Fuel shortages disrupt inland shipping, stoking fears of higher essential prices

A growing fuel shortage is disrupting the movement of goods on the country's river routes, threatening supply chains and raising concerns that the impact could eventually be felt in consumer prices.

The disruption has particularly affected the transportation of cargo from Chattogram Port to inland destinations, where thousands of lighter vessels typically carry imported goods – unloaded from large mother vessels anchored at the outer anchorage – across the country's waterways.

Industry operators say that the limited diesel supply over the past four weeks, following the outbreak of war involving Iran, Israel, and the United States, has significantly slowed cargo movement.

Traders and shipping operators warn that the prolonged shortage, largely due to the inability of Bangladesh Petroleum Corporation (BPC) to supply sufficient fuel, could drive up transport costs, delay deliveries, and ultimately raise the prices of essential goods.

Khairul Alam Sujan, vice-president of the Bangladesh Freight Forwarders Association (BAFFA), told The Business Standard that the shortage was already creating logistical and financial pressures.

"Imported goods are unloaded from mother vessels using lighter vessels. If lighter vessels cannot operate, the mother vessels have to remain idle," he said.

"Depending on the size of the vessel, this idle time can add an additional expense of $10,000 to $25,000 per day. Importers ultimately bear these costs, and the impact eventually reaches consumers," he added.

Around 2,500 lighter vessels – owned by private operators and industrial groups – operate across different river routes in Bangladesh. Together, they require roughly 250,000 litres of diesel every day.

Operators say the shortage began after the Middle East conflict disrupted global energy markets, leading to supply constraints in Bangladesh as well. Since then, many vessels have struggled to obtain enough fuel to operate.

Parvez Ahmed, spokesperson for the Bangladesh Inland Water Transport Coordination Cell (BIWTCC), said the shortage had been affecting cargo operations for nearly a month.

"Yesterday, four vessels belonging to the Akij Bashir Group could not depart because of the fuel shortage," he said. "For the past four weeks – including three weeks before Eid – we have not been receiving the amount of fuel we require."

Parvez said the organisation had already raised the issue with the authorities. "We issued statements earlier and informed the finance minister. He asked the energy minister not to impose rationing, but the problem has still not been resolved," he said.

According to him, vessels under BIWTCC require between 200,000 and 250,000 litres of diesel daily but are currently receiving only about 50,000 litres.

The shortage has also affected operational planning. About 1,050 vessels under the organisation transport goods from Chattogram Port to various destinations across the country.

"Normally we allocate around 80 vessels each day for cargo transport, and we hold allocation meetings daily," Parvez said. "But since the crisis began, we have been holding allocation meetings only every two days."

Diesel demand and reserves

Diesel is the most widely used fuel in Bangladesh, powering sectors including irrigation, road transport, and electricity generation.

According to BPC data, the country's annual diesel demand in the 2024-25 fiscal year stood at about 4.35 million tonnes – equivalent to roughly 360,000 tonnes per month or around 12,000 tonnes per day.

Bangladesh's total diesel storage capacity is 624,189 tonnes. As of 23 March, the available supply stood at about 185,000 tonnes, roughly 29% of total capacity, just enough for around 14 days of consumption.

Concerns over marine fuel supply

Alongside diesel shortages, concerns are also emerging about marine fuel used by large vessels operating on international routes.

Mother vessels typically use low-sulphur fuel oil (LSFO) with 0.5% sulphur content. The price of this fuel began rising in Singapore earlier this month due to the ongoing conflict in the Middle East and has now become higher than in Bangladesh.

Industry sources say that although dealers have marine fuel in stock, some are reluctant to release it into the market in anticipation of higher prices.

As of 2 March, BPC had around 1,500 tonnes of marine fuel in stock, which could support supply for about 44 days.

Syed Mohammad Arif, former chairman of the Bangladesh Shipping Agents Association (BSAA), said most mother vessels visiting Bangladesh usually refuel in Singapore.

"For that reason we have not yet seen serious instability," he said. "But global impacts can reach the country very quickly, so adequate reserves are important."

Disruptions spread to inland ports

The fuel shortage has also affected cargo movement along other river routes, including Narayanganj.

Sources linked to inland shipping say many vessels and bulkheads have been unable to start journeys on time because of limited diesel supply, causing delays in transporting goods from Narayanganj river port.

Some vessel operators have also demanded higher freight charges, putting additional pressure on traders.

Large quantities of goods, including wheat, edible oil, rice, cement raw materials, and fertiliser, are transported to Narayanganj by river. But traders say vessel shortages have recently emerged on routes from Chattogram.

Even vessels that are operating are often delayed due to long refuelling queues. At the same time, rising fuel prices in the open market and supply uncertainty have increased transportation costs. Many owners have been forced to keep their vessels idle.

Masum Billah, owner of fuel supplier Raftar Petroleum, said the supply gap had become severe.

"We normally require 300,000 litres of diesel each month, but we are currently receiving only about 80,000 litres," he said. "As a result, at least 60% of cargo vessels have stopped operating. Many ships are anchored in the river."

Rising transport costs for agricultural goods

The fuel shortage is also increasing transport costs for agricultural goods transported by river.

In Brahmanbaria's Ashuganj market, one of the largest rice trading hubs in eastern Bangladesh, traders say the cost of transporting paddy by boat has risen by about Tk5,000 per trip.

Trader Jagadish Chandra Das from Itna said transporting a boatload of paddy to Ashuganj requires around 140 litres of diesel. "Previously we bought diesel for Tk100 per litre, but due to the shortage it now costs Tk110," he said.

Nazmul Islam, another trader, said paddy prices have recently fallen because supply in the market is high and rice sales remain slow. "As transport costs rise due to diesel prices but paddy prices are not increasing, traders are facing losses," he said.

Traders warn that unless fuel supplies stabilise soon, the disruption to river transport could intensify and put further strain on the country's supply chains.