Congestion of Containers in Ports and ICDs: Legislative and Infrastructural Reforms Needed
The Ports of Bangladesh face severe congestion every year between the months of April and October. This year, the ongoing Covid-19 situation in Bangladesh has begun to impact the maritime industry, particularly port yards, causing major cargo congestion. It was seen in the past few weeks that hundreds of export laden trucks and covered vans carrying cargos from the different parts of the country were standing in a long queue in front of the inland container depots (ICDs), although the Chittagong Port Authority (CPA) had claimed that the Chittagong Port was free of container congestion and that exports and imports were proceeding normally and the country's Ministry of Transportation, on the other hand, made statement that the transportation of export products from the ports was not a major issue because there were sufficient ships and empty containers lying at the ports. Amid the situation, the CPA in the last month had asked the ICDs of the country to shift ICD-bound goods and empty containers from the port yards. By allowing the storing of all cargoes at the private depots and undertaking other measures, such as raising the number of berths by the government, priority berthing for Colombo-going vessels, the CPA has now able to improve the cargo congestion situation at the port yards and such improvement has also eased the backlog situation at the private depots. But this development is considered to be temporary.
The substantial disruption of shipping schedules of vessels at many transshipment ports, as a result of the pandemic, is one of the key causes of the current problem. Furthermore, vessels stuck in the Suez Canal have also caused a backlog at transshipment ports. Import containers heading for Bangladesh are congested at transshipment ports, i.e. Singapore, Colombo, and Port Klang. On the other hand, the containers that took goods for export in many foreign ports are taking more time to return as the import in the country has decreased due to the pandemic. Besides, the containers that are lying idle in the ports of Bangladesh are mostly from other companies that are not owned by the frontline MLOs, such as Hapag-Lloyd, Hyundai Merchant Marine, CMA CGM, Mediterranean Shipping Company (MSC) and Maersk Line, who mostly ship cargos from Bangladesh. Because of this halt in the container bookings, the shipment of cargos to the mother vessels in transshipment ports has become uncertain. Furthermore, the paucity of feeder vessels is also noticeable and the freighters are failing to book spaces in the mother vessels due to severe space scarcity in mother vessels at transshipment ports.
The crisis of container congestion at ports creates an imbalance in shipping activities. The supply chains disrupt. Shippers and consignees count demurrages for the prolonged stay of trucks and covered vans in front of the ports or deports and they eventually have to bear the additional expenses for the shipments. The merchants, shipping lines, forwarders, terminal operators, hauliers have to incur unforeseen additional costs, whatever the reasons of congestion are. It is extremely difficult to determine the true costs as incurred by them due to the congestion. Moreover, delayed shipments in numerous consignments are causing exporters to be concerned about timely delivery and order cancellations.
The delay in shipping and hike in costs are causing Bangladesh to lag behind its competitors. The country's economy will see a negative impact if this continues. In these circumstances, the government should undertake effective long-term measures to solve this regular annual problem. Taking the pandemic into consideration, the port authorities, who have a larger role to play in addressing these challenges, need to ensure better services to the shippers and take all kind of safety measures so that the port staff, workers, and other stakeholders such as importers, exporters, shipping agents, clearing and forwarding agents, freight forwarders, berth operators, ship-handling operators, and customs officials could work together to come out from the crisis. It is evident that, although the government has not shut down the port activities for a single day in the midst of the lockdown, the lockdown can no longer be given to save the shipping industry.
The assistance of all stakeholders is needed to increase the handling capacity as per our growing demand and to hold the supply chain. Shippers must come forward to help us and find a way out with regard to the issues involving scarcity of containers. A legislative change may be made with regard to the cargo congestion and, overall, to encourage the shipping competition among the exporters, the importers and the shipping companies who will play their respective roles without undue influence. In this respect, the United States' Ocean Shipping Reform Act of 2021 which aims to address the carriers' service failures and unfair pricing at the container markets may be a reference point for Bangladesh.
We also consider that inadequate infrastructure at the ports is also contributing to cargo congestion. In order to deal with the problems that the port authorities are currently facing and to save the country's shipping sector in the long run, the ports of the country should compulsorily be modernised by upgrading the infrastructures, installing digitisation and making investment in new technologies. The construction work of the 'Bay Terminal', the project of the government which will expectedly enhance the container handling capacity of Chattogram Port upto 5 million TEUs to the existing yearly capacity (which is around 3.1 million TEUs container), must be finished as quickly as feasible.
The writers are Head of the Chambers of MCLaw Services and Advocate of Supreme Court of Bangladesh, respectively.