Lack of inland container depots threatens Chittagong's growth

Lack of inland container depots threatens Chittagong's growth

Chittagong port with containers.

Inland container depots (ICDs) are responsible for stuffing and unstuffing export and import containers on their premises. If Bangladesh does not add more ICDs, cargo delays and missed shipments are likely to increase at/near Chittagong Port. (Above: Containers at Chittagong port.) Photo credit: Shutterstock.com.

An inadequate number of inland container depots (ICDs) will likely prevent Chittagong Port from handling increased container volumes in the years ahead, despite the port’s adding jetties and terminals to handle the extra work.

The ICDs are responsible for stuffing and unstuffing export and import containers on their premises.

“As the capacity of ICDs is not increasing, our export goods-laden trucks wait there [at the port] even two to three days for unloading. We count demurrage in truck rent in these cases,” Exporters Association of Bangladesh (EAB) vice president Mohammad Hatem told JOC.com.

Hatem said that due to the delays, containers sometimes fail to board on scheduled feeder vessels, and as a result need to catch the next one. The consequence is that containers reach their destination much later than scheduled — compelling shippers to sell their goods at a cheaper rate.

“Alongside raising port capacity, the capacity of ICDs also needs to be increased,” said Hatem, also the managing director of MB Knit Fashion Ltd.     

He said several more ICDs need to set up near Chittagong Port since a good number of economic zones are being set up near Cox’s Bazar and in the Chittagong area.

18 ICDs operating near Chittagong

Currently, 18 ICDs are near Chittagong Port and one is close to Dhaka, where export goods are stuffed into containers before they are boarded onto feeder vessels for their journey to mother vessels in Singapore or Colombo.

ICDs handle about 91 percent of Bangladesh’s export containers, with the remaining 9 percent transported directly to the port yard from the factory.   

In addition, the ICDs currently handle 25 percent of imported containers, while 20 percent is transported directly to the factory, and the remaining 55 percent transported from the port yard. Of the port yard containers, 50 percent are fully loaded containers while the remaining 5 percent are less-than-containerload (LCL) containers.

The LCL containers, which contain cargo from several importers, are unstuffed at the port yard, kept in sheds, and delivered separately to their respective parties.

These ICDs are also being used as warehouses for empty containers.

Bangladesh Inland Container Depots Association (BICDA) secretary Ruhul Amin Biplob told JOC.com in 2017 ICDs handled 533,000 TEU export containers, 315,000 TEU import containers, and 650,000 TEU empty containers. The ICDs have total a 1,560,000-TEU annual handling capacity; in 2017 they handled 1,498,000 TEU.

“We are already handling almost close to our total capacity,” said Biplob.

Biplob said there is no port in Asia, other than Chittagong Port, that still delivers a significant number of containers from its own premises, by opening those in the port yard.

“To raise the port standard, it must stop 6,000 trucks from entering the port daily; the Chittagong Port needs to stop delivery of import containers from [the] port yard,” he said.

In this case, to handle the containers from outside the port area, at least 10 more ICDs need to be constructed, starting immediately, as apparel sector business development is expected to increase export earnings to $50 billion by 2021.

Bangladesh: 10 ICDs short

Chittagong Port Authority (CPA) secretary Omar Faruk told JOC.com there is only one application by Summit Group for an ICD. Another, by MM Ispahani Limited, is under government consideration for necessary approval to set up an ICD. There are no other applications for ICDs — far short of the 10 needed.

“The entrepreneurs need to come forward with proposals. The CPA is ready to cooperate on all fronts,” Faruk said.

Biplob said in the past conglomerates such as AK Khan Group, S Alam Group, Maersk Line, and even the Bangladesh Garment Manufacturers and Exporters Association showed an interest in setting up ICDs.

“But in the end they did not show up,” Biplob noted.

Biplob said he thinks that the government needs to provide incentives to attract entrepreneurs to set up ICDs if it really wants to tackle the export/import containers issue in the coming years.

The government can offer a tax holiday, reduced corporate tax, and declare it as a thrust sector to attract investors, Biplob noted.

“New entrepreneurs are not sure about the return from the business. So, they hesitate to invest in this sector,” Biplob said.

Meanwhile, a survey by CPA found that the 18 private sector ICDs lack an adequate number of vehicles and equipment for handling the growing trade volume. As a result, two-way movement of containers — to and from Chittagong Port — encounters delays. The ICDs lack 70 container carrying vehicles and 57 pieces of container loading and unloading equipment, the survey found.

And the lack of an adequate number of vehicles and equipment also increases the number of containers stockpiled in port yards — hampering activities there.

Chittagong Port is the prime seaport of Bangladesh, which handles almost 90 percent of seaborne trade in the country. The port registered 9.36 percent container volume growth in 2017, handling 2.56 million TEU in 2017; it handled 2.34 million TEU in 2016. The port’s designed handling capacity is 1.7 million TEU per year.