Shipping agents demand amending Flag Vessels Act citing increased costs in time and red tape

Shipping agents have demanded an amendment to the Bangladesh Flag Vessels (Protection of Interest) Act 2019, saying the law is increasing the cost in time to ship goods with the mandatory requirement of obtaining a waiver certificate.

In a letter to the director-general of the Department of Shipping on Sunday, the Bangladesh Shipping Agents Association (BSAA) called for amending the section of the act that requires an no objection certificate (NOC) from the Bangladesh Ocean Going Ship Owners' Association (BOGSOA) for privately owned vessels. 

The flag vessels act, passed in 2019, mandates Bangladeshi flag vessels carry at least 50% of seaborne cargo in the country's foreign trade.

To ensure that, the law requires any container feeder vessels calling at Chattogram port to obtain a waiver certificate from the Mercantile Marine Department 15 days before loading or unloading cargo at the port.

However, in spite of a shortage of domestic flagged ships, traders are required to obtain a NOC from flagged vessel owners in order to use foreign vessels for trade.

For instance, the state-owned Bangladesh Shipping Corporation (BSC), which provides the NOC for state-owned vessels, has eight ships. Of these, six are leased to different countries for long terms. This condition very often leads the corporation to eventually provide an NOC due to a shortage of ships and space.

Shipping agents claim this process often turns out to be lengthy, causing delays in trading. This is why they have called for shortening the time needed to obtain the required waiver certificate.

Vessels go to and from Chattogram port and other ports in the subcontinent and neighbouring countries in very short time periods with voyages not lasting more than five days from one port to another, according to the BSAA letter.

In their letter, BSAA said in importing goods, ensuring the opening of a letter of credit (LC), cargo fixing, vessel chattering etc, are all the sole responsibility of importers and the matter is overall known only to importers.

The letter also said since importing goods and selecting ships is completely under the jurisdiction of importers, it is only logical that they be the ones applying for the NOC [not the shipping agents].

A shipping agent is not informed about the goods loading port and other matters before getting the appointment letter, which comes only a few days before a ship arrives at the port of discharge, the letter noted.

BSAA Chairman Syed Mohammad Arif told The Business Standard (TBS) that at present, 5,000 to 5,500 different cargo ships arrive at Bangladesh's seaports every year. Bangladeshi-flagged ships account for a small number of those.

"This circumstance compels traders to hire foreign ships, and the decision needs to be taken at short notice.  In reality, it is not possible to apply for a waiver for each ship 15 working days prior to shipment. Our demand is to amend this law to bring the time limit for waiver application to 3 to 5 days prior to shipment, with a quick turnaround in granting of the waiver," he said.

According to the Department of Shipping, there are currently 75 official and private seafaring ships registered in Bangladesh. Most of these ships are owned by several industrial groups including KSRM, Meghna Group, Akij Group, Karnaphuli Group. Only four of these ships are container carriers while the rest are bulk carriers and oil tankers.

Local ship owners disagree

Regarding the demand to amend the flag vessel law, BOGSOA Chairman Azam J Chowdhury said, "Annually, the country's total expenditure for freight services is nearly $8.0 billion, of which only $200 million is carried by Bangladeshi flag vessels. 

"The government enacted the law to increase the number of Bangladeshi-flagged ships to make this huge amount of money for the country."

Terming shipping agents' demand to shorten the time required to obtain a waiver certificate "absurd", he said,"It takes more than 5 days to go by ship and bring goods from a port. So, 15 days is logical. Otherwise, how will Bangladeshi flagged ships be protected?"

He also denied the allegation of a delay in issuing NOCs. "We provide certificates as soon as traders apply using our website. There's no question of delay here."

The BOGSOA chairman alleged that domestic shipping agents are demanding the amendment to the law, conspiring with foreign ship owners.

Meherul Karim, CEO of SR Shipping Ltd owned by KSRM Group, said, "Shipping agents are not supposed to demand amendments to laws or shortening the required period for obtaining waiver certificates. They can relay the statements of their principal operators. Also, the allegation of delaying certificates is not true."

Gias Uddin, principal officer at the MMD, told TBS that the department has no jurisdiction over shortening the required period to apply for and obtain a waiver certificate. Amendments to the law are done by the national parliament.