Fuel hike squeezes exporters as transport, port and factory costs rise

Transport operators have already raised freight rates, while private inland container depots in Chattogram have increased their charges by 9.85%, adding to the cost of moving export and import cargo.

The latest fuel price hike is driving up transport, port handling and factory operating costs, putting further pressure on exporters and industries already grappling with high production expenses and weak demand.

Transport operators have already raised freight rates, while private inland container depots in Chattogram have increased their charges by 9.85%, adding to the cost of moving export and import cargo.

Chowdhury Zafar Ahmed, secretary general of the Bangladesh Covered Van-Truck-Prime Mover Goods Transport Owners Association, said the cost of a Dhaka-Chattogram prime mover trip had risen from Tk20,000-Tk22,000 to at least Tk26,000.

A prime mover’s round trip to Chattogram Port, including fuel, driver and helper wages, now costs Tk30,000-Tk32,000, he said.

“Higher transport costs increase production, supply and marketing expenses, which ultimately affect consumer prices,” Zafar said.

Waterway freight is also set to rise.

More than 1,200 lighter vessels transport goods from Chattogram Port to different destinations through 34 inland waterways.

After fuel prices rose 15% in April, the shipping ministry increased lighter-vessel freight rates by 6.5%. Another adjustment is now under review following the latest hike.

Parvez Ahmed, a spokesperson for the Bangladesh Inland Water Transport Coordination Committee, said freight rates need to be adjusted to reflect the higher fuel price.

ICD charges jump 9.85%
The 23 private inland container depots and off-docks in Chattogram raised container handling and transportation charges by 9.85% from Monday.

The Bangladesh Inland Container Depots Association said the increase was necessary as prime movers and cargo-handling equipment are heavily dependent on diesel.

The surcharge follows a 17.4% increase in diesel prices to Tk135 per litre.

The higher charges cover empty-container transport and handling between the port and ICDs, export cargo stuffing and handling, verified gross mass weighing and import cargo delivery packages.

Around 93% of export cargo and 20-23% of import containers are handled through private off-docks.

Transport costs through land ports have also increased. At Benapole, truck fares jumped by Tk5,000-Tk8,000 within a day.

The fare for a 15-tonne truck from Benapole to Dhaka rose from Tk21,000-Tk22,000 to Tk25,000-Tk26,000. On the Benapole-Chattogram route, the fare increased from Tk27,000-Tk28,000 to Tk34,000-Tk35,000. Fares to Narayanganj rose by around Tk5,000.

Faridul Alam, publicity secretary of the Khatunganj Trade and Industries Association, said the fare for a 27-tonne truck from Dhaka to Chattogram had increased by about Tk2,000 in two days.

“Higher transport costs will inevitably affect the prices of essential goods,” he said.

Exporters struggle to absorb costs
For exporters, the latest increase comes on top of higher logistics, energy and raw material costs.

Mohammad Abdus Salam, managing director of Asian Group and former first vice-president of BGMEA, said truck and logistics costs as well as expenses for importing raw materials had increased.

Again, factories often have to run diesel generators during load shedding, adding to production expenses, he said.

“We cannot pass the additional costs on to buyers,” Salam said, warning that the higher costs are putting Bangladeshi garment manufacturers at a disadvantage in international markets.

Mohammad Bokhtiyer Jamal, manager of Corvo Bicycle Ltd and Trident Cycles Company Ltd at Karnaphuli EPZ, said transport, port and import-export costs were all rising.

The bicycle market has begun recovering after a downturn, but higher operating costs could undermine the sector’s competitiveness, he said.

Port operators seek higher rates
Berth operators at Chattogram Port have also sought an adjustment to their service charges, saying their existing rates were agreed four years ago and no longer reflect current operating costs.

The Bangladesh Ship Handling and Berth Operators Association made the request in a letter to Chattogram Port Authority (CPA) Chairman Rear Admiral SM Moniruzzaman on Monday.

Operators use diesel-powered quay gantry cranes, rubber-tyred gantry cranes, straddle carriers, mobile harbour cranes, reach stackers, forklifts, top handlers, prime movers, trucks and covered vans at 12 general cargo berths.

Fazle Ikram Chowdhury, president of the association, said diesel cost Tk80 per litre when the current contract bids were submitted in January 2022. It now costs Tk135, nearly 69% higher.

Each operator has around 30-40 trailers, while most heavy equipment is diesel-powered. Transport accounts for about 40% of operating costs, making it difficult to continue at existing rates, he said.

CPA Secretary Syed Refayet Hamim said the matter would be discussed with stakeholders.

Factories face higher energy bills
Industries are also bearing the brunt of higher diesel prices.

Ameer Hossain Sohel, managing director of PHP Float Glass Industries, said the impact runs through the entire production chain.

Glass furnaces must operate continuously, and the company uses diesel when gas supply or pressure is inadequate. Diesel-powered cranes and other equipment are also used to handle raw materials and finished products.

Tapan Sengupta, deputy managing director of BSRM, said low gas pressure was forcing the company to use fuel oil.

Production costs were previously around four times higher when fuel oil was used instead of gas; they are now about five times higher, he said. BSRM has increased freight rates by around 10%.