News / Bangladesh’s garment market feels the heat from the shipping crisis

© Rehman Asad |

The Red Sea crisis has started to bite into Bangladesh’s apparel exports to Europe and the US, the two main destinations for the country’s apparel, accounting for 65% of total shipments.

Bangladesh is the second-largest apparel exporter worldwide and garments are the main foreign currency earner for the small South Asian nation.

The security crisis in the Red Sea has forced shipping lines to avoid the usual route and go round the Cape of Good Hope in South Africa. Mother vessels calling at Asian ports now need to travel an additional 3,500 km to reach Europe, which has increased the transit time by two to three weeks.

Stakeholders say that due to this and the resulting extra costs, ocean freight rates have gone up 40%. From Chittagong to Europe and America the freight rate has been increased by $1,200 to $1,500 per feu.

The longer transits have also created a shortage of 40ft containers and high-cube boxes in Bangladesh, where exporters mainly use larger containers, while importers mostly use 20ft boxes.

Factory owners fear an order fall if buyers begin to look for alternative sourcing. At least one has already reported its buyers are moving orders to other countries.

Shahidullah Azim, VP of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told The Loadstar the industry was already feeling the pinch as a consequence of the Red Sea crisis.

Mr Azim said he was concerned that although buyers were currently bearing the additional costs, they may try to pass these on to manufacturers.

BGMEA president Faruque Hassan said some exporters would opt for more costly air shipments in order to supply goods in time. By ocean, each kg costs less than $0.30 to send from Chittagong to Europe, but air freight rates are about $3.50 per kg. Some Vietnamese manufacturers are already shifting to airfreight, according to Xeneta.

Khairul Alam (Suzan), VP of the Bangladesh Freight Forwarders Association, said both exports and imports were affected by the Red Sea crisis.

“Due to the additional two weeks’ travel time, the vessel chain at transhipment points has broken down,” he said, adding that the delay was also causing container congestion at transhipment ports.