Soaring shipping costs weigh on businesses

Businesses dependent on the import of raw materials are facing increasing shipping costs, which are fuelling their cost of production, and the burden is being passed onto consumers, resulting in a hike in prices.

Cement makers claim the soaring freight costs alongside intense competition was forcing them to incur losses.

The shipping cost was $17 per tonne just a month ago and it has increased to $24 per tonne, said Md Alamgir Kabir, president of the Bangladesh Cement Manufacturers Association (BCMA). This has had factories doling out more money into production, the BCMA said in a statement, adding that it would not be possible for cement makers to sustain losses for a long time.

In another development, the cost of locally transporting raw materials and finished goods has increased significantly due to a recent rise in fuel prices, said Kabir.

Under the circumstances, cement companies are trying to increase prices. Without the adjustment, the cement sector will incur huge losses, he said.

Taslim Shahriar, senior assistant general manager of the Meghna Group of Industries (MGI), said the freight rates were unstable.

The shipping cost of soybean seeds from Santos, Brazil to Chattogram was $55 per tonne last month but it began to rise alongside oil prices amidst tension over the build-up of Russian troops at the Ukraine border.

Currently, it is around $60 per tonne, he said.

"Any global crisis is alarming for an import-dependent country like us," he said, urging the government to remain active in preventing disruptions to the shipment of commodities by the exporting countries.

Meanwhile, the shipping cost of scrap steel in bulk has increased threefold over the past year, said Tapan Sengupta, deputy managing director of BSRM.

Abul Bashar Chowdhury, chairman of BSM Group, a commodity importer, said soaring shipping costs would lead prices of commodities to spiral.