Virtual monopoly in ship handling hurting importers

Highlights:

• In the past 15 years, cargo handling more than tripled whereas the number of operators increased from 15 to 32 
• Importers could unload goods with operators of their choice until 2007 
• Due to inefficient operators, importers have to incur losses because of slow unloading and damage to goods
• Daily demurrage of $10,000 to $25,000 is charged depending on the size of the vessel for extra time

Businesses are counting losses as they have no say in choosing or even properly negotiating with ship handling operators who unload bulk cargo at Chattogram port's outer anchorage, causing importers to suffer in terms of both extra cost and time.

The association of ship handling operators currently appoints companies to do the unloading from its pool of 32 operators on a serial-wise system.

But businesses allege that as importers cannot hire their preferred, often more efficient, operators have begun to enjoy a sort of monopoly.

Moreover, in the past 15 years, cargo handling at the outer anchorage have more than tripled whereas the number of operators has increased from 15 to 32 only.

As a result, businesses are being held hostage by the ship handling operators.

Amirul Haque, managing director of Premier Cement, told The Business Standard that it is the "inherent right" of importers to hire ship handling operators of their choice.

"But they no longer have that right. The entire unloading process of the port has become monopolised. This monopoly needs to be broken for the sake of businesses. The number of ship handling operators should be increased," he added.

They said that earlier the shipping agents used to appoint ship handling operators on the condition of taking responsibility for the damage to the goods and ships while unloading goods. There was also a provision to terminate a contract in case of negligence or late discharge.

In addition, the unloading costs would be determined through negotiations between the two parties. Operators were controlled by shipping agents and as a result, competition among them increased. 

But now, these no longer exist.

Importers had the option of unloading goods with operators of their choice until 2007 when the government divided the 56 stevedore companies engaged in ship handling into berth operators and ship handling operators.

Now, due to inefficient operators, importers have to incur losses because of slow unloading and damage to goods, businessmen claimed. 

Daily demurrage of $10,000 to $25,000 is charged depending on the size of the vessel for extra time. 

As most of the goods uploaded at the outer anchorage are food products and industrial raw materials, any crisis puts a negative impact on the product prices in the country's market for which consumers have to pay eventually.

Aameir Alihussain, managing director of the country's largest steel manufacturer BSRM Group, told TBS, "We cannot unload imported industrial raw materials using our preferred operators. We have to get our products using operators imposed by the association. In many cases, time is wasted in unloading goods with unskilled operators. On the other hand, the cost of unloading products is also not competitive."

He said industries should have the opportunity to hire ship handling operators of their choice. "Otherwise, importers will suffer financially which will ultimately affect the product market of the country."  

The affected businessmen alleged that the ship handling operators are opting for various means to block the entry of new entrepreneurs into the sector.

AKM Shamsuzzaman Russel, chairman of the Bangladesh Ship Handling and Berth Operators Association, said the activities of ship handling operators are carried out according to the policies of the port. There is no scope for syndicate or monopoly business here.

In 2015, the port invited tenders for the appointment of ship handling operators. 

A total of 32 companies joined, including the previous 21. Five of them unload products imported by their own companies and the remaining 27 operators handle the products of various industrial groups and importers. The sector employs about 2,500 workers.

In 2021, the Chattogram Port Authority again floated a tender notice for the appointment of ship handling operators. 

The process, however, has remained halted for the past year due to a High Court order after eight operators challenged the move.

Importers also said there is no competitive mechanism in determining handling charges, which reduces the performance of the port and leads to more suffering. 

According to the port authority, more new ship handling operators need to be added considering the overall growth of the port. If there are 50 ship handling operators, the operational activities of Chattogram port will be speedier.

Chattogram Port Authority Secretary Md Omar Farooq said the tender process is on hold due to a writ petition. "We hope that the complications related to this will end soon," he added.

At the port, cargo unloading is done at both the jetty and the outer anchorage. Those involved in loading goods at the jetty are called berth operators and those involved in unloading goods at the outer anchorage are called ship handling operators.

Although Chattogram port is a container port, 70% of its handling is bulk cargo. Imported goods arrive in the port in containers and bulk carriers. Ship handling operators handle 75% of unpacked cargo brought in by bulk carriers. The remaining 25% of unpacked cargoes and container goods are uploaded at the port jetty.

Ship handling operators take 18-20 days to unload goods from a mother vessel.

Chairman of the Bangladesh Shipping Agents Association Syed Mohammad Arif said for the sake of work it was necessary to ensure the accountability of ship handling operators in order to meet future demand.

"It should be ensured that berth operators posted at other seaports can work at Chattogram port. As new operators are not added, the sector has become hostage to one group," he lamented.

Due to the shallow depth in the port channel, ships with a draft of more than 9.5 metres cannot enter the main jetty of the port. Therefore, carriers of unpackaged cargoes, especially raw materials of various industries such as wheat, fertiliser, cement clinker, stone, sugar, food products, scrap, coal and goods are unloaded in lighter vessels in the outer anchorage. They sail to different parts of the country by rivers.

Md Abdus Sabur, secretary to the Bangladesh Competition Commission, said there must be competition in all businesses.

"If anyone complains about this to the commission, we will investigate the matter," he added.