The severe fall in imports and less-than-expected growth of export cargo contributed to the shutdown of operations of the direct shipping services to and from the major port in Bangladesh, according to port officials.
Last year, the freight rate was too high, some US$12,000 or more per TEU for a Chittagong-Europe sailing, with a number of foreign companies along with their local partners coming forward to launch direct shipping service from Chittagong.
The new direct services had cut down box transportation time significantly, from some 40 days for those containers carried through regional transshipment ports, to only around 22 days to reach the European ports.
Usually, boxes to and from Bangladesh are transported through regional transshipment ports like Sri Lanka, Colombo, Port Klang, Tanjung Pelepas, and Singapore.
However, the new direct shipping services could bypass these ports and reach European ports directly without any stoppage thus cutting transit time and costs.
Of the seven direct shipping services, four have already shut operations while the rest are struggling to continue voyages, according to the operators.
The first direct service was launched towards Italy and Turkey in February 2022 which cut down voyage time to 20 days from around 45 days and the service is still continuing.
In May 2022 a direct shipping service was opened Hong Kong-China-Chittagong route connecting the two sides in 12 days from a usual transit time of 25 days. The service ceased operation in August this year, as Bangladesh’s imports fell drastically from $8 billion per month to only $5 billion.
China is the main source of intermediate goods for Bangladesh’s apparel industry which earned $47 billion by exporting readymade garments mainly to the US and Europe. As the government strictly contained imports amid severe foreign currency scarcity, a lower number of ships nowadays coming to Bangladesh forcing some operators to cut voyages.
In the same month, a direct service from Chittagong to France and the Netherlands was launched and is continuing operation. The Chittagong-UK-Netherlands direct service, which launched operations in June 2022, stopped voyages in October 2022, after five months.
In June 2022, another direct service was launched connecting Chittagong to the Netherlands and Spain. However, the service stopped operations in August 2023 due to lower cargo volumes.
In May 2023, the service that started connecting Chittagong Port to Jebel Ali and Khalifa Ports directly in 15 days from a usual 30 days also stopped operations in October.
However, another direct service from Chittagong to the United Arab Emirates, launched in November and is still running operations. The service cut the transit time to only 18 days from 45 days for containers carried through regional hub ports.
Mohammed Rashed, chairman of Reliance Shipping and Logistics Ltd, told Container News that the freight rate has decreased by around 80% compared to last year while the availability of export cargo from Chittagong port lessened by over 60% which forced the direct shipping services to shut operations.
“We have been getting around 1,000 TEUs per voyage while now get only around 400 TEUs. How long we can continue with this falling trend?” he asks. Rashed said one operator now planning to run the vessels through touching the transshipment ports, instead of sailing directly, so that ships can get an increased number of containers and survive in this tough time.
