Importers face 'unfair' demurrage costs at Ctg port

Infographic: TBS

Chattogram Port, the key gateway for Bangladesh's international trade, was thrown into disarray last week due to a nationwide internet disruption that halted the loading and unloading of goods. Now, importers are being hit with demurrage charges for delays they had no control over.

Leading trade bodies, including the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) and the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), have requested waiving these charges.

However, the port authority has not agreed and instead instructed importers to apply for waivers individually. Businesses argue this process is lengthy and will lead to higher costs due to extended container demurrage times.

The disruption has already caused a significant backlog, with the number of containers rising to 41,000 TEUs, up from the usual 30,000 TEUs. This congestion threatens to increase delays and inflate costs further, leaving businesses struggling to manage the fallout from an issue beyond their control.

Also, this added cost will be passed on to consumers, which will, in turn, drive up inflation, currently nearing double-digit levels.

Omar Hajjaj, president of the Chattogram Chamber of Commerce and Industry, told The Business Standard that they demanded a waiver of 15 days' storage rent for all containers, not case-by-case.

"The issue of waiving storage rent has already been raised in letters from the FBCCI and other trade bodies. We will also send a letter to the government on this matter on behalf of the Chattogram Chamber," said Hajjaj.

According to Chattogram port sources, businesses are allowed to keep import containers in the port yard for four days without charge. After that, they have to pay a storage rent of $6 per day for a 20-foot container for the 5th to 7th days.

For the subsequent week, the daily rent for the same size container is $12, and from the 21st day onwards, the rent increases to $24 per day. For a 40-foot container, the rent is double these amounts.

Chittagong Port operations were disrupted for 23 days over the past year due to two cyclones, Eid holidays, and the recent quota reform.

Appeal for rent waiver

Mohammad Hatem, Executive President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said the FBCCI sent a letter to the shipping ministry requesting a waiver of port demurrage charges.

Also, the principal secretary to the prime minister issued similar instructions, but the ministry has not taken any action, he told The Business Standard.

"This unfair demurrage cost is very frustrating. What else can we do?" he said, adding that he had to release his goods from the port by paying the demurrage on Thursday.

Nazmul Haque, executive director of Saif Powertec, which handles containers at two of the four terminals of the port, said container delivery is slowly returning to normal, but it will take at least ten more days to clear the backlog.

Meanwhile, BGMEA has requested the Chairman of the Chittagong Port Authority to waive shed charges on containers and yard charges for the period from 19 July to 24 July. The organisation also asked shipping agents and other institutions to waive shipping charges, bank interest, and other expenses.

According to port officials, importers can apply to the shipping ministry for store rent waivers. The ministry will consult the Port Authority before making a decision, with potential waivers applicable up to the day of delivery from the port yard.

Chittagong Port Authority Secretary Md Omar Faruk said containers are currently being delivered with full store rent paid.

"The shipping ministry handles container storage rent waivers and the Port Authority will follow any ministry directives about rent waivers" he added.

Current condition at ports

Omar Faruk said container deliveries are currently higher than usual, with around 3,500 TEU containers delivered last Friday. The number of containers at the port yard is expected to drop to 30,000 within the week.

He said the port's capacity is 53,000 TEUs and that maintaining a 15% free capacity is essential for smooth operations. Under normal conditions, Chittagong Port delivers 3,500 to 4,500 TEU containers daily. This number dropped to nearly zero due to the nationwide protests and unrest.

This led Chittagong Custom House to start manual customs clearance, and deliveries began to increase. On July 26, the port set a record by handling 5,201 TEUs in a 24-hour period ending at 8am.

Meanwhile, in the 19 inland container depots in Chattogram, about 6,300 TEUs of export containers, 11,000 TEUs of import containers, and 49,000 TEUs of empty containers, according to the Bangladesh Inland Container Depots Association.

Shippers want waiver too

Ships usually take two days to leave the port after loading and unloading, but now it takes four to five days, according to the Shipping Agents Association.

Shipowners face fines of at least $20,000 per day for these delays. The Association has requested a waiver for the extra time spent at the port.

Syed Mohammad Arif, chairman of the association, said the free period for container shipping charges is 14 days. Despite this, longer waiting times at the port result in additional expenses for importers.