Container-shipping costs on some Bangladesh routes have more than doubled in two months as renewed geopolitical tensions over Iran and their ramifications, costly energy and tightening vessel capacity escalate freight rates.
A major blow to shipping and fuel supply comes from uncertainty surrounding the Strait of Hormuz and Houthi threats in the Red Sea.
The latest spike is particularly visible on routes connecting Chattogram with Europe and the United States, adding to cost pressures for Bangladesh's exporters, especially garment manufacturers.
Industry insiders have said the approaching China National Day holiday, or Golden Week, in early October could add further pressure as exporters and importers typically rush to secure vessel space ahead of the holiday, potentially tightening vessel-and equipment availability.
For Bangladesh, the impact is significant as export industries depend heavily on maritime transport to reach major markets in Europe and North America.
Chattogram-New York rates vary sharply among carriers
According to a rate quotation from shipping agency APS Logistics, freight rates for containers from Chattogram to New York vary significantly among major carriers. The FE obtained a copy of that.
Rates for 20-foot general-purpose (GP) containers range from $7,057 to $10,066, while those for 40-foot high-cube (HC) containers range from $8,275 to $12,516.
Among the listed carriers, MSC quoted the lowest rate at $7,057 for a 20-foot container and $8,275 for a 40-foot HC container under a fixed all-in (FAK) contract.
ZIM's spot rate was the highest, at $10,066 for a 20-foot container and $12,516 for a 40-foot HC container for garments.
CMA CGM quoted $8,727 for a 20-foot and $9,476 for a 40-foot HC container for garments under a spot arrangement, while Hapag-Lloyd quoted $8,200 and $10,200, respectively.
The rate sheet also shows varying free-time arrangements among carriers. Yang Ming offers 14 calendar days of per-diem free time, while CMA CGM's FAK rate includes 10 calendar days. Its garment spot rate provides four calendar days. MSC offers four working days, while ONE and ZIM each offer 10 calendar days.
Speaking to The Financial Express, Subhasish Biswas, former executive director (commercial) of Team Group, said the recent spike in oil prices following the Iran conflict increased shipping costs.
He said disruptions and heightened risks around the Strait of Hormuz and the Red Sea also pushed up freight costs by raising insurance premiums.
Saiful Islam, CEO of Foresight Business Solutions, has said freight charges have risen sharply over the past two months.
"Two months ago, exporting a container from Chattogram to New Jersey cost us $3,050. Today, shipping via MSC costs $8,275," he said.
Besides higher freight rates, exporters are also facing a shortage of containers on required departure dates.
Mr Islam said exporters with long-term contracts were somewhat insulated from the immediate impact, but new entrants were facing severe difficulties in operating amid the elevated freight rates.
"In some cases, freight costs become higher than the product price. These high shipping costs are forcing us to slow down export to the US," he said.
Carrier rates surge: The scale of the increase is also evident on major Bangladesh-Europe routes.
Hapag-Lloyd's published base ocean tariff for a 40-foot dry container from Chattogram to North Europe rose to $5,036 from August 1, from $3,036 on July 15. The carrier has announced another $1,000 increase from August 15, taking the rate to $6,036.
That would put the published base tariff about 138 per cent above the $2,536 level prevailing before the July 15 increase.
Hapag-Lloyd has cautioned that bunker-related, security, terminal-handling, peak-season, local and contingency charges may be added up to the base tariff.
For the Mediterranean and Black Sea, its 40-foot rate from Chattagram will rise to $5,646 from August 15, from $4,646 currently.
MSC has also raised its Bangladesh-Europe rates. Its August tariff for Chattagram-Antwerp and Chattagram-Valencia stands at $3,850 per 40-foot dry or high-cube container, up from $2,850 in July.
Maersk has added further pressure through its Emergency Contingency Surcharge (ECS). Since August 1, the ECS for Bangladesh shipments to North Europe has risen by $1,000 to $4,800 per 40-foot dry/high-cube container. The same surcharge applies to Bangladesh-Mediterranean shipments.
The increases are also steep on US-bound routes.
Maersk's peak-season surcharge for Bangladesh and other Indian Subcontinent origins to the US East Coast and Gulf rose to $4,500 per 40-foot dry/high-cube container from August 4, from $3,500 during July 14-August 3.
From August 15, the surcharge for Bangladesh shipments to destinations other than Houston is scheduled to rise to $5,500, while the Houston rate will reach $5,800.
On the US West Coast, the surcharge has risen from $3,000 during July 14-August 3 to $4,000 from August 4 and is scheduled to reach $5,000 from August 15.
Geopolitical risks squeeze capacity: The latest increases reflect a combination of geopolitical risks, higher operating costs and tighter effective vessel capacity.
The Strait of Hormuz remains a major source of uncertainty for shipping and energy markets. Rising oil prices are increasing bunker costs, while heightened regional risks are also pushing up insurance and security-related charges.
Uncertainty over the Red Sea is adding to the pressure. If carriers avoid the Red Sea and Suez Canal, vessels have to take a detour on the longer route around the Cape of Good Hope, increasing sailing time and fuel consumption and requiring more vessels to maintain service frequency.
That effectively reduces available container capacity even without any decline in the global fleet.
The RMG sector is particularly vulnerable as exporters have limited room to pass sudden increases in logistics costs on to buyers. Moreover, published ocean-freight rates do not necessarily reflect the final freight bill, with carriers being able to impose bunker, security, terminal-handling, peak-season, contingency and other surcharges on top of base rates.
Shovon Islam, managing director of Sparrow Group, one of the leading apparel exporters to the US, says the surge in freight costs is already disrupting shipments and squeezing exporters.
"We are struggling to secure bookings for US-bound containers and are being forced to pay significantly higher freight rates.
"Shipment delays damage our reputation and heighten the risk of losing future orders. On top of that, these soaring freight rates are directly driving up our overall production costs."
BKMEA President Mohammad Hatem has said the freight shock was hurting apparel exporters despite most shipments being made under the FOB (Free on Board) model, under which buyers normally bear freight costs.
"As freight charges rise, buyers are significantly reducing their order volumes. Some are also using higher shipping costs as an excuse to demand lower product prices from manufacturers," he said.
With carriers announcing further increases for August, exporters and freight forwarders fear freight costs could remain elevated and volatile through the upcoming peak season.
