Car stockpiles jamming Bangladesh seaports amid shutdown

JASIM UDDIN HAROON | Thursday, 5 August 2021

Imported car stockpiles at Bangladesh's two main seaports hit an all-time high principally as roads are off-limits and shops shuttered amid corona curbs.

Sources in the business circles say importers and cargo carriers are losing business proceeds while government missing out on revenue to a great measure.

There have been prolonged lockdowns enforced across the country, staggered spell by spell, and the current 'hard' one has been extended by five more days to August 10th as daily corona casualties remain high above 200 while cases of infection are many hundreds.

Country's external trade also has been hit hard as global markets were under lockdowns or restrictions amid invasion by the coronavirus pandemic for last one and a half years. With the tide stemmed by enforcement of health rules and mass vaccinations, however, most countries are reopening now.

The imported-car stockpiles have a knock-on impact: the lots are causing a space crisis at port yards and frustrating the car carriers as their stay time is increasing in Bangladesh, the sources said.

Motorised vehicles reach Dhaka and other major cities through driving but this lockdown bars entry to the cities.

Besides, car importers say, a slump in the trading persists for long due to the pandemic and lockdowns leading to the stockpile at the ports.

As of Monday, there were 6187 units of motorised vehicles in stockpile at both the ports --- Port of Chittagong and Port of Mongla. Ctg had 2,556 units while Mongla had 3,631.

There are 2,386 units more to be grounded within the next couple of weeks, according to officials working at both the ports. Of this, some 2,100 units will be discharged in Mongla and some 286 in Chattogram.

Of the stock-lot, approximately 20 per cent of the cars are brand new while the rest belong to reconditioned category, mostly come from Japan.

Such huge numbers of stored vehicles is equivalent to more than 60 per cent of the country's annual car sales, people familiar with the trading told the FE.

This is frustrating car carriers as they have to wait three to four times higher than usual for discharging the automobiles.

The car carriers, specially designed for transporting motorised vehicles, usually enjoy "priority berthing" at the ports of Bangladesh. That advantage is blurred by the global public health emergency.

The MV Malaysia Star, which carried 1156 units of cars, had to wait 11 days for unloading the cars in Ctg Port, according to shipping executives.

The MV Lotus Star which arrived in Ctg with 286 units of cars, including 160 units of brand- new ones on July 27, has yet to get permission for discharging. It may start discharging cars on August 05, said people familiar with the matter.

"Actually we have priority berthing but we now have to wait for more than 10 days, which raises our operational cost significantly", said Shahed Sarwar, deputy managing director at Chowdhury Group involved with Japanese shipping line ---K Line.

Under such cases, shipping companies impose surcharges for overstay at the ports, which ultimately causes a raise in prices of the imported products on the local market.

In the meantime, to avoid the increased port rents after free charges the importers prefer to store the imported cars in the open. The rents for the open-sky spaces are much cheaper than for the well-structured sheds.

As the undelivered vehicles occupy spaces of the port yards, the customs authority is now conducting auctions, according to customs officials.

They said Mongla Customs conducted an auction on July 29 for 150 vehicles and Ctg customs would do for 360 units shortly.

Chittagong Port Authority has recently written to BARVIDA, the representing trade body of reconditioned cars, for quick delivery of the motor vehicles.

Contacted, port officials told the FE that the delivery stood almost zero during this round of lockdown.

"In my view, the delivery is almost zero", said Mr. Omar Faruk, secretary at the Chittagong Port Authority (CPA).

He said usually, during lockdown-free days, importers take around 90 cars a day.

Echoing the same, director (traffic) Mostafa Kamal at the Mongla Port Authority (MPA) told the FE that the pace of delivery is very slow this time.

"Importers used to take delivery of around 100 units of imported cars a day but this time at best 2-3 units," he said.

Car importers prefer Mongla port, especially since the past caretaker-government era in 2008. The rent called wharf rent is one-third here from Ctg port.

And the Mongla port, which handles around 60 per cent of total car imports, fetches a large part of its revenue from the car imports. Its capacity for storing is 4,200 units but it has already grounded 3,600.

It is expecting around 2,100 units more within next few weeks, according to the Mongla Port officials.

Car importers say that their business has dropped significantly because of the pandemic and the lockdown. They said there are some other issues, including NBR policy stances, which are also liable for this huge logjam at the ports.

"Our business has dropped around 50 per cent over the past one year," said Mohammed Shahidul Islam, chairman at HNS, a leading car seller in Bangladesh.

He said there is another important issue: there is now huge demand for ambulances and micro-business due to the pandemic. The NBR has issued an order slashing the duty for the segment of the vehicles. But it mentioned the reduction in the duty is applicable for the diesel-run ambulance and the 12-14- seater microbuses.

"Such policy stance also contributes to the stockpile as many importers do not take delivery as long as the issues are settled", Mr. Islam, also general secretary at the BARVIDA, told the FE.

Currently around 250 units of such microbuses also remain stockpiled at the ports, BARVIDA said.

Abdul Hoque, president of BARVIDA, lamented that ports and banks remained open during this lockdown but BRTA registration and their showrooms remained closed.

"To my mind, we need to keep all required services open for limited hours each working day during the lockdown to avoid such stockpile at the ports," Mr Hoque, also managing director at a leading automobile company, Haqs Bay Automobiles Ltd, told the FE.

The slow delivery and slump in the business affect government revenue mobilisation. The NBR loses significant supplementary duty which comes from imported luxury goods.

The revenue board has a target of collecting supplementary duty worth Tk 120 billion. As of May, in 11 months of the fiscal year, it had collected Tk 74.7 billion only.

And BRTA or Bangladesh Road Transport Authority loses a large sum of money as registration fees, while non-life insurers miss out on premium earnings for insurance coverage.

Vehicle registration with BRTA had dropped significantly during the past 11 months of the last fiscal year. Total registration in July-May stood at 160,515 units.

Of the figures, private passenger-car registration dropped to 6,196 units as of May last, down by more than 50 per cent from July-June of 2019-20.

However, Bangladesh imported some 12,502 units of reconditioned cars in 2018-19. This fetched Tk 27.4 billion to government exchequer, according to BARVIDA statistics.

Annual sales are around 10,000 units of cars, BARVIDA said.

There are three Ro Ro car carriers currently operating to and from Ctg and Mongla seaports.

Brand-new cars are usually loaded from Singapore and Colombo. The new cars come from Asia's emerging markets like China, Thailand, Korea and Indonesia.

Local groups Rangs Motors, JMJ motors, Navana Motors and KIA Bangladesh are among the leading brand-new-car importers and traders.

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