The cut of Bangladesh-China direct shipping link impact textile trade

A Singapore-based mainline operator has decided to cut the direct shipping link between Bangladesh and China, that had opened a new vista in the two countries' trade three months back.

The carrier Pacific International Lines (PIL) started the 'landmark' shipping link on September 9.

This direct link-cut would largely affect the garment manufacturers, especially those who have been utilising new European Union (EU) rules of origin by procuring Chinese fabrics, trading circles noted.

This will also leave negative impact on industrial raw materials and capital machinery as freight cost might rise.

The move comes as the Singapore-based shipping company gets fewer export cargoes than it expected.

Bangladesh country director of PIL, Captain Md Rafiqul Islam, told the FE Monday: "We'll shortly discontinue our services between China and Bangladesh as we've been incurring huge financial losses on the route."

Sources said their last voyage had already begun from China for Chittagong.

"This is their last voyage on the route," said a top shipping executive.

With the direct link, freights were easier for Bangladeshi traders, who import merchandise worth US$ 7.0 billion from the world's second largest economy and it had helped boost export opportunities for local manufacturers.

Besides, the link has saved a week for local traders, who import most of the country's electronics from China and for garment makers, who source yarn and fabrics.

Traders and manufacturers will now need at least 22-25 days instead of 18-19 days to import goods from China.

The stoppage of the service will raise costs of import from the world's second largest economy as traders now will be required transshipment at Singapore or Port Klang in Malaysia.

The carrier used to bring cargoes from the Chinese ports Ningbo of Zhejiang province and Nansha of Guangdong -- the global textile, electronics and footwear hub.

It also carried cargoes from Shanghai in China.

However, PIL Bangladesh office said that consignees will not suffer much following their 'new decision'.

"Our services between China and Singapore will continue and Bangladeshi importers will require additional one day only to get their goods," said an official of the mainline.

Shipping executives said continuing the direct Chittagong-Bangladesh link was tough mainly due to poor out-bound cargoes from the Chittagong port.

"If we had adequate exports for China, then this would be a profitable venture," said a senior shipping executive.

Meanwhile, local top importers said goods and food grains remained stockpiled at Singapore and Klang ports for weeks, fuelling inflation at home.

The direct link saved at least $120 in freight cost per 20-foot container for Bangladeshi traders.

China has in the recent years emerged as the country's largest import partner. It accounted for some 21 per cent of Bangladesh's $33 billion import trade in the year up to June 2011.

Bangladesh's major imports from China include electronics, fabrics, non-cotton yarn and accessories, machinery, chemicals, intermediary raw materials, fertilisers, food grains and fruits.