Port inefficiency increases export-import lead time
With continuous economic growth both import and export volume of the country is increasing everyday through multimodal ways of sea, air and land. To meet the growing demands for logistical services port efficiency is becoming important--aiming to provide low lead time, reduce costs of doing business and offer products and services in competitive prices amid competition from other countries.
Bangladesh's current economic development requires improvement in its port services as existing facilities are not adequate to cater necessary services of exporting over $40 billion and import of goods and services which is more than export with a trade deficit. To speed up productions it is important for a company to import raw materials within lower lead time and at cheaper cost but the existing chaotic port facilities is horrible for both exporters and importers that it requires higher lead time and increased costs of transportation and manufacturing costs.
In the Chittagong port the existing standards of facilities and services are harassing situation that results higher lead time for Bangladesh born trade than our competitor countries. Here I am trying to mention few problems that I face in doing business mainly arrival of feeder vessels, river draft, lighter vessels and lengthy clearance system of goods in the port. In particular I will focus on apparel sector that how we are facing trouble when we import cotton-a major raw material of our industrial units.
As feeder vessels--due to low draft--can't come to our port premises, it is a time consuming process of clearing goods that the entire process requires 12-14 days to load with company cargo vehicles. Due to port congestion, inadequate space and inefficient handling system an importer needs to face troubles in different stages that ultimately increase lead time and rise costs of doing business.
Firstly, in the port's outer anchorage the ships stay for many days and it takes four days for berthing due to ships' traffic and once a ship is in its berthing position than it waits day after day to unloading goods. Once the goods containers are unloaded from feeder vessels, it is kept in different places of the jetty due to space crisis resulting a single importer's unloaded goods containers are being put in different places and it becomes difficult for him to find all together from scattered positions.
Due to this haphazard situation an importer has to wait for at least 3 days here to take his goods container to depot allocated for him that from outer anchorage to depot one needs to wait for seven days.
Secondly, from the depot it takes another couple of days to clear the imported goods as according to the government rules imported cotton needs to be sterilized in ports, the importers needs to wait for three days until it is sterilized. The sterilization and spraying chemicals to cotton is a lengthy process as one needs to put down containers from upper stakes.
After putting down now it's a trouble worthy fact of opening the container locks and only the port authorized plumbers can open the locks for sparing insects killers. But due to low number of them and higher demand they are not always available so to find them an importer needs to wait one more day. After spraying insect killers, now it comes to customs clearance. For random sampling and testing there is another 7-8 days to be wasted as goods uplifting and down lifting is a time consuming process.
Another lead time is synchronization of the government's different agency/authority reading for a certain HS Code goods mainly by BB, NBR and customs which takes at least another 1-2 days. As per rules it is to check the same HS Code by the government's three agencies but in reality the server of the institutions do not respond in same time for a certain goods identification which results time for the authority to check whether the certain goods is of same HS Code or not as per the BB, NBR and Customs reading.
Besides that all the necessary chemicals, testing reagents and manpower are not available within the port authority's laboratory that it creates hassles and with the existing facilities one can get services with some ransom which is also another fact that increases port lead time. So to maintain all the process one importer has to wait for at least 14 days to clear his goods from port which increases his costs of doing business.
For late procedures the importer pays the port authority as delay penalty which is totally unjust. But in compare with our other competitor countries it is only a matter of maximum three days and their importers and exporters do not need to spend more for their goods in ports. As a result they can offer lower prices for their products both in their domestic and export market.
As cotton in spinning mills are main raw material so higher lead time affects entire apparel industry and higher lead time in spinning mills also affects in production. If there are low lead time cotton could be brought in mills at higher frequency and spinning mills can make available cottons as per its timing as large machinery starting and running is a matter of huge cost due to their consumption of electricity in spinning mills and also due to engagement of many operating persons.
Once a mill is running and cotton stock is available as per requirement, its rotation percent becomes lower but if stock is not available then either it has to stop the machinery or wait in running mood for longer time which incurs loss for the factory owners. As an importer my suggestions to upgrade systems is all containers of a particular importer should be kept in a particular place for particular client which will save at least two to three days of lead time.
Synchronization technology should be upgraded and number of persons related to container handling, sterilization, customs clearance and others should be increased. The government has planned to build a deep sea port and once it comes into reality Bangladesh can offer low lead time for its exportable products.
Currently mother vessel do not enter in Bangladesh water due to low draft and even feeder vessels stay far away from port as draft reduces sometimes. So port dredging should be done on regular basis to maintain draft and easy access of the goods carrying feeder vessels.
Low lead time makes products competitive and once we can curtail business costs we can offer cheaper products to both domestic and export marker consumers.
The writer is a former director of Bangladesh Textile Mills Association and Chairman of Little Group