A change in government power and factory disruptions in recent weeks haven’t been the only major concerns for apparel companies looking to import garments out of Bangladesh. Shippers in North America and Europe are coming to grips with the reality that it isn’t getting any cheaper to fly cargo out of the world’s second-largest apparel exporter.
According to ocean and air freight benchmarking platform Xeneta, Bangladesh holds the record for the highest air freight rate increase so far in 2024 across all global air corridors.
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Outbound Bangladesh air cargo spot rates accelerated at one of the highest paces on record (163 percent year-on-year) in the week ending Aug. 25, Xeneta said, reaching their highest level in over two-and-a-half years.
Spot rates out of the country to North America soared 127 percent to $6.91 per kg, while rates for cargo headed to Europe saw a 151 percent increase to $4.77 per kg.
Air freight rates across the board have continued to escalate throughout 2024, with worldwide year-over-year numbers seeing a 10 percent jump as of July 24, according to data from WorldACD. In line with Xeneta numbers, rate increases out of the Middle East and South Asia (MESA) region were the highest of all regions, with USD/kg going up 51 percent.
According to Xeneta, brands have to endure volatility on Bangladesh’s spot market, making matters more difficult as businesses shift from sea to air in the wake of the ongoing conflict in the Red Sea.
“Bangladesh’s air cargo market is very short-term oriented because about 70 percent of the capacity procured by freight forwarders comes at a price which is valid for no more than a month,” wrote Wenwen Zhang, shipping analyst of air freight at Xeneta, in an Aug. 30 blog post.
This sea-to-air shift has been further exacerbated by escalating prices on the Asia-to-Europe ocean trade lane. The average spot rate to ship a 40-foot dry container from Chattogram to northern Europe stood at more than $6,300 in late August, Xeneta says, which is 270 percent higher than 12 months ago.
Importers that opt to ship goods via container vessel out of Chattogram Port (also known as Chittagong Port) have been pushing exporters to cut lead times, according to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
While the lead time for garment exports has traditionally been 120 days, issues like the Red Sea crisis have led more foreign buyers to reduce this period to 60 days, the association says. Ultimately, this puts more pressure on exporters to meet tighter deadlines.
With the tighter deadlines in place, the Chittagong Port Authority (CPA) extended the deadline for loading containers with ready-made garment exports into ships by 24 hours, meaning carriers and exporters now have two days instead of one to bring garments to the port yard before the intended ship’s estimated departure time.
Without the extension, up to 30 percent of garment sector shipments could be delayed, potentially leading to significant financial losses and forfeited export earnings, according to the BGMEA.
Chattogram Port has already been through the gauntlet this summer in the wake of the nationwide unrest and heavy flooding. As a result, the port unloaded a horde of excess piled-up cargo out of the country in August—further stabilizing container movement out of the hub by September.
Export container handling in August increased 23.4 percent month over month to 78,146 20-foot equivalent units (TEUs), up from 59,854 TEUs in July, according to the CPA.
Port officials said export activities were hampered in July due to the communications blackout during the Anti-Discrimination Student Movement protests, which halted the loading of export containers from the depot for several days.
The excess in export container handling came as container dwell times doubled in the two-month stretch basis, from an average of 6 days in July to 12.7 days in August, according to recent data from supply chain visibility and collaboration platform Beacon.
In August, the port handled over 114,708 TEUs of import containers, In July, it was 114,455 TEUs. Although imports coming into the hub weren’t nearly as impacted as exports were, Bracon’s data indicates that average anchor times, which represent the duration vessels wait to berth, surged 77 percent from 2.2 days (53 hours) in July to 3.9 days (94 hours) in August.
This marked a steady increase from 1.2 days (29 hours) in June and 1.0 days (24 hours) in May, and far exceeds the average waiting time of 0.8 days (19 hours) recorded across the first half of the year.
At one point during August, more than 20 container ships had waited at berth at Chattogram, according to Linerlytica. The container shipping analysis firm estimated that average berthing delays were at one point between seven and 10 days.
