Why businesses avoid Pangaon and what MSC wants to fix with $400m offer
Pangoan remains grossly underutilised, often running at 5% capacity
Highlights:
- Pangaon ICD runs at less than 20% of capacity
- High costs add $800–$1,000 per container versus Chattogram
- Exporters avoid Pangaon due to delays, customs, and unpredictability
- Past accidents and demurrage charges ruined importers' confidence
- CPA, customs, and transport syndicates blame each other for inefficiency
- MSC proposes $400m investment to modernise and operate Pangaon ICD
When the Pangaon Inland Container Depot (ICD) was inaugurated in late 2013, it was hailed as Bangladesh's answer to Chattogram port congestion. Built at a cost of around Tk157 crore, the country's first river-based terminal was designed to handle 116,000 twenty-foot equivalent units (TEUs) a year.
Now, more than a decade later, the ICD on the banks of the Buriganga in Keraniganj has turned into a glaring example of a project gone wrong. The facility remains grossly underutilised, running at less than 20% of its capacity – and at times as little as 5%.
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Now, salvation may come from an unlikely quarter.
The world's largest container carrier, Mediterranean Shipping Company (MSC), has offered to invest $400 million to take over and modernise Pangaon. For the first time, a global shipping giant is eyeing direct control of a key piece of Bangladesh's logistics infrastructure.
CPA Secretary Mohammad Omar Faruk told The Business Standard that seven local and international firms responded to the government's call for expressions of interest.
"A shortlist has been prepared and MSC is in it. The proposals are now under review," he said.
Pangaon costs $800-$1000 more than Ctg
Official figures show Pangaon, built on 48.24 acres leased from BIWTA, handled around 30,000 TEUs in 2023, a quarter of its capacity. By 2024, monthly throughput fell below 4,000 TEUs, or just 5% utilisation.
Industry insiders said clearing cargo from Chattogram port via Pangaon adds an extra $800–$1,000 per TEU. These costs include charges from the mainline operator (MLO), such as Maersk, local barge operators' haulage fees, and loading, unloading, and port charges at both ports.
A senior port official, speaking on condition of anonymity, told The Business Standard that nearly all containers departing Pangaon are empty, as exporters have largely abandoned the terminal.
"This forces shipping lines to raise freight rates to cover operating costs," he said. "While three ships used to call at Pangaon weekly in 2023, the terminal now sees only three ships per month."
On 7 September, during a meeting at Pangaon attended by several government advisers, officials presented a paper indicating that the additional cost per TEU via the terminal is nearly $1,000.
Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) President Mohammad Hatem explained why exporters avoid Pangaon.
"Submitting a bill of lading through this port does not depend on us, but on the buyer or their nominated agent," he said. "Since cargo doesn't move on a fixed schedule and additional costs apply, buyers are reluctant to route shipments through Pangaon."
The Chittagong Port Authority (CPA), which owns Pangaon ICD, frequently blames customs for the terminal's poor performance. Customs officials, in turn, highlight structural disadvantages
Costly and slow clearance
Khairul Alam Sujan, director of the Shipping Agent Association, told TBS that road or rail transport is cheaper than shipping via Pangaon, making exporters and importers reluctant to use the terminal.
Time delays also deter use. "For a Gazipur factory, sending cargo to Pangaon requires a truck hire, and even after arrival, loading onto a ship – including staff handling – can take three to four days," he said.
"By contrast, loading cargo at night allows customs clearance at Chattogram ICD the next day at almost the same cost," added Sujan.
Customs bottlenecks worsen the delays. One shipping agent said clearing containers at Pangaon takes at least three extra days due to miscoordination between customs and the CPA.
Mohammad Hatem, managing director of MB Knit Fashions, recalled a delayed consignment years ago. "Since then, I haven't used the port," he said.
Inamul Haq Khan Bablu of Ananta Garments noted similar problems. "Even after reaching Pangaon, goods can take three to four days to reach Chattogram. Road transport remains faster and cost-effective for exporters."
Lost scope for mis-declaration at Pangaon
Amir Hossain Nurani, a veteran steel importer from Old Dhaka, once used Pangaon ICD for CR coil sheets and scrap steel but has abandoned it due to nearly double costs and customs hassles.
"One container from Osaka to Chattogram costs $1,200. Transporting it from Chattogram to Pangaon adds over $1,000. How can this be justified?" he told TBS.
Moving the cargo by truck from Pangaon to his Old Dhaka warehouse costs around Tk15,000 per truck – roughly the same as moving it directly from Chattogram. "This adds $1,000 or more for no reason."
Nurani added that importers before took the opportunity to misdeclare goods' valuation, helping offset extra shipping costs. "That option is almost gone. Why pay more and waste time using this port?"
Losing container dented reputation
Nurani cited a past incident where some containers fell into the river while en route from Chattogram. As a result, all his other containers were held at the port for over a year and four months, and the port demurrage exceeded the value of the consignment.
"Paying that demurrage left me effectively ruined," he said.
Badsha Group's managing director, Badsha Mia, described a cotton import that went wrong: a container fell into the river, and customs authorities held the rest of his containers for a prolonged period.
"Clearing that consignment required immense effort. My factory was idle due to a shortage of cotton, while port demurrage kept mounting. After that, I decided not to use Pangaon again."
Blame game and syndicate
The Chittagong Port Authority (CPA), which owns Pangaon ICD, frequently blames customs for the terminal's poor performance. Customs officials, in turn, highlight structural disadvantages.
"Pangaon is 283km from the outer anchorage, compared with just 11km for Chattogram port," a senior customs official explained. "The distance and high costs inevitably slow down operations."
Beyond that, both Chattogram and Pangaon levy separate container-handling charges, including loading and unloading fees. A transport syndicate centred in Keraniganj has also driven up truck fares, further raising overall costs, according to industry sources.
Enter MSC – $400m lifeline
Against this bleak backdrop, MSC has stepped in with a bold proposal: invest $400 million to take over Pangaon ICD under a public–private partnership.
According to documents seen by The Business Standard, MSC plans to expand container yards and upgrade handling equipment, introduce full automation and digital tracking and dredge and maintain navigational channels.
MSC will also deploy 25 dedicated barges to run feeder services between Dhaka, Chattogram, Mongla, Colombo, and Singapore and build a dedicated cotton warehouse, cutting costs for the textile sector.
"This is a serious offer, not a speculative one," said Amirul Hoque, chairman of Seacom Shipping, MSC's local agent. "MSC wants to integrate Pangaon into its global network."
Commodore Kawser Rashid, member (engineering) of the CPA, confirmed MSC's $400 million proposal. "Alongside developing the infrastructure and adding modern equipment, the shipping giant will bring a fleet of 25 ships capable of transporting containers from Chattogram and Mongla ports to PICT."
Speaking at a recent workshop in Chattogram, Shipping Adviser Brigadier (retd) Shakhawat Hossain said, "We are in the final stage of discussions with MSC. We hope to seal the deal by November or December."
The adviser added, "Alongside the terminal, a cotton warehouse will be built where cotton from different countries will be imported and stored. The warehouse will help boost the country's textile industry."
Meanwhile, exporters see hope. "If MSC delivers, Pangaon could ease pressure on the Dhaka–Chattogram highway," said a garment sector leader.
But critics caution against risks. "Controversies with foreign operators like Red Sea Gateway Terminal show that handing Pangaon to MSC could let tariffs and costs spiral," a former CPA official warned.
