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Finding the ghost of excessive export cost at Hazrat Shahjalal International Airport

As per a report published in Textile Today on January 7, Bangladeshi RMG shipment to Europe will speed up with the ‘Bangladeshi bonded cargo departs from Kolkata airport.’ The report mentioned that the first-ever bonded cargo from Bangladesh flew out of Kolkata airport last month, the cargo went to the Benapole land port where it was transferred on to Indian trucks which carried it to Kolkata airport. This is a new window of opportunity that has been largely welcomed by RMG exporters who are in dire need to ship RMG goods by air to Europe on short lead time.

excessive export cost Hazrat Shahjalal International Airport
Figure: Biman charges are higher than any other airlines, increasing the export cost for apparel manufacturers.

The agreement worked out at the policy level that originated from the signing of the BBIN (Bangladesh, Bhutan, India, and Nepal) agreement in 2016, which attempts to increase co-operation between the neighboring countries. And this mode of transport will, on the one hand, cut lead time and, on the other, reduce the cost of carrying goods.

But this new development does make us wonder, why not and how this process can’t be done from Bangladesh’s Hazrat Shahjalal International Airport? It also raises the issue of concern by Bangladeshi economists, textile industry experts, and stakeholders that our aviation authorities urgently need to develop competencies and skills to handle and deliver air cargo handling facilities.

Md. Hatem, 1st Vice President, BKMEA said, “Sending freights via Kolkata is very risky and not feasible for RMG exporters at all. First of all, the products will go through by road – which is a big hassle – and from there, air transshipment and notably not all the leading airlines don’t have any flight in Kolkata. Which is available in Delhi or Mumbai. So, goods have to be double transshipped to Delhi or Mumbai again from Kolkata.”

“This doesn’t in any way save time for the garment manufacturers. Rather it lengthens the lead time for us with bonus hassle. And RMG exporters already reported some incidents and buyers complained these grievous disasters where goods were stuck for 20 to 25 days between Kolkata to Delhi,” Hatem expressed.

Our textile and apparel exporters are forced to use the transshipment facility as the Civil Aviation Authority of Bangladesh (CAAB) which manages the Hazrat Shahjalal International Airport, not able to manage the air handling issue.

Some 800 tons of goods are air shipped every day via Hazrat Shahjalal International Airport. Around 70 percent of it is garment items, exporters said.

“Sending freights via Kolkata is very risky and not feasible for RMG exporters at all. First of all, the products will go through by road – which is a big hassle – and from there, air transshipment and notably not all the leading airlines don’t have any flight in Kolkata. Which is available in Delhi or Mumbai. So, goods have to be double transshipped to Delhi or Mumbai again from Kolkata.”

Md. Hatem, 1st Vice President, BKMEA

Improved security situation

While the recent security situation at Hazrat Shahjalal International Airport has been improved a lot but the same can’t be said about the dismal state of cargo handling. Though recent government efforts have improved services, scarcity of trained workforce, shortage of equipment and space, and security concerns still plague the cargo village of the country’s key airport.

One of the main drawbacks of Hazrat Shahjalal International Airport is not having enough space in the cargo shade, goods are left haphazardly in the open.

Mahbubul Anam, President of Bangladesh Freight Forwarders Association (BFFA) said the cargo handling situation remained almost unchanged due to a shortage of ground handling staff in the cargo village and lack of required equipment and machinery.

Construction of the separate shed for garment items by the BGMEA mitigates the problem to some extent, the 8,000sqft shed reduced delivery time for imported samples of garment items significantly but just one shed was not adequate for storing all goods as tons of garment products are exported and imported through the airport.

A source from BGMEA also said that this was due to a section of officials at the cargo village taking a long time in the name of inspecting goods.

RMG export via air suffered another blow when the UK imposed a ban on direct cargo from Dhaka on security ground in 2016.

The European Union, which accounts for more than 54% of Bangladesh’s exports, also declared the airport a “red zone” due to its insufficient safety and security arrangements, following the lead of the UK, Australia, and Germany. With the ban in place, EU-bound cargo airlines from Bangladesh had to rescreen goods in a third country

They found lapses in screening with x-ray and Explosive Trace Detector (ETD) machines; London-bound air cargo left unprotected and unguarded on the airside; visible lapses in supervision; non-implementation of Corrective Action Plan (CAP), and manpower and equipment crises.

Afterword, the Bangladesh govt. has approved a Tk 890 million project and hired Redline, Security Company of the UK. And officials of Biman said the situation improved ‘remarkably’.

Also Read: Using Indian airport for shipping goods to tarnish Bangladesh image

The UK lifted the ban allowing cargo from Dhaka, and the cargo air transshipment situation improved a lot.

Airport expansion project

At the end of 2015, press reports started to emerge with regard to the problems of financing the third terminal at HSIA. While international lenders and even aid agencies had initially been keen to invest in the project that interest seems to have withered. The airport expansion project isn’t new.

According to a report in airport-technology.com, the construction was supposed to begin in April 2018 and it was envisaged that along with all the facilities that came under the expansion master plan, a 41,200m2 (square meter) cargo building would be constructed which would increase cargo capacity from 200,000 to 500,000 tons. In mid-2017, we were told that CAAB had signed a deal with four joint-venture companies to finally construct the terminal.

The issue here is off to come to a decision, award a contract and then start construction which was in the making for years.

The CAAB needs to consider deeply as Bangladesh govt. has set the RMG export target of US$50 billion by 2021. And make a lean process of Hazrat Shahjalal International Airport’s existing capacity as well as scopes to build an up to date system. And bring back the lost confidence of exporters.

Comparison of cargo demand forecast Hazrat Shahjalal International Airport

Biman-the real ghost

A trusted high-up source in BAFFA said, “The main problem is with Biman. Its charges are higher than any other airlines. Also, these are not even regulated.  Sadly, the related exporters don’t have any say on this.”

“We as an organization giving official letter every time to the minister, relevant departments, civil aviation against this unfair increase. And CAAB every time said Biman has increased the charge without taking any permission from them. As CAAB is the authority for ground handling, and Biman is licensed under CAAB, can’t suddenly increase charges without permission.”

The main problem is with Biman. Its charges are higher than any other airlines. Also, these are not even regulated.  Sadly, the related exporters don’t have any say on this.

“And ultimately we’ll lose foreign buyers as charges in Hazrat Shahjalal International Airport is much higher than that of internationally. Also, we have to pay 15% royalty to Biman for cargo. Which is an alien concept internationally.”

“Also, there is another serious issue of product missing at Hazrat Shahjalal International Airport. At the past, you have to give a written statement to Biman that no product is missing even after product missing. International aviation rule is that if any product goes missing then the custodian will compensate, but there is no such rule in Bangladesh.”

Now that the new cabinet has been sworn in with a lot of new faces, perhaps we can change our mindset about getting the wheels of the bureaucracy moving at a pace that the times dictate. Biman should be accounted for their authoritative approaches and the concept to pay a royalty to Biman for cargo should be banned.

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

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