Exports to Russia and Ukraine in trouble
Exports to Russia and Ukraine, especially clothing, now face an uncertain future as shipping companies understandably aren’t too keen on transporting goods to war zones.
Major container shipping companies have temporarily suspended bookings in both countries since Russia invaded Ukraine on February 24.
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This left some 166 TEUs (twenty foot equivalent units) of containers full of clothing unused over the past two days at 19 docks in Chattogram.
Exporters are also worried about whether they could get payments from retailers and brands in both countries for their efforts. This includes those who were already exporting goods to the destinations before the invasion.
On February 24, Danish shipping giant Maersk, MSC, based in Switzerland, and France’s CMA CGM issued updates on their operations announcing the suspension of ship calls to Ukraine until further notice.
On March 1, the three shipping companies announced that they would no longer accept cargo bookings to and from Russia amid the Russian military attack on Ukraine.
German company Hapag Lloyd and Singapore-based company ONE followed suit.
Although other companies have yet to make such an announcement, they are already expressing their reluctance to accept bookings from Bangladesh to these two destinations.
Md Ruhul Amin Sikder, secretary of the Bangladesh Inland Container Depots Association, told the Daily Star yesterday that the cargoes were either already stacked in containers or waiting in the Inland Container Depots (ICD) warehouses.
Sources said Esack Brothers Industries, an ICD near the port of Chattogram, alone had 35 TEUs of loaded export containers idle for several days now as Maersk stopped accepting bookings.
A senior official at CMA CGM’s office in Bangladesh said its main office had ordered to refrain from taking bookings for shipping cargo to Russia or Ukraine until further notice.
Bangladesh also faces the possibility of losing one of its most promising garment export destinations as various Russian lenders have been locked out of the SWIFT messaging system in response to the country’s invasion of Ukraine. .
Rajiv Chowdhury, managing director of Young 4 Ever Textile, said after a long negotiation that its Russian buyer had confirmed in writing that it would soon pay its $200,000 through its office in Turkey.
However, he now fears the export of clothing items worth $250,000 that he has already made, despite the buyer confirming that he brought the goods to Russia via a third country port.
But Chowdhury was advised by his Russian buyer not to manufacture any more sought-after clothing items from previous orders until further notice, as the situation during the war was gradually deteriorating.
Uncertainty has therefore been created for Chowdhury over access to the Russian market, to which Bangladeshi exports have increased by 36% in the 2020-21 financial year to nearly $600 million.
“Like me, many garment exporters are struggling to receive payments and ship goods to Russia,” said Chowdhury, whose T-shirts, polo shirts, jackets and hoodies are sold in Russian markets.
Chowdhury, also a director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said the association has already asked members to send export data and payment receipts to create a database. on the Russian and Ukrainian markets.
Of the garments exported to Russia, about 20% are shipped directly to buyers and the rest through offices in third countries, said Mohammad Hatem, executive chairman of the Bangladesh Knitwear Manufacturers and Exporters Association ( BKMEA).
There are Russian buyers who have offices in countries like Turkey, Hong Kong and Poland. Business involving them poses no problem for local exporters who receive payments.
However, in the case of direct exports, there are problems with receiving payments.
So far, two exporters have filed complaints with the BKMEA for not receiving payments from Russian buyers, he said.
In the July-January period of the current fiscal year, the country sent clothes worth $415.47 million to Russia, registering a 36.47 percent year-on-year growth, according to Export Promotion Bureau data.
Bangladesh shipped clothes worth $593.66 million to Russia last year. Of these, knitted items were worth $373.25 million while woven items were worth $220.41 million.