Port fails to catch up with trade growth

The number of terminals has increased at the Chittagong Port. It can handle more than double containers now than it could 10 years ago.

But export-import trade has risen at a faster rate, outperforming the port's enhanced capacity.

Businesses here have to pay one of highest port fees in the world for a service that finds itself at the bottom of global indexes of port and logistics services.

Longer stay at port adds to the cost of products and lengthens the delivery time of export consignments, making Bangladesh's businesses less competitive.

The Chittagong Port Authority has spent crores of taka to improve the port's infrastructure and buy modern equipment to enhance its service, but is still struggling to handle growing numbers of container.

Why?

The answer can be traced in a World Bank report.

The report suggests improvement in infrastructure does not mean quality service. In its latest trade logistics index, it puts Bangladesh at the 100th place among 160 countries.

Good logistics reduces trade cost and raises competitiveness. It comprises a network of trade-facilitating services and ease of international shipments is a key component.

The World Bank's 2018 Logistics Performance Index (LPI) shows Germany, Sweden, Belgium, Austria and Japan as the top 5 performers.

Among the lower-middle-income countries, large economies such as India and Indonesia and emerging economies such as Vietnam and Cote d'Ivoire stand out as top performers.

Of them, India and Vietnam are Bangladesh's key competitors in global apparel market – not to mention China, which has topped the list of best-performing upper-middle-income countries since 2012.

The World Bank report, titled "Connecting to Compete 2018", was updated in October last year. It measured trade logistics like customs, infrastructure, ease of international shipment of 160 countries.

The report stressed regulatory reforms of the logistics services sectors to make cross-border trade easier and competitive.

It cited how India, Lao PDR, Southern African countries, Vietnam and Oman got higher and quicker return on investment from "soft reforms" than hard infrastructure.

This has not happened in Bangladesh.

The Chittagong Port Authority poured crores in a series of hard infrastructure development, but ignored smaller ones, which affect businesses the most.

"Now berthing facilities have increased. The port has now got modern equipment like gantry crane and others. The private sector now has a container terminal. There should not be any reason for delay in delivering goods to and from the port," said

Anwar Ul Alam Chowdhury Parvez, an apparel maker who is now president of the Bangladesh Chamber of Industries.

"You may not believe that a ship returns in just eight hours from a Denmark port after delivering goods, while it takes six, seven, eight days here. Why can't we complete loading-unloading in 24 hours?" the business leader asked.

He recalled turnaround time had been reduced to two-three days for years before it started deteriorating further from 2013-14 – for reasons not known to him.

"We have to play with time. The less turnaround time we have, the more competitive we will be in global trade," he added, suggesting that the port and customs authorities swing into action to help export-import trades stay competitive.

"We are already in a disadvantageous position as mother vessels cannot anchor at our port. Only feeder vessels come here which require loading and unloading work in two phases – once in Chattogram, again in Singapore or Colombo. It increases the time and cost," the businessman added.

"A shipment takes 18 to 20 days to reach Europe from here, whereas our competitors can deliver goods to any European destination in six to eight days," Parvez said as he explained the reasons that make Bangladesh less competitive in external trade.

Costs also go up accordingly, Parvez said. "A quantity of goods costs us $1,500 to $1,800 to reach a European destination, the same quantity costs an exporter from Vietnam or China hardly $650 to $700."

Former president of the apex trade body FBCCI Mir Nasir Hossain identifies shipment expense as one of the major factors that pushes the cost of doing business in Bangladesh high. RMG is the most affected sector as they use port both for export and import more than any other sector, he added.

Referring to the port authority's claim that their capacity has been enhanced, Mir Nasir asked, "Has the cost come down? Has service delivery improved?"

Customs clearance adds to the woes of businesses as the process takes more time now than before, Mir Nasir pointed out. "In the name of checking and testing, they make things difficult for genuine traders."

The port needs to be comprehensive. It should have lab facilities of its own so that tests can be done here instantly and traders do not have to wait for weeks to get their samples tested in Dhaka, he said.

Not only port service, trade-related all logistics services need to be integrated like that in Vietnam, the business leader felt. "We have tried one-stop service. Now Bida has initiated some steps like online registration. But nothing big is achieved."

Nothing much improved

The average turnaround time at the Chittagong Port was 2.5 days in 2012, and exporters then were calling for bringing down the lead time further.

In a report in September 2012, BBC quoted the then first vice-president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Nasir Uddin Chowdhury as saying: "If I can take my delivery within a day or a few hours, it would save me a lot of time and money."

The concern of the businesspeople remains the same today.

BGMEA's incumbent First Vice-President AM Chowdhury Selim feels that there is no alternative to increasing the number of jetties if the Chittagong Port wants to reduce the turnaround time.

Average turnaround time – the time required for vessels to unload and reload containers – went up to 2.88 days from 2.65 days in the last five years, a period when the Chittagong Port saw big projects and a surge in equipment purchase.

The global average is 0.7 days (or 16.8 hours), while it is 0.9 days in India.

One reason is the rapid rise in external trade volume, and the 133-year-old port, despite taking a series of projects to improve, is failing to cope with the pace.

Though its capacity saw some improvement, it is far less than the growing demand.

In 2011, the port handled more than 47 million tonnes of cargo and containers of 1.4 million TEUs (20ft equivalent units). The volume more than doubled to nearly 3 million TEUs last year. But the number of container jetties remains static at 12. The Chittagong Metropolitan Chamber last year said the port needs at least 50 jetties to cope with the growing demand.

But trade volume continued to shoot up, from $60 billion in 2011 to over $95 billion in 2019, with rising arrivals of foreign ships.

Bangladesh Shipping Agents Association's President Ahsanul Huq Chowdhury says only 12 jetties are not enough to accommodate ships here.

Here ships have to stay longer and businesses have to count Tk8.5 lakh to Tk12 lakh each day for waiting charge, which adds to the cost of products, he pointed out.

Former president of Junior Chamber Chattogram Cosmopolitan Gias Uddin made the similar point: "Jetties are insufficient. So, ships have to wait up to seven days in cases to have berthing schedules. This makes businesses pay extra."

Problem lies with implementation too. An Asian Development Bank-funded project, taken up in 2004, was delayed by four years. The Bay Container Terminal, a Tk17,500 project, took 12 years to take shape in 2018.

The story is more or less similar for all other projects intended to enhance capacity and improve service.

Full automation of the port and customs could help improve overall services. The ASYCUDA World System for Customs and the Cargo Tracking and Management System for the port are not yet interlinked as planned, while the National Single Window, aimed to ease Customs procedures, will be put into force not before 2022.

CPA pins hope on big projects

"Some steps have been taken to increase the port's capacity, but other competing countries improved their ports at a faster rate. So, our position has not improved in global ranking," Professor Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue, said.

"The port needs investments which will be commensurate with the development targets set by the government," the economist said, stressing that the port and other trade logistics must be improved to raise competitiveness at export level.

Trade analyst Khondaker Golam Moazzem felt the country needs to go beyond its single-port dependence and explore the Mongla and Payra ports. Trade volume has been growing at a pace that calls for deep-sea port and the government is working on that, he added.

Use of the Mongla Port needs to be fixed for certain products and necessary logistics must be ensured. Some jetties could be solely dedicated for major export sectors, suggested Dr Khondaker Moazzem, research director at the CPD.

The port authority, however, pins its hope on big projects such as Bay, Patenga and Laldia container terminals. But none of these is completed.

Chittagong Port Secretary Omar Faruk spoke about their multipronged plan to reduce duration of average stay of ships. "Work on the Patenga Container Terminal is in progress. This terminal will accommodate four ships and the average turnaround time will come down to 2.44 days then," the port executive hoped.

CPA Chairman Rear Admiral Zulfiqur Aziz told The Business Standard earlier that 52 percent work of the Patenga terminal has been completed and it is expected to start operation this year.

Two more terminals – Bay and Matarbari – are under construction, which, after completion would enhance the port's container-handling capacity, the CPA chairman hoped.