Export freight costs double, lead time rises as shipping lines trim Bangladesh bookings
Representatives of importers, buying houses, shipping agents, and exporters said even when bookings are accepted, lead times have increased by up to three weeks in some cases, while freight rates have more than doubled.
Shipping companies have sharply reduced bookings for export containers from Bangladesh, creating fresh uncertainty for exporters and freight forwarders.
Representatives of importers, buying houses, shipping agents, and exporters said even when bookings are accepted, lead times have increased by up to three weeks in some cases, while freight rates have more than doubled. Freight to the USA has jumped from $4,500 per container a month ago to more than $11,000.
They alleged that shipping companies – also known as mainline operators (MLOs) – are deliberately creating an artificial shortage of container space to drive up freight rates.
Industry insiders warn that if the situation continues, exporters may have to switch to air freight, driving up logistics costs further. Over time, the added burden could fall on exporters and erode Bangladesh's competitiveness by prompting buyers to shift orders elsewhere.
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MLO representatives, however, say the disruption is caused by shipping disruptions linked to tensions in the Middle East. Exceptionally strong demand from China is also leaving fewer booking slots for other countries, including Bangladesh, they add.
The major MLOs serving Bangladesh include Maersk, MSC (Mediterranean Shipping Company), CMA CGM, Hapag-Lloyd, COSCO, Evergreen Line, and OOCL.
DDP exporter suffering directly
The crisis is hitting exporters shipping under Delivered Duty Paid (DDP) terms directly as they bear freight costs until goods reach buyers' warehouses. Those exporting under Free on Board (FOB) terms are less directly affected because overseas buyers pay the ocean freight.
Shovon Islam, managing director of Sparrow Group, a leading garment exporter that ships under DDP, said most Bangladeshi exporters shipping under such terms are facing challenges.
"We are struggling to secure bookings for US-bound containers and are having to pay significantly higher freight rates," he told The Business Standard.
"Delayed shipments damages reputation and increases the risk of losing future orders. Besides, higher freight costs are pushing up our production costs," he said.
Neither the Bangladesh Garment Manufacturers and Exporters Association nor the Bangladesh Knitwear Manufacturers and Exporters Association has data on how many Bangladeshi exporters use the DDP model.
Freight cost doubles in a month
The Dhaka liaison office of US-based buying house Liang Fashion has spent nearly two weeks trying to secure bookings for 10 garment-laden containers bound for the US, despite approaching several MLOs, including Hapag-Lloyd and MSC.
Last week, the MSC informed the company by email: "Sorry we are unable to accept your booking currently. Our vessels have been fully booked for the next few weeks."
A senior Liang Fashion official, speaking on condition of anonymity, said the company eventually had to accept sharply higher freight rates for its 10 containers to secure space.
"Freight to New York has jumped from $4,500-$5,000 per container a month ago to as much as $11,400," he said. "Our containers will reach buyers two to three weeks late. That could hurt future orders, while our logistics costs are also rising."
He said most container shipments from Bangladesh to the US and Europe are facing booking delays and exorbitant freight rates.
Kabir Ahmed, managing director of Conveyor Logistics, said freight to Hamburg, Germany, has risen from about $2,500 a month ago to nearly $6,000 per container.
Kazi Iftequer Hossain, former president of the Bangladesh Garment Buying House Association, warned that the disruption could further weaken Bangladesh's exports.
"Bangladesh's exports are already under pressure. This latest crisis will further lengthen container transit times, hurting the country's export competitiveness," he said.
No industry body, however, could provide data on the number of exporters or containers affected, or the additional costs incurred.
Finger pointed at MLOs
Conveyor Logistics MD Kabir Ahmed alleged that MLOs have created an artificial shortage. "We believe they are acting in concert to reduce booking and drive up freight rates."
A senior executive at a Bangladesh-based shipping agency, speaking on condition of anonymity, echoed the claim. "Whenever the MLOs want to raise freight rates, they create this kind of artificial shortage," he told TBS.
Other Industry insiders said container bookings from China have surged in recent weeks, prompting shipping lines to allocate more capacity there.
They explained that Bangladesh does not typically receive direct calls from mother vessels, and export containers are first shipped by feeder vessels to transshipment hubs such as Colombo, Port Klang, and Singapore, where they are transferred to larger vessels bound for Europe and North America.
With more capacity being allocated to Chinese cargo, less space is available for containers from Bangladesh and other countries at these hubs. As a result, MLOs have reduced booking allocations from Chattogram.
Industry sources alleged that shipping lines are prioritising Chinese cargo because it generates higher returns, leaving fewer slots for Bangladesh and other countries.
MLOs deny allegations
A senior MSC official in Dhaka, speaking on condition of anonymity, acknowledged that booking allocations for Bangladesh had reduced, but said the cut was modest. "If we previously accepted bookings for around 2,000 containers, we are now taking about 1,500."
He said the disruption is caused by the conflict in the Middle East and continued disruptions in the Red Sea. "This is not a Bangladesh-specific problem; it is affecting global shipping."
The official also admitted that shipping lines are allocating more capacity to China because it is commercially more attractive. "Cargo from Bangladesh must first be transported by feeder vessels to transshipment ports, where additional loading, storage and handling costs are incurred. Those costs do not apply to cargo shipped directly from China," he said.
A senior official at Hapag-Lloyd's Bangladesh office also confirmed that freight rates from Bangladesh had surged because of the shortage of shipping space.
Crisis could worsen, adding pressure on exporters
Stakeholders warn the container space shortage could worsen in the coming months. While DDP exporters are bearing the immediate impact, they said even FOB exporters could eventually face pressure as higher logistics costs ripple through the supply chain.
A senior Hapag-Lloyd official in Bangladesh said the shortage is likely to intensify.
"If the situation worsens, we will have to revise our freight quotations. Eventually, part of the additional cost could be passed on to factories," he said.
Kabir Ahmed said exporters could increasingly be forced to use air freight, further raising costs.
A senior executive at a Dhaka-based buying house said sustained increases in freight costs would ultimately be passed on to suppliers. "We cannot absorb these additional costs indefinitely. Eventually, they will have to be reflected in product prices," he said.
He warned that if Bangladeshi exporters are unwilling or unable to absorb the higher shipping costs, international buyers could shift orders to competing sourcing destinations.
