Event: Seasonal demand surge and capacity constraints, 2020
The Port of Chittagong faces recurrent seasonal congestion between the months of April and October. Ships often wait for over a week to unload/load cargo, with no viable immediate alternative transport option (JOC.com, 2018).
Causes and impact
Capacity constraints (also work holidays) in the face of seasonal demand surges have created the recurrent congestion in the Port of Chittagong. Factors exacerbating the situation included: (i) upsizing of vessels resulting in volume peaks, which put pressure on existing yard capacity; (ii) the port only had six berths to handle primary in cargo operations with an outer anchorage space being used to load cargo onto inland waterways vessels; (iii) Insufficient container handling capacity to meet seasonal demand, both at the yard and inland container depots (ICDs); (iv) a lack of alternative ports for cargo handling operations. The second seaport, Mongla, is of limited capacity; (v) Lack of bilateral agreements with neighbouring countries (e.g. India), such agreements could allow for alternative routes; and (vi) port yard power outages constrain the capacity to service reefer containers.
Since 2017, ships have had to wait more than a week to unload/load cargo between April and October. By mid-April 2020, 49,000 containers were waiting in the port yard, and 30 vessels were waiting to anchor (Chowdhury S. H., 2020). As of July 2020, feeder vessels were anchored for 20 days (Lennane A., 2020). Although the end of the seasonal peak, vessels were still waiting five days to berth (Islam S., 2020), while feeder vessels cumulated delays at other regional ports (Colombo and Singapore). Recurrent congestion undermines Bangladesh’s economy as Chittagong handles 90 per cent of its seaborne trade.
Response and mitigation measures
The National Board of Revenue (NBR) intervened in early 2020 with a political directive to solve the chronic congestion. The plan provided a temporary transfer of six specific types of containers held at the port towards private ICDs. Container types were differentiated by cargo carried (e.g. seeds, fiber, products listed by the drug administration, imported yarn for the production sectors, tire cord, and insecticides). This measure was ineffective because the specified containers only accounted for 5 per cent of the total, and the differentiation added further operational complexity to the port. Measures also included sending containers to a private company (Summit Alliance) offering off-dock services, via inland waterways, rather than via the usually congested rail, which was only partially effective, again because of the lack of container storage capacity across inland waterways. The Port Authority also re-introduced demurrage charges to keep imported containers in the port yard. In 2020, the Government of Bangladesh and the Chittagong Port Authority jointly defined an expansion plan for the port to be completed in one year. The expansion would include: (i) a new container terminal, expanded yard facilities; (ii) a new mooring yard; (iii) the adoption of a port community system; and (iv) agreements with alternative terminals to support the separate trade of raw materials (Alam M. Z., 2021). Meanwhile, congestion was cleared by August 2021, with median times in ports down to the standard maximum of 72 hours and no waiting time before berthing.24
Lessons learned and good practice
- Ports should collaborate with ICDs and inland terminals.
- Establish regional collaboration strategies with other ports and adjacent countries and invest in the infrastructure required to optimize operations.
- Promote competition among private ICDs service providers to increase capacity and performance.
- Invest in port infrastructure to ensure continuous improvement and operational efficiency.
- Adopt a regionalized strategic approach. In this respect, Chittagong’s regionalized approach was good practice. The port launched a direct shipping service with Ranong Port (Thailand), lowering bilateral shipping time from 15 to 4 days and enabling short-sea services.
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