The rise in freight rates though is not random; it is simply economics at play
The rising freight costs are adding more salt to the wounds of the country’s apparel exporters, who are already hit with shrinking work orders and soaring raw material prices.
What cost $2,000 in October now cost $4,600, according to Fazlee Shamim Ehsan, the owner of Fatullah Apparels.
“It is a burden for exporters.”
The soaring freight costs come at a time when the exporters are facing pressure from buyers to offer discounts, said Ehsan, also a director of Bangladesh Knitwear Manufacturers and Exporters Association.
The rise in freight rates though is not random; it is simply economics at play.
Both exporters and retailers pleaded to prolong cargo transit as much as possible as stores remained closed amid the pandemic, leading to container shortages as lower numbers of ships were dispatched to avert losses.
“Their absences were felt when economies reopened,” said Amirul Islam Chowdhury, senior vice-president of the Bangladesh Freight Forwarders Association.
Air cargo also faced a similar predicament.
Since the ship operators incurred losses during the lockdown and slower demand, now they are taking the advantage of it to recover their losses, he added.
As per the association’s information, it used to cost $1,300-$1,400 to send a 40-feet container to Europe, which now costs $4,500-$5,000.
On the other hand, to import goods with a 40-feet container from China it used to cost $1,200-$1,400. Now, the rates are grazing $3,500.
On top of that, exporters and importers were not getting sufficient space in the ships, as fewer vessels were operating in the seas.
“I am hopeful the freight charges will come down soon,” Chowdhury added.
Beyond apparel goods, the rise in freight charge also pushed up the prices of imported consumer goods such as fruits and others, according to Serajul Islam, general secretary of the Bangladesh Fresh Fruit Importers Association.
Bangladesh usually imports fruits from South Africa and China.
The import cost of a 20-kilogram carton loaded with fruits rose by $2 per kg due to high freight charges, according to imports.
Abul Bashar Chowdhury, a leading Chittagong-based commodity importer, went on to urge the government to take immediate steps to address the situation as the local importers have already started bringing in various food items such as chickpeas, lentil and wheat from countries like Australia, Canada and Egypt ahead of Ramadan.
The hike in the freight charges will have its impact on the local commodity market, he added.