Hapag Lloyd increases freight charges by $200 per container from Bangladesh

German-based shipping company Hapag-Lloyd recently increased freight charges from Bangladesh by $200 per container.

These adjustments have notably a significant impact on goods transportation involving containers destined for North and South Europe, apparel businesses say. 

For a 20-foot container, customers shipping to North Europe will now face an increased freight charge of $659, up from $469. Similarly, those shipping to South Europe will experience a rise from $711 to $911 per container.

For customers shipping 40-foot containers, the new rates for North Europe will be $1,168, compared to the previous $968. In South Europe, the charges will increase to $1,372, up from $1,172 per container.

The increased charges will be applicable from 1 November, according to Hepag Lloyd's website. 

"Hepag Lloyd updates its freight charge on a regular basis. This is part of that change," an official of the German ocean carrier told The Business Standard.

North Europe includes the following countries, Germany, Netherlands, United Kingdom, Belgium, France, Poland, Denmark, Sweden, Ireland, Norway, Finland, Lithuania, Czech Republic, Hungary, Latvia, Austria, Switzerland, Slovakia, Estonia, Iceland, and Luxembourg. 

South Europe includes the following countries: Spain, Portugal, Italy, Algeria, Morocco, Malta, Tunisia, Albania, Bulgaria, Croatia, Georgia, Greece, Israel, Montenegro, Libya, Bosnia and Herzegovina, Romania, Cyprus, Slovenia, Lebanon, Turkey, Ukraine, and Egypt.

The Bangladesh Shipping Agents Association reports that Hapag-Lloyd is the fourth top container transporter operating from Chattogram port. At the close of each year, shipping companies typically adjust their freight charges, following the General Rate Increase (GRI) mechanism. 

Consequently, Hapag-Lloyd's decision to raise freight charges is in line with this industry practice, and it's possible that other shipping lines will follow suit later in the year.

Syed Mohammad Arif, chairman of the Bangladesh Shipping Agent Association, stated, "Before Covid-19, the freight charge for a dry container bound for Europe was $2,500. After Covid-19, it increased up to $12,000 in phases. 

Subsequently, with the onset of the Russia-Ukraine conflict, freight charges dropped steadily below $1,000, presenting challenges for shipping companies. In response to these difficulties, shipping companies are striving to offset their losses by increasing freight charges.

Rakibul Alam Chowdhury, vice president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), expressed concern about the impact of Hapag-Lloyd's decision on the ready-made garment industry. The industry is already facing challenges due to the Russia-Ukraine war, with shipments to Europe and America on the decline. 

He said, "In such a situation, the freight charges increased by Hapag Lloyd will escalate the crisis. We would expect Hapag Lloyd to postpone such a decision to increase rents during this transition period."

In terms of product volume, Chattogram Port handled 7,351,258 tonnes of export products in the 2022-23 fiscal year, compared to 7,969,366 tonnes of products in the fiscal year 2021-22. Additionally, the port handled 1,319,808 TEUs in FY 2022-23 and 1,475,281 TEUs in FY 2021-22 as containers.