Rise in Bangladesh Freight Forwarding Charges Causes Row

BANGLADESH – Any rise in costs in a country such as Bangladesh can have a deleterious effect on trade according to many merchants and now importers are up in arms over the instructions, apparently issued to its members by the Bangladesh Freight Forwarders Association (BAFFA), to raise Destination Service Charges, applicable to every consignment shipping into the country, by 75% as from the beginning of this month.

Although the Association website carries no notice of the advised increase local press reports that all members have received the circular informing them to raise the rate per transaction from 2,000 Taka to 3,500 (£28.70), a 75% jump, accompanied by a notice stating that the charge is justified due to increased costs caused by the implementation of automated Customs data reporting technology.

The circular, dated 31st August, apparently then instructs each member that they should impose the charges immediately without negotiation, which apparently is what has happened, outraging many importers who say that they cannot bear the increase in costs due to the narrow operating margins they have to maintain because of overseas competition.

The situation in Bangladesh with regard to charges would seem to be similar to the regime in the UK around fifty years ago when the now defunct Institute of Freight Forwarders would issue similar directives as to how much one could charge in ‘Forwarding Agents Commission’ for each shipment. Those rulings however, like the BAFFA circular, were instructions, not edicts backed by law, and commercial pressure and competition for business between agents rendered that system unworkable. Don’t be surprised if a similar situation arises in Bangladesh when some agents decide, for whatever reason, that they won’t be following the party line on this move.

Photo: Courtesy of the Chittagong Port Authority (CPA).