Surging freight costs threaten exports, stoke inflation fears 

Infographics: TBS

Shipping costs are rising fast as capacity tightens and risks mount in the Gulf. Many vessels are idling in safer waters to avoid potential attacks, while others are taking longer, costlier detours. At the same time, tighter oil flows have driven up bunker fuel prices, with insurance premiums climbing sharply.

The ripple effects of the Middle East war are now being felt in Bangladesh.

Shipping lines operating in the country have raised container detention charges by up to 10% and slapped Emergency Fuel Surcharges (EFS), adding fresh strain to businesses already struggling with global supply disruptions and demand shrinkage.

Industry insiders say the combined impact could push overall logistics costs up by around 25% – raising import bills, squeezing exporters' margins and, ultimately, feeding into consumer inflation.

Rakibul Alam Chowdhury, former vice president of the Bangladesh Garment Manufacturers and Exporters Association, said most carriers have increased both detention charges and fuel surcharges.

"Earlier this month, they imposed fuel surcharges which were not factored into our cost calculations," he told The Business Standard.

The impact is already visible in freight rates. Importing a 20-foot container of fabric from Shanghai rose from $1,500 in February to $1,900 in March, while exporting a similar container of garments to Los Angeles climbed from $2,300 to $2,900.

"In both routes, shipping costs have increased by around 26-27%," he said.

The China-Bangladesh maritime corridor remains the backbone of the country's apparel trade. In the 2024-25 fiscal year, Bangladesh imported textile and garment raw materials worth $18.44 billion, nearly 80% of which came from China, according to the Bangladesh Trade and Tariff Commission.

More than 20 shipping lines operate in Bangladesh. Among them, Maersk accounts for roughly a quarter of the country's container throughput, alongside other major carriers such as Ocean Network Express (ONE), CMA CGM, MSC and Hapag-Lloyd.

With freight, fuel and ancillary charges rising in tandem, many importers are now adopting a wait-and-see approach.

Abul Bashar Chowdhury, chairman of BSM Group, one of the country's largest commodity importers, said he has held back imports since the war began on 28 February.

"Freight cost per tonne has gone up by $20-$25, while wheat prices have jumped by around $30 per tonne in the last 10 days," he said. "This volatility in both commodity prices and freight costs is forcing us to stay out of the market for now."

Carriers pass on fuel costs

Ocean carriers are continuing to pass on rising operational expenses, with ONE announcing a fresh round of EFS across multiple trade lanes.

The revised surcharge structure applies to both dry and refrigerated containers across Trans-Pacific, Trans-Atlantic, European, Latin American, African, and Asian routes.

Under the new rates, shipments from Asia to the US West and East coasts will incur EFS of $160 for 20-foot containers and $320 for 40-foot containers for dry cargo. Charges for refrigerated containers are higher, reaching $210 and $420, respectively.

Similar patterns are visible across Asia, Europe and intra-European trades, where headhaul routes carry higher surcharges than return legs. In some Europe-Latin America corridors, surcharges are denominated in euros, with rates such as $69 for 20-foot containers.

Routes involving Africa and the Middle East also fall under the revised tariff, with EFS ranging between $80 and $320 depending on direction and cargo type.

Industry insiders say the adjustments reflect continued volatility in global shipping, driven by fuel price swings and geopolitical risks.

Detention charges climb

At the same time, nearly all global shipping lines have raised container detention and demurrage charges, according to BGMEA officials.

Maersk Bangladesh has revised its detention tariffs, increasing per-day charges across container categories by around 7-10%, effective from 6 April.

While free-time allowances remain unchanged, the cost of holding containers beyond the allowed period has increased. For imports, dry containers will continue to get four days of free time, after which daily charges rise across all slabs. Refrigerated containers, with only two days of free time, will also face higher daily fees.

Industry stakeholders say similar revisions have been implemented by other carriers. ONE also increased detention charges by around 4-7% across different container types, effective from 1 April.

Shipping operators attribute the hikes to tighter vessel capacity, disruptions in global shipping networks and sustained demand for container space.

Logistics service insiders have, however, said most of the major shipping lines have not yet imposed a detention surcharge, though they are making excuses of a shortage of containers. This is why the impact of the detention surcharge has not yet been felt, they said.

"But the impact may be visible in April if the situation continues like this," said Syed Ershad Ahmed, president of the American Chamber of Commerce in Bangladesh.

Fuel surcharge has already been imposed, raising overall freight cost to a level worldwide, which will cost the supply chain heavily, said Syed Ershad, who is also country manager and managing director of Expeditors (Bangladesh) Ltd.

Businesses brace for impact

Exporters and importers warn that rising logistics costs could erode Bangladesh's trade competitiveness.

The readymade garment sector is expected to be hit particularly hard, while higher import costs may feed into inflation.

Abu Tayyab, director of BGMEA, said exporters have little room to pass on the additional burden.

"Buyers will not pay the increased freight or detention charges. We have to absorb these costs, which will reduce profitability and weaken competitiveness," he said.

Carriers defend rate hikes

Shipping companies, however, say the increases are unavoidable. Khairul Alam Sujon, former director of the Bangladesh Shipping Agents Association, said operating costs have surged sharply.

"Fuel prices have jumped from below $70 per barrel to around $118 following the Middle East conflict, while insurance premiums have increased by 50-60%," he said, adding that vessels are taking longer routes to avoid conflict zones, further raising fuel consumption.

A senior official at Maersk Bangladesh, requesting anonymity, said detention charges are adjusted based on market conditions.

"Detention charges do not increase every year. They depend on the situation," he said, adding that higher bunkering costs and insurance premiums have pushed up overall operating expenses.

"Not only Maersk, but all liners have also increased detention charges and similarly imposed fuel surcharges to recover additional costs," the official added.

Planning challenges ahead

With detention charges rising sharply after the free period, businesses are under pressure to improve logistics planning.

Delays in customs clearance, port congestion or inland transport disruptions could now translate into higher penalties, industry insiders warn.

As uncertainty persists in global supply chains, freight rates and related charges are expected to remain elevated in the near term, adding another layer of challenge for Bangladesh's export-oriented economy.