Civil unrest slows Chattogram
NewsBangladesh’s main port has been impacted by the civil unrest in Dhaka and across the country.
Bangladesh is picking up the pace
Bangladesh is one of the more difficult markets in SE Asia for port development, but there are signs the government is now moving at a faster pace.
Speaking at the Siemens Cranes and Technology Conference in Rotterdam in June, Eleanor Hedland, Drewry’s Lead Analyst for Ports and Terminals, gave an overview of the sector. She said that contrary to previous assumptions, “the greenfield terminal is not dead” and cited plans for new terminals in India and Bangladesh, as well as Sri Lanka, as markets where these facilities are on the drawing board.
However, all of these countries have previously announced plans for new terminals that have failed to materialise. Bangladesh in particular is known for excessively long and complicated bureaucratic processes for new developments for both ports and the hinterland infrastructure to support the movement of cargo. Hedland, however, is optimistic that the new greenfield terminals will help support the organic growth of container shipping in the coming years.
Bangladesh turns a corner
Bangladesh has started to embrace private investment in container terminal development. Headland cautioned that the concession process is not always moving according to planned timelines, but there are promising signs. Bangladesh’s main seaport Chattogram, formerly known as Chittagong, opened a new terminal on July 21, some 15 years after the country last opened a new facility.
The new terminal, called Patenga Container Terminal, will enhance the port’s annual capacity by 500,000 TEU. The terminal has a quay length of 600 meters, built on 32 acres of land near the estuary of the Karnaphuli River. With a water depth of 10.5m, it will be the deepest terminal at Chattogram, able to handle vessels up to 4,500 TEU, compared with the 2,000 TEU range that currently calls at the port.
The intention is that the 600m berth will be able to serve three 190m vessels simultaneously. Initial yard storage is put at 6,000 TEU. Officials say for the time being the Chittagong Port Authority (CPA) will operate the terminal and only geared vessels and bulk carriers will be berthed. The port authority will provide some of its equipment to unload cargo from bulk carriers.
However, this is only a temporary measure. The port authority plans to hand over the terminal to a private operator and it is considering foreign companies. Opening the port sector to international companies is part of a wider plan to bring in competition and enhance the quality of service. Terminal operators reported to be interested include DP World, Adani Ports and Special Economic Zone Ltd (APSEZ), Saudi Arabia’s Red Sea Gateway, and APMT Terminals. Some local companies are also vying for the task.
Being a sister company to Maersk Line puts APM Terminals in a strong position. Maersk Line carries some 30% of Bangladeshi export and import cargoes. APM Terminals has engaged the Danish government, and major apparel buyers like H&M and Inditex, in its lobbying efforts with the Bangladeshi government. Sources said the government is evaluating all the proposals and is expected to select the successful operator this year. Once selected, the operator will be required to purchase equipment to run the terminal.
In the meantime, the facility is ready to go. On 13 July CPA chairman Mohammad Sohail told reporters: “We are fully prepared to handle vessels at the newly built terminal.” He said the terminal will handle bulk carriers on the first day and geared container vessels thereafter on priority. The terminal was built by the CPA, from its own funds, by engaging the Bangladesh Army at a cost of US$240m.
Bay Terminal
In another development, the long-delayed Bay Terminal at Chattogram is back on the agenda following Bangladesh’s warming to foreign investment in its ports. If fully built, the Bay Terminal would double the annual port capacity of the country by adding 3m TEU over four terminals.
In May, AD Ports Group signed an MoU with the Chittagong Port Authority for the development and operation of a multi-purpose terminal component of the development. CPA Chairman Mohammad Sohail said: “The multi-purpose terminal in Chittagong is a priority for the Government of Bangladesh. It will be a game changer for the regional economy in general and Bangladesh’s economy in particular.”
“We are pleased to collaborate with AD Ports Group on the development of this vital project, leveraging their expertise and capabilities as a global trade and logistics player,” Sohail added.
Port of Chattogram / Archive / Credit: Shutterstock
The exact details of the deal are not known at this point, but Sohail said he hoped the MoU would “pave the way for further cooperation that will attract more foreign direct investments to Bangladesh.”
The Bay Terminal will be built along the Halishahar coast, with a maximum draft of 12m to accommodate 5,000 TEU capacity vessels up to 300m long. The other three terminals at the port are two container facilities and one liquid bulk terminal.
PSA Singapore and DP World are said to be planning to invest around US$1.5 billion each in the two container terminals, with East Coast Group and its foreign partners investing US$3.5 billion in the liquid facility for oil and gas. Back in 2021, PSA International and the International Finance Corporation (IFC) signed a Joint Development Agreement to work together to support the project.
Following studies that began in 2022, the IFC is providing US$500m to dredge the main navigational channel and build a breakwater. On the landside, Bay Terminal will eventually extend over 2,500 acres of land, of which the CPA now controls 567 acres, with further acquisitions underway.
CPA chairman Rear Admiral Mohammad Sohail said the Bay Terminal master plan is ready, while detailed drawings and design work are soon to be completed. He expects construction work on the main terminal area to be started later this year, with almost all of the investment coming from abroad.
One more
In another development, APM Terminals has been linked with a small container terminal called Laldiar Char. In June Bangladesh Government appointed the IFC as their transaction advisor to study, design, and negotiate the building of the Laldia Container Terminal with a foreign investor. Locally APM Terminals is said to be the preferred investor for the project.
The terminal is estimated to cost around US$400m. It would have 450m of quay with a depth of 9.5m and an annual capacity of 300,000 TEU.
40ft box shortage
Bangladesh’s garment industry is facing a shortage of 40ft containers for exports. The majority of readymade garments exported to Europe and the US are exported in 40ft containers. According to the Bangladesh Inland Container Depots Association (BICDA), members of which handle almost all the stuffing of export containers, the depots have been facing an acute shortage of 40ft containers over June and July.
BICDA believes this is because containers are stuck in the regional transhipment port of Singapore, where congestion issues have reduced the number of feeder services serving Chittagong Port.
Shipping lines have brought in empty boxes from other locations. However, BICDA believes there is insufficient quantity to offset the volume lost from regular feeder connections. To compound the situation, hundreds of 40ft containers remained stranded in Chattogram Port, as importers are slow to take delivery of their containers. The shortage is affecting the major carriers, including MSC and Hapag-Lloyd, according to Ruhul Amin Sikder, secretary general, BICDA.
This situation was expected to improve after MSC, then Maersk, announced new services to Bangladesh with direct connections to China. MSC has added a call at Chattogram to its Bengal service, with a transit time of 10 days from Shanghai to Chattogram. Maersk, meanwhile, has launched a new ocean shipping service between China and Bangladesh called SH3, with calls at Xiamen, Kaohsiung, Nansha and Tanjung Pelepas on the way to Chittagong.
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