ICDs indispensable for Bangladesh to become a global giant by 2041

How are private Inland Container Depot (ICD)s helping to improve services at the Chattogram Port?  

When containerisation started getting introduced at the beginning of the 1980s, Chattogram Port had no other alternative but to adapt to the newly introduced process of global supply chain management. 

At that juncture, Chattogram Port Authority (CPA) deemed it necessary to request the local entrepreneurs to come forward and invest in setting up inland container depots (ICDs). The businessmen at that time were barely familiar with the idea of a container yard and were not confident to foray into a venture they had little knowledge about.

However, in 1985, Seafarers Limited, the first ICD of the country, was set up. Then Ocean Containers Limited [now Summit Alliance Port Limited (North)] came in 1988. Shafi Motors was set up in 1996, Iqbal Enterprise Limited in 1998, and QNS Container Services in 1999. The ICDs only handled empty containers up to 1998. 

Shafi Motors Limited was the first to obtain permission for the storage and containerisation of export goods. Still, Iqbal Enterprise Limited first containerised export goods and dispatched the export-laden containers to Chattogram Port for shipment.

At present, ICDs handle almost 100% of the export goods and 25% of the containerised import goods through Chattogram Port and, at the same time, store and handle a massive volume of empty containers, which enables the stuffing of the exportable goods from the country, besides keeping Chattogram Port free of container congestion.

How much investment has been made in this sector so far? How many people are employed?

So far, about Tk16,000 crore has been invested in this indispensable private inland container depot service sector. The number of private ICDs now stands at 21. Some very reputable business groups of the country have invested substantially in this sector and have been operating efficiently. About 32,000 people are employed in this sector.

ICDs principally handle three types of operational activities: export goods and container handling, import goods and container handling and empty container handling.

Export operational activities include cargo receiving, storage, sorting, inspection and assessment by customs officials, stuffing into designated containers, storage of loaded containers in the yard, doing VGM (verified gross mass determination, i.e. weighing of export loaded containers – a mandatory requirement from International Maritime Organization, i.e. IMO since 2016) and finally dispatch of the containers to the nominated vessels at Chattogram Port for loading onto the vessels.

The import handling operation is just the opposite. It starts with taking out import-loaded containers from Chattogram Port and ends in delivering the imported goods to the importers after going through some operational steps like survey, storage, extra-movement for fumigation or inspection and finally, placement for delivery.

The empty container handling operation includes life on and off of empty containers, storage and transportation back and forth between Chattogram Port and the ICDs.

How fast are private ICDs growing?

Currently, the ICDs handle about 750,000 TEUs of export-loaded containers, approximately 300,000 TEUs of import-loaded containers, and around 1.3 million TEUs of empty containers per annum. 

The volumes of import-loaded containers handled by private ICDs have been significantly less than expected in recent years because about 25% of the 38 import items approved only for private ICDs by the National Board of Revenue (NBR) have been delivered directly from Chattogram Port by a dual-delivery provision allowed by Chattogram Custom House. 

Nevertheless, the overall container handling by private ICDs has seen consistent growth in the last decade.

What sorts of problems are private ICDs facing now? 

There are multiple challenges facing the ICDs of Bangladesh. Following are some challenges that come to mind vis-à-vis the growth of the ICD sector of Bangladesh: Lack of government policies favourable for the consistent growth of the ICD sector, lack of government incentives needed to boost this sector and enable the ICDs to operate with their full potential and capacity, ignorance among the stakeholders as well as the concerned government agencies as to how the ICDs are contributing to the export and import of the country and the last but not the least, poor return on investment in the business of ICDs which is a setback to further investment in this sector.

Less number of import items handled by the ICDs also poses an operational challenge. Currently, ICDs handle 38 import items, constituting an average monthly volume of 25000 TEUs against a monthly export container volume of 65,000 TEUs. So a large number of empty containers need to be brought in from Chattogram Port for export stuffing.

This gap can only be bridged by releasing more import items to private ICDs, leading to faster operation.

It will take time and policy support from the government to deal with the challenges we have been facing. We have been keeping our operation up and running through all these challenges because our aim is to help the export-import of the country remain on a track of consistent growth.

How are the dollar crisis, Ukraine war and energy price hikes impacting private ICDs?

The war between Russia and Ukraine has shaken up the global business and trade balance that was restored after the corona outbreak of almost two years. 

Unfortunately, that long-cherished restoration and recovery in the global business, as well as ours in Bangladesh, is now bearing the brunt of the Russia-Ukraine war by the skyrocketing rate of US dollars against the Bangladeshi Taka. 

Undoubtedly the increase in the rate of US dollars has been hampering the business because we are a country where import volume has been predominantly higher than export and with the dollar rate getting so high against Taka, the foreign reserve has been strained considerably. 

The Ukraine-Russia war and dollar crisis have led to less volume of export and import, meaningless business for private ICDs and hence we have been struggling to keep ends meet since September 2022. 

The fuel price hike has increased our operational costs considerably because our container-handling equipment and long container-carrying vehicles consume a substantial volume of diesel daily. Yes, we have adjusted our prices in accordance with the fuel price hike, but that was meant only to cover the additional cost. 

BGMEA and other users often question private ICDs' capacity and service quality. The private ICDs provide service to exporters, importers, shipping agents, freight forwarders and C&F agents and hence the associations of the entities mentioned earlier, like BGMEA, BSAA, chambers, BAFFA and C&F agent associations, will have their own say when they judge our service standard. They do sometimes complain about our shortcomings and we are not above them.

I am confident that the clients of private ICDs are satisfied with the quality of service that we provide them with on the bigger picture. If the ICDs did not have storage capacity and a sufficient number of equipment, then the question should arise as to how we have been handling 100% export containers from the country for over two decades. I expect our client associations to judge a service sector like ours from the right and neutral perspective.

Will existing ICDs be able to handle the additional pressure when the 100 new economic zones become operational? What are your plans for the future? 

Since new economic zones are being set up all over the country to increase export volume attracting foreign direct investment as well as investment from local entrepreneurs, there should be a consistent and proportionate increase in the capacity of the logistic sector, particularly the private ICDs. 

In the last couple of years, two ICDs have joined the sector. Another one or two are in the pipeline. Nevertheless, if we take into consideration the growth in exports during the next five years at least, we may need more capacity in the ICD sector. However, it all depends on how the government will create an atmosphere conducive to the consistent growth of the ICD sector.

If policies and regulations are favourable for investment in this sector, we may expect investors to be interested in setting up new ICDs. 

For example, if all the imported goods are permitted to be delivered from outside Chattogram Port, i.e. from the ICDs, new ICDs are bound to come. We cannot expect the investors to make an investment and then wait for the policies to ensure their investment on return. Instead, it should be the opposite.

Why are we lagging behind advanced countries in logistics services? How can we overcome the shortcomings?

There are many significant and fundamental differences between our logistics sector and those in developed countries. Our logistics sector is primarily road-based. We have not been able to explore and utilise the rail and waterways in the hinterland connectivity of the logistic sector. In contrast, the developed countries have well-balanced utilisation of roads, railways and waterways for the logistics sector.

In any developed country, Ports are only used as terminals wherein only loading and unloading containers take place, whereas our prime seaport, Chattogram Port, is used for delivery of 55% of the import-loaded containers by opening the containers through the engagement of manual labourers.

We need to have a composite and detailed national master plan for the logistic sector, which experts should make from home and abroad and we need to set a timeline for implementing that master plan. 

Most importantly, accommodative policies and regulations should be in place to enable the logistics sector to grow consistently.

The devastating fire at the BM Depot has brought forth the safety issues of ICDs. How are you improving safety compliance?

First of all, the fire incident in BM Depot was an accident and accidents happen all over the world. However, the shortcomings in safety and security issues should be taken very seriously. After this incident, we have all realised that compliance issues regarding safety and security are of utmost importance while we conduct our operational activities. 

As for handling IMDG export cargoes, the majority of the ICDs have not handled any such cargo before because the volume of such cargo from our country has been very insignificant. 

Now that the fire incident in BM Depot has transpired, the awareness among the other depots has increased manifold. There is no denying that we all have drawbacks and now we are trying our best to overcome them and reach a common standard.

What policy support does this sector need to grow further and support external trade more?

So far, we, the ICDs, have not been given any incentive whatsoever from the government for handling 100% of the export cargo of the country. 

If we consider the contribution of the private ICD sector to the export-import of the country, i.e. the national economy and at the same time, the return on investment in this sector. The ICDs should be first in line to deserve and receive government incentives. 

At present, we have two policies for this sector: one issued by the Ministry of Shipping in 2016 and the other issued by the National Board of Revenue in 2021. There are some contradictory sections in these two policies, making it difficult for the ICDs to comply with either policy. 

Policies, rules and regulations for the private ICDs should be conducive to this sector's robust growth and development. We need to allow this industry to grow to serve the export-import supply chain, shipping and logistic sector, Chattogram Port and the economy of the country on the whole. 

We hope to get all the policy support and patronisation from the government necessary for this sector, if Bangladesh is to become an global economic giant by 2041.