Exports to Russia, Ukraine hit snag

Russia and Ukraine-bound exports, especially garments, are now faced with an uncertain future as shipping lines are understandably not too eager to carry goods to war zones.

Major container shipping companies have temporarily suspended accepting bookings to both countries since Russia's invasion of Ukraine on February 24.

This has left some 166 TEUs (twenty-foot equivalent units) of containers packed with garment items lying idle over the past couple of days in 19 off docks in Chattogram.

The exporters are also worried over whether they would be able to secure payments from retailers and brands of the two countries for their efforts. This includes those who already exported goods to the destinations prior to the invasion.

Danish shipping giant Maersk, Switzerland-based MSC and France's CMA CGM on February 24 released operation updates announcing suspension of vessel calls to Ukraine until further notice.

On March 1, the three shipping companies announced that they would no longer take bookings for goods to and from Russia amid the Russian military attack on Ukraine.

German company Hapag Lloyd and Singapore-based ONEfollowed suit.

Though other companies are yet to make any such announcement, they are already expressing unwillingness to accept bookings from Bangladesh to these two destinations.

Md Ruhul Amin Sikder, secretary to Bangladesh Inland Container Depots Association, told The Daily Star yesterday that the cargoes were either already stuffed inside containers or lying in wait at inland container depot (ICD) warehouses.

Sources said Esack Brothers Industries, an ICD near the Chattogram port, alone had 35 TEUs of the export-laden containers lying idle for several days now for Maersk having stopped accepting bookings.

A senior official of the CMA CGM's Bangladesh office said their principal office directed to refrain from taking bookings for cargo shipment to Russia or Ukraine until further notice.

Bangladesh also faces the possibility of losing one of its most promising apparel export destinations as various Russian lenders have been excluded from the SWIFT messaging system in response to the country's invasion of Ukraine.

Rajiv Chowdhury, managing director of Young 4 Ever Textile, said after a long negotiation his Russian buyer has confirmed in writing that he would pay his $200,000 soon through his office in Turkey.

However, he is now apprehensive over the export of garment items worth $250,000 which he has already manufactured although the buyer has confirmed of taking the goods to Russia through the port of a third country.

But Chowdhury was advised by his Russian buyer not to manufacture any more garment items sought under previous orders until further notice as the situation over the war was gradually worsening.

So an uncertainty has been created for Chowdhury over accessing the Russian market, exports to which from Bangladesh grew 36 per cent in fiscal 2020-21 to reach nearly $600 million.

"Like me, many garment exporters have been facing trouble in receiving payments and shipping goods to Russia," said Chowdhury, whose t-shirts, polo shirts, jackets and hoodies are sold in Russian markets.

Chowdhury, also a director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said the association has already asked members to send data on export and payment receipts to create a database on Russian and Ukrainian markets.

Of garments exported to Russia, some 20 per cent is shipped to buyers directly and the rest through third country offices, said Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

There are Russian buyers who have offices in countries including Turkey, Hong Kong and Poland. Cases involving them cause no problems in local exporters receiving payments.

However, in case of the direct exports, problems are arising over receiving payments.

So far, two exporters have lodged complaints with the BKMEA over not receiving payments from Russian buyers, he said.

In the July-January period of the current fiscal year, the country sent garment items worth $415.47 million to Russia, registering a 36.47 per cent year-on-year growth, showed data from the Export Promotion Bureau.

Bangladesh shipped apparel items worth $593.66 million to Russia last fiscal year. Of it, knitwear items were worth $373.25 million while woven items $220.41 million.