Friday | 24 January 2025 | Reg No- 06
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Friday | 24 January 2025 | Epaper

Red Sea attacks threaten intl trade, BD fears setback

Published : Tuesday, 30 January, 2024 at 12:00 AM  Count : 344
Shamsul Huda
The violence impacting Red Sea shipping has become a big threat to international trade causing trouble in doing Bangladeshs export, import business.

It is adding to shipping cost and navigation time impacting the supply chain.

Now most shipping lines have to sail through an additional 4000 nautical miles through the Cape of Good Hope around Africa on their voyage to Europe taking an additional 15 days to reach merchandise such as readymade garments from Bangladesh to buyers in Europe and beyond.

Though costs are rising, it is likely not to affect export as buyers bear 90 percent of the freight costs, but importers have to feel the brunt due to higher cost which may result higher inflation.

Syed Ershad Ahmed, President, American Chamber of Commerce (AmCham) in Bangladesh told this while talking with the Daily Observer.

He said as buyers have to pay additional charges, they may seek alternative lesser freights routes and lead time. So it is a challenge for Bangladeshs export to minimize lead time and speed up manufacturing to lower cost. It needs adequate energy for transportations and in manufacturing.

 "As our major export destinations are EU and US, it increases our difficulty to reach exports to destination in real time.

 The Red Sea violence is disrupting global trade, impacting Bangladeshs $40 billion import-export trade.

Roughly 61 percent of exports and 8 per percent of imports pass through Red Sea route. The shift to alternative routes adds 11 days of shipping, besides increasing costs by 40 per cent. It will affect vital sectors like ready-made garments, export of pharmaceuticals and others potentially leading to job losses. Collaborative efforts are crucial to mitigate economic disruptions, the AmCham president said.

Ahmed also the chief executive officer of a global logistics company said diverting routes may affect macroeconomic stability due to higher cost and inflation caused by high cost of imports. To avert consequences like higher lead time it is crucial to run smooth transport to maintain shipment schedules.

Ahmed who is a logistics expert said, "We remain vigilant. Already there is a 30-40 per cent freight increase. As for exports buyers pay the freight costs at about 90 per cent. We may avert time consuming export by air lifting cargoes, but it will be expensive."

He said its imperative to keep our clients abreast of global market shifts. The Red Sea/Suez Canal disruptions have compelled ocean carriers to reroute via the Cape of Good Hope. This has led to asset imbalances, increased costs, and broader market impacts. "Despite the challenges, we remain committed to providing solutions and information to help mitigate supply chain disruptions during these dynamic times", he said.

"We are monitoring the developments and providing our clients with agile solutions to navigate through uncertainty. By staying informed and adaptable, we can continue to optimize supply chain efficiency and mitigate disruptions, ensuring seamless transport operations", Ahmed said.



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