Local ships recovering from pandemic fallouts

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The Daily Star October 06, 2020

Bangladesh can easily retain $1 billion out of the $7 billion of freight spent to bring import cargoes, says Akij Group’s MD

Akij operates 10 seagoing ships that carry coal, iron ore, clinker, wheat, fertiliser and other mineral cargoes from one international port to another. Photo: CollectedSohel Parvez

Local oceangoing vessels that carry bulk shipments from one continent to another have recovered from the Covid-19 fallouts as the operators are getting good business thanks to the increased demand from China, according to a leading operator of seagoing ships.

“There is a huge movement of bulk cargo towards China. Because of China, the shipping industry is no longer struggling,” said SK Bashir Uddin, managing director of Akij Group, one of the country’s biggest business houses with 24 concerns ranging from jute, cement, and steel to food processing and shipping.

Akij operates 10 seagoing ships, which carry coal, iron ore, clinker, wheat, fertiliser and other mineral cargoes from one international port to another.

The Baltic dry index, which tracks rates for ships ferrying dry bulk commodities, jumped to a more than two-month high recently owing to strong iron-ore shipments out of Australia and Brazil, reported Reuters.SK Bashir Uddin

Bashir said the Baltic dry index which dropped to an unprecedented low early this year amid the global Covid-19 outbreak, rebounded later alongside the demand for ferrying bulk cargo.

Stimulus packages offered by the Chinese authorities and the public spending are two of the main drivers that pushed up the demand for shipping, he said in an interview over the phone last month.

“Business went down drastically following the outbreak but it is back at full swing now thanks to China,” he added.

Since local ships have to comply with international maritime laws to sail on international waters, they become part of the global community, Bashir also said.

Therefore, all local oceangoing vessels enjoy similar treatment in line with ships owned by other countries.

“So when there is a pull, it does not matter who is the owner or from where the ship hails. We enjoy similar status when our ship and a German are in the same class,” he said, adding that they carry cargoes from other countries too.

Bashir, also vice chairman of the Bangladesh Oceangoing Ship Owners Association (BOSOA), went on to say that Akij also brings its own cargos through its own ships as this is advantageous in terms of freight charge.

“That is what we are trying to make the regulators understand. We spend nearly $7 billion annually as freight charges to carry inbound cargoes and it is no challenge to retain $1 billion of that amount in the country,” said Bashir, citing rising cargo imports.

Bangladesh imported 87 million tonnes of cargo in fiscal 2019-20, up 78 per cent from 48.94 million tonnes five years ago, data from the Chattogram Port Authority shows.

According to the managing director, clinker accounts for a big portion of bulk cargo imported for the cement industry. Besides, wheat and fertiliser are also imported.

“So, Bangladesh ship owners need to grow. There needs to be more ship owners and the government needs to create conducive policies,” he said, adding that friendly policies could increase the number of ships.

“It is not a matter at all to increase the number of ships to 1,000.”

Citing the necessity to pay for local ships to cross the Suez Canal, he said it is very difficult to make such a transaction from Bangladesh.

The more conducive the regulation, the more local ship owners will grow, said Bashir, adding that the shipping industry creates very high value jobs as well.

“Opportunity is enormous in the industry.”

Bangladesh had 85 oceangoing ships six or seven years ago.

The number of oceangoing ships declined to 35 as owners sold off most of their vessels owing to declining freight rates, high operating costs and removal of the value added tax (VAT) exemption benefit for import and manufacture of ships from fiscal 2014-15.

In March 2018, the National Board of Revenue exempted VAT for import of 15-year old ships of 5,000 deadweight tonnage (DWT) capacity.

It increased the age limit to 22 years in June the same year in an effort to accelerate the growth of the shipping industry.

Since then, the number of locally owned ships started increasing as the volume of imports and exports for the growing economy has been on the rise.

The number of seagoing vessels currently stands at 47 with a combined carrying capacity of roughly 2 million tonnes.

“And we carry from all over the world,” said Bashir of Akij, which operates one of the country’s largest bulk cargo ships with a 76,000-tonne capacity.

He said people who have knowledge should get into the industry.

“It is very feasible for Bangladesh to own 1,000 ships. So new entrepreneurs should come but whoever has the resilience, the perseverance and the ability to learn new things I would strongly encourage them to come,” he added. 

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