News / Air cargo rates plummet alongside consumer demand for Bangladesh apparel

© Tero Vesalainen

Demand for Bangladeshi apparel is falling significantly in the US and EU and air cargo rates from Dhaka have seen a drastic decline.

Airlines are now charging $3.50 per kg to Europe and $8.50 to the US and Canada, compared with $8-$12 and up to $16, respectively, only a few months ago.

Following the Russian invasion of Ukraine and subsequent global economic downturn, consumers in the US and Europe, the major buyers of Bangladeshi apparel, are buying much less, giving priority to food and other necessities, said forwarders.

As a result, retail clothing stores remain fully stocked, which reduces demand for air shipments.

Nasir Ahmed Khan, director at the Bangladesh Freight Forwarders Association (BAFFA), told The Loadstar: “Though the fuel oil rate increased significantly after the start of the Russia-Ukraine war, the airlines are failing to raise rates due to the significant fall in demand.”

He said there should have been a big rush of air cargo ahead of the Eid-ul-Azha Islamic holiday on 10 July, but “we feel a total reverse of demand”. Buyers who were supposed to import 10 containers were taking just two or three, he added.

“The rate is falling day by day, five to 10 cents a day,” he noted.

Airport officials said there was no problem with the repaired and renewed explosive detection scanners (EDSs) that had previously caused delays, as the pressure had fallen.

“Three EDSs are always ready now, but as the cargo flow is very low, one is enough or when needed, another is operated,” said an official.

After attaining significant growth during the past year, which helped Bangladesh reach $50bn in export earnings, Bangladesh Garment Manufacturers and Exporters Association president Faruque Hassan told local media: “International clothing retailers and brands have cut work orders by 20% for the September to November season.”