European buyers back AP Møller-Maersk to run Patenga Container Terminal

Highlights:

• H&M and Inditex have already written to the shipping ministry expressing their support for Maersk 
• Saudi Arabia-based Red Sea Gateway Terminal, and Dubai-based DP World are also trying to get the job 
• The construction of the terminal is going to be completed by next June and the government plans to run it on a PPP basis.

Buyers from Europe, the largest export destination for Bangladesh's readymade garments, have favoured AP Møller-Maersk for the job of operating the Patenga Container Terminal in Chattogram.

H&M, the largest buyer for the country's garments, and Inditex have already written to the shipping ministry expressing their support for Maersk to run the terminal set to be completed by next June and is expected to be operational by July.

According to a report by UK-based media Loadstar, the conglomerate is also pursuing the deal via the Danish government.

In addition to Maersk, Saudi Arabia-based Red Sea Gateway Terminal (RAGT), and Dubai-based DP World are also trying to get the job of operating the terminal.

As per the sources concerned, the construction work of the terminal is going to be completed by next June and the government plans to run it on a public private partnership (PPP) basis.

Trade experts say those who comply with government requirements and have a good reputation for operating such terminals internationally should have the opportunity to operate the container terminal.

However, no decision has been made by the government in this regard yet, Chairman of Chattogram Port Authority Rear Admiral Mohammad Shahjahan told The Business Standard.

"It was decided to operate through PPP. Those who can meet the criteria will get the job to operate. Otherwise, the port authorities will operate it," he added.

As a single company, Sweden-based H&M Group buys the largest amount of products from Bangladesh. Masarrat Quader, Stakeholder Engagement and Public Affairs Manager of H&M Group, wrote a letter to Shipping Secretary Mohammed Mezbah Uddin Chowdhury.

In the letter, she emphasised the importance of environmental compliance saying, "We, therefore, urge the government of Bangladesh to strongly consider the Environmental, Social and Governance (ESG) aspects when commencing operations at the new terminal. Now is the time for Bangladesh to be the torchbearers in this transformation of the global supply chains." "We, along with our global logistics partners such as Maersk, will do our best to support your initiative," she added.

The letter also read, "As companies like us H&M Group, look to meet the demands of consumers, we are increasingly concerned with the ESG parameters, not just in terms of responsible production but in terms of responsible sourcing, increasingly considering the sustainability of the entire supply chain. This includes maritime infrastructure."

H&M buys garments from more than 200 factories in Bangladesh, amounting to over $3 billion.

In a letter to the secretary on the same issue, Inditex, which buys $1.3 billion worth of products a year, also raised the ESG issue, saying, "We would like to direct your attention to the proposal submitted to the government of Bangladesh by the Maersk Group for operating the Patenga Container Terminal."

"We have global experience of working with the Maersk Group and consider them to be the ideal operator for this new terminal, not only because of their extensive experience of operating world-class container terminals but also because of their focus on safety and sustainability while providing complete supply chain solutions," it added.

"We believe that their appointment as the operator of this new terminal can unlock the greatest value for all stakeholders," read the letter.

Loadstar's report said the annual 0.5m TEU (Twenty-foot equivalent unit) capacity and 600-metre long container terminal are being constructed for $240m on 32 acres of land. It will be able to accommodate vessels up to 10.5 metres with a carrying capacity of 4,500 TEU, three of 190-metre length at a time, and a 220-metre oil tanker.

A leader of the Bangladesh Inland Container Depot Association (BICDA) told TBS on condition of anonymity that companies with an international reputation and experience should be offered jobs at the Patenga Container Terminal.

M Masrur Reaz, an international trade expert and chairman at Policy Exchange of Bangladesh, told TBS, "If an organisation like AP Møller-Maersk operates a container terminal in Bangladesh, it will no doubt brighten the image of the country in the international arena."

"However, those who will meet the criteria should be given the responsibility to operate the terminal, not on the consideration of anyone's letters," he added.

Exporters are also in favour of operating the terminal by the most compliant organisation.

However, Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said that it should be ensured so that no quarter gets the opportunity to form a syndicate.