in Italy.
The global freight forwarding market was expected to shrink by 7.5 per cent
in the worst-case scenario in 2020 compared with 2019. Ahmed said once
airlines resumed operations after the outbreak of the coronavirus, the rate
per kg rose by 100 per cent to 200 per cent compared to the pre-Covid-19
period.
KI Hossain, president of the Bangladesh Garment Buying House
Association, said sea fare went up significantly.
One and a half months ago, shipping companies used to charge $1,600 for
carrying a twenty-foot equivalent unit (TEU) of goods. Now, they charge
$4,700 to carry goods to Europe.
In case of 40–foot equivalent unit, the charge rose to $7,800 from $2,600
to $3,000. The charge goes higher when other costs are added, he said.
Mohammed Mansur, general secretary of the Bangladesh Fruits, Vegetables
& Allied Products Exporters'' Association, said Middle-East-bound airlines
had already increased the rates by 50 per cent as the usage of air cargo was
increasing gradually.
For instance, the airliners that had levied a rate of $1.90 in December 2019
are now charging $3.20 to $3.30 per kg, he said.
Source: The Daily Star, Bangladesh Saturday, 16 January 2021