Exporters fear delays, surge in cost

Bangladeshi exporters are apprehending prolonged delays in shipments and a surge in transport costs following recent attacks on commercial vessels on the Red Sea, one of the busiest and most vital shipping routes for global commerce.

A container vessel chartered by Orient Overseas Container Line (OOCL) was hit in a drone attack launched by Iran-backed Huthis, who control much of Yemen but are not recognised internationally, earlier this month.

They fired a missile at Maersk Gibraltar on December 14 and attacked Hapag-Lloyd's Al Jasrah and Mediterranean Shipping Company's (MSC) Palatium III on the very next day.

The Huthis said they were targeting vessels to pressure Israel over its devastating war with Palestinian Hamas militants in the Gaza Strip, reports the AFP.

The attacks have prompted the major shipping lines to suspend travel across the Red Sea and adjoining Suez Canal, which basically connects Africa and Asia, and divert to a much longer route, around Africa's Cape of Good Hope.

It is yet another setback for global supply chains and a matter of concern for Bangladesh's exports, mainly garments, which are bound for European destinations and the US East Coast over this route.

Around 12 per cent of the global trade of all goods, including 30 per cent of the world's shipping container volume, transit through this route.

According to shipping executives as well as exporters in Bangladesh, around 80 per cent of the country's export-laden containers, which are sent off to ports in the EU, US East Coast and Canada, cross the Suez Canal.

Exports of Bangladesh which are bound for these destinations are first sent to transhipment ports in Colombo, Singapore and Malaysia and then carried by mother vessels using this route, said Captain Giasuddin Chowdhury, country head of the OOCL.

It takes anywhere from 16 days to 25 days to travel from the transshipment ports to the European destinations, he told The Daily Star.

The diversion will increase this time by another 10 days to 14 days, he said.

The additional time will translate to a rise in transport costs for the additional fuel burnt, said Bangladesh Shipping Agents Association Chairman Syed Mohammad Arif.

Shipping executives assume that charges for such container freight, which currently ranges from $1,000 to $1,200 per TEU (twenty-foot equivalent unit), would go up by $500 to $600.

Lead time of export shipments will definitely be affected, said Syed Nazrul Islam, first vice president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

If ships avoid the Red Sea passage, shipments of the country's garment products to the Europe and US East Coast will face much delays, he said.

However, a senior executive at a foreign shipping line said since the foreign buyers usually bear the transport cost and the exporters may not be affected immediately.

Responding to this claim, the BGMEA leader said if the crisis prolongs, the buyers would definitely bargain for cheaper rates or discounts for their future orders in order to make adjustments with the additional cost.

He hoped for immediate improvement of the crisis, saying that otherwise gloomy days await the country's garment sector.