Pangaon terminal use should not be mandatory

Textile millers yesterday said transporting higher amounts of imported cotton and capital machinery through Pangaon Inland Container Terminal destined for Dhaka and its surrounding areas should not be made mandatory.

In December last year, the government issued an order saying factories will have to transport 20 percent of imported capital machinery and cotton through the terminal. The order comes into effect in February this year.

From March onwards, the factories will have to transport 40 percent imported capital machinery and cotton through the terminal, located at Keraniganj on the banks of Buriganga.

“But it will be difficult to reach the target. We hope the government will look into the issue,” Tapan Chowdhury, president of Bangladesh Textile Mills Association, told reporters at the association office in Dhaka.

“We are not against it. We understand that the government has set up the terminal to ease pressure on highways. But it should not be mandatory.”

Over 70 percent of the imported goods, mostly bound for Dhaka and Narayanganj, are transported through roads. Only 12 percent are ferried through rail links and the rest through waterways, according to the Chittagong Port Authority.

This prompted the CPA and the Bangladesh Inland Water Transport Authority to build the inland terminal at a cost of Tk 154 crore.

The objective was to ease the pressure of cargo movement on the Dhaka-Chittagong railway and highway corridors.

The terminal has a storage capacity of 3,500 twenty-foot equivalent units (TEUs) of containers and can handle 116,000 TEU containers annually. The capacity will gradually be raised to 160,000 TEUs.

But the Pangaon ICT has failed to attract users since its inauguration in November 2013 though officials say the terminal has modern facilities. Businesses blame the lack of facilities including the shortage of ships. Port users said it would be unfortunate if importers are forced to use the terminal at a time when their confidence on its ability to deliver is still at a low level. They allege that ships do not arrive at the terminal from Chittagong port when there is no container.

At the same time, the importers do not feel comfortable about this arrangement because of the uncertainty. There were incidents of huge delays, too. 

“Vessels have to ply between Chittagong port and the Pangaon terminal whether there is any container or not in order to build trust,” BTMA Director Masud Rana told The Daily Star.

Mohammed Hatem, a business leader, said the Pangaon ICT is ready to fully operate but the government has to provide some incentives as well as cut the feeder tariff on the river route.

“We are ready to bring all our imported items through the terminal. But the authorities have to ensure that the vessels will reach Pangaon in time.”

The port handling charges need to be kept at a low level, at least for a while, said Hatem, a former first vice-president of Bangladesh Knitwear Manufacturers and Exporters Association. He said National Board of Revenue should sit with the international buyers and freight forwarders to encourage them to use the terminal.

Md Mostaba Ali, customs commissioner of the terminal, said the terminal has been functioning properly since its inception and its use is increasing day by day.

Three vessels have already been procured from China at a cost of Tk 50 crore. Each vessel can carry 128 TEUs.

The shipping ministry has given licences to 32 private firms to purchase vessels for the route. Four more ships have been purchased already, according to officials at the terminal.   

The terminal generated more than Tk 80 crore in revenues in the last six months of the current fiscal year.

Port users blame the higher container charges for the lukewarm response from the businesses.

They said the cost of transporting goods between the Chittagong port and the Pangaon terminal is much higher than transporting goods between the port and the inland container depot in Kamalapur by railway or to industrial units in Dhaka, Narayanganj, Gazipur and Ashulia through the highways.  On an average, Bangladesh consumes 5.50 million bales of cotton a year.

But in the year ending July 31, 2016, Bangladesh may import a record 5.75 million bales of the fibre, up 6.5 percent from a year earlier, thanks to strong demand from apparel makers, said the US Department of Agriculture in December last year.

In case of import of capital machinery, the letters of credit opened for it were over $2.3 billion during the July-December of the fiscal year, according to the central bank.

The growth rate is over 20 percent compared to the same period a year earlier. Textile machinery import went up 40 percent year-on-year in fiscal 2014-15 to Tk 7,119 crore, according to the BTMA.