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HomeBusinessWhy Bangladeshi exporters have increased use of Delhi airport for air shipments

Why Bangladeshi exporters have increased use of Delhi airport for air shipments

Over the past four months, Bangladeshi exporters and their buyers have increased use of Delhi’s Indira Gandhi International Airport to reduce transport costs (airfreight).

According to the sources related to the industry, Hazrat Shahjalal International Airport is struggling to keep pace with the recent increase in the amount of cargo. In addition, the ongoing Red Sea crisis resulting from the Iran-Israel conflict has increased the lead time (time from purchase order to product arrival) by sea. Some fashion brands have resorted to airfreight to deliver their products on time.

Besides, airlines from the neighboring country operate direct flights to various destinations, thereby saving on costs. This reduces the overall cost of shipping.

Bangladesh has taken dedicated air cargo space at Delhi’s Indira Gandhi International Airport as a strategic move to increase logistics capacity, according to a report published in the Indian business magazine ‘Construction World’ on May 3.

Through this arrangement, Bangladeshi exporters are getting direct access to Delhi’s extensive air connectivity network. The product is being shipped quickly and efficiently.

Bangladesh Garments Manufacturers and Exporters Association (BGMEA) Director and TAD Group Managing Director Ashikur Rahman Tuhin told The Business Standard, ‘In the current season, there was a small number of order bookings. Buyers ordered cautiously given last year’s sales performance. However, after receiving positive feedback from consumers, apparel buyers have started increasing orders with shorter lead times. So these products have to be exported through airfreight at extra cost to catch the lead time.

In some cases, even due to their own delays, garment manufacturers are shipping goods by air. Despite this, airfreight rates for EU routes in Dhaka have increased from $2.4 per kg to $5-5.5 per kg, Tuhin said.

Shovan Islam, managing director of Sparrow Group, also said in a tone that Delhi airport is currently more cost-effective than Dhaka airport for both air cargo and passenger flights.

He said, ‘The cost of airfreight from Dhaka to New Jersey stands at 6 dollars per kg, while from Delhi airport it is only 4 dollars. Similarly, airfreight from Dhaka to New York costs $8 per kg, while it is only $5 per kg from Delhi airport. Besides, the airfreight cost from Dhaka to Madrid or London is 5.5 dollars per kg, which is only 4 dollars from Delhi airport.

Shovan said his American customer Mango recently chose Delhi airport to transport some of its fashion products as it is a more cost-effective route.

He said that Delhi Airport can offer services at the most competitive cost due to numerous direct flights and chartered cargo services on various routes.

Air cargo has increased at Dhaka Airport

According to Bangladesh Freight Forwarders Association (BFFA) data, Dhaka airport’s daily cargo handling capacity has increased to an average of 600 tonnes, from 150 to 250 tonnes four months ago.

BFFA also said that the daily air cargo demand in the country is 1,000–1,200 tonnes, but the current capacity is less than half of this demand.

BFFA president Kabir Ahmed said garment manufacturers have been under a lot of pressure to ensure timely delivery of products since late December. This has significantly increased the export-cargo load at Dhaka Airport.

Besides, Dhaka Airport’s cargo handling capacity has come under pressure as some airfreight operators have reduced their cargo transportation operations in Bangladesh. Kabir said, ‘In the absence of dedicated cargo flights, we often rely on passenger flights.

“In this situation, many exporters are forced to use Indian airports for shipments.”

He said that the amount of Bangladeshi goods transported through Indian airports has increased from 150-250 tons to 350-500 tons per month.

If the third terminal of Dhaka Airport is opened, its cargo handling capacity will increase a lot. A Japanese company is expected to handle the ground and cargo operations of the new terminal. The BFFA president expressed hope that the efficiency will increase. He said that the remaining work of the new terminal could be completed by the end of this year.

Dhaka lost business to Delhi

According to India Sea Trade News, Delhi Airport handled 260,000 tonnes of export cargo from April to December 2023, while Bangladesh’s share was only 5,000 tonnes, which is less than 2 percent of the total cargo.

However, out of the total 90,000 tonnes of cargo handled by the Delhi airport in the March quarter of 2024, Bangladesh’s share increased to 8,000 tonnes, which is 9 percent of the total cargo.

Bengaluru’s Federation of Indian Export Organization (FIEO) vice-president Israr Ahmed said that Bangladesh’s cargo has increased in this way and cargo congestion has occurred. And airfreight has increased by almost 300 percent.

Bangladesh Freight Forwarders Association director Nasir Ahmed Khan told TBS, “Dhaka airport is making a loss of 16 cents per kg of goods transferred to Delhi airport. The total revenue loss would be even higher if the amount is calculated.’

Noting that the airlines do not want to come to Dhaka airport, he said, ‘When it is established that exports can be made through Delhi, then the airlines will not come to Dhaka airport. Then there will be a very bad situation in Dhaka airport in terms of cargo handling.’

Nasir further said, ‘Indian freight forwarders will benefit whenever the cargo goes through Delhi. As a result, we local people will lose business and many people will be unemployed.

“If we do not solve the problems due to which cargo is going through India, then this problem will not go away.”

Apart from the high cost, freight forwarders complain that only two of the four cargo scanners at Dhaka airport are functional. Besides, they emphasized on making the cargo handling of Biman Bangladesh.

Airlines more smooth and therefore bringing modern equipment. They feel that if these issues can be resolved, then there will be no need to send cargo through Delhi.

Indian exporters are not getting enough space

Indian exporters are not getting enough space to send Bangladeshi-made garments to Europe and the United States through Delhi’s Indira Gandhi International Airport.

Under a trade agreement with India, sealed export cargo from Dhaka can arrive directly at the Delhi airport with minimal checks at the border.

Indian manufacturers told Sea Trade News that it has become very difficult to get air space for their export shipments. As a result, they are forced to pay a premium to get a seat on the plane.

Apparel Export Promotion Council (APC) chairman Sudhir Sekhri said Indian exporters are already paying higher freight charges due to the Red Sea crisis. In addition, they are forced to transport goods by more expensive air instead of by sea.

Transporting Bangladeshi exports through the Delhi Air Cargo Terminal will further increase logistical challenges and transport costs for Indian garment exporters, he said.

About 30 cargo trucks go to Delhi every day from Dhaka. As a result, the flow of cargo slows down and airlines are taking unethical advantage of the situation, Sekhari alleged.

He said Indian exporters have suffered greatly due to delays in cargo handling and processing and severe cargo congestion at the cargo terminal at Indira Gandhi Airport, besides reducing competitiveness due to increased airfreight charges.