Bangladesh supply chain disruptions

Bangladesh’s Prime Minister, Sheikh Hasina, arrived in India this week following the army’s seizure of power after violent riots. This development adds another challenge to global supply chains, with the world’s third-largest garment exporter now experiencing the world’s longest vessel berthing delays. 

Around 50 ships are queuing outside Chittagong port following weeks of protests, curfews and internet outages, all of which culminated on the 5th August with the resignation and flight of the Prime Minister, as protesters stormed her palace in Dhaka.

Chittagong, which handles over 90% of the country’s international trade, now has the worst berthing delays in the world, with many ships forced to wait in the Bay of Bengal for a week or longer.

The port is overwhelmed with tens of thousands of containers filled with imports and exports, with import boxes incurring substantial demurrage charges after four days, which the Federation of Bangladesh Chambers of Commerce and Industry has urged the government to waive.

The massive stockpile of containers now occupies about 80% of available yard space and typically, congestion begins to impede port operations when yard space usage reaches 60%, but with customs clearances at the port falling by 85%, the backlog is not being cleared.

Disruptions in rail transport have also impeded the flow of imported products, while cross-border links with neighbours including India and Bhutan have been closed for the past couple of days.

Bangladesh exports approximately $47 billion worth of garments annually to global clients. Any potential sanctions or trade restrictions could severely impact the economy. Therefore, maintaining diplomatic balance with Western countries is essential for Bangladesh’s interim leaders.

Meanwhile, airfreight rates from Bangladesh to major Western destinations have skyrocketed over the past two weeks, as 3,000 tonnes of export cargo have accumulated at Dhaka, the country’s main airfreight gateway. 

Exporters claim that carriers are exploiting the demand surge, increasing rates by up to 20% to various destinations. With airfreight rates at Dhaka significantly higher than those at Kolkata.

Despite the delays, no additional freighters have yet been deployed at Dhaka to help clear the backlog, and relying solely on the belly-hold capacity of passenger planes means only 600 to 700 tonnes of cargo are being transported each day.

It is clearly going to take a little time to clear the cargo bottleneck and shippers may want to consider alternative services to direct air in the short-term, including air/air via Colombo, Singapore or Dubai. Road/air via Delhi, or sea/air via Colombo and Dubai.

We are closely collaborating with clients affected by the evolving situation in Bangladesh to ensure minimal disruption to their air and sea traffic. 

Our dedicated operations teams and local partners are navigating the complex challenges at Chittagong and Dhaka, maintaining the integrity of our customers’ supply chains amidst ongoing regional tensions.

If you have any concerns about the issues discussed or would like to explore our range of contingency services, please EMAIL our Chief Commercial Officer, Andy Smith.