Karnaphuli Group’s shipping business flourishes even in third generation

In June 2020, two Bangladeshi flag carrier ships owned by Karnaphuli Group set sail for Singapore and Malaysia after a 10-year hiatus. HR Lines Ltd, an affiliate of the Karnaphuli Group, is operating the two ships – Sahare and Sarera as the feeder operator. 

Established in 1954, Karnaphuli Group's businesses have spanned over a wide spectrum that include shipping and logistics, media and publishing, health care, real estate, air cargo etc. The company has 3238 employees and a stated yearly turnover of $270 million.

A director of Karnaphuli Group, Hamdan Hossain Chowdhury in an interview with The Business Standard shared his vision about shipping business and Bangladesh's prospect in it, as well as Karnaphuli Group's decades-long journey.

TBS: When did Karnaphuli Group start its journey in the shipping industry?

Hamdan Hossain Chowdhury (HHC): Named after the river on which the port city of Chattogram stands, Karnaphuli was established in 1954 by my late grandfather Hedayet Hossain Chowdhury. In these early years of the then East Pakistan, hardly any Bengalis ventured into business, as it was an almost exclusive domain of West Pakistan. My late grandfather, a bold visionary and dynamic entrepreneur was also the driving force and one of the founders of Chittagong Chamber of Commerce in the 1950s.

TBS: What are the inevitable traits that allow you to continue the legacy of this shipping business? What are your plans to continue this legacy in the future? 

​HHC: The business of shipping has been in Karnaphuli's DNA for generations. My late grandfather ventured into shipping agency business right after the independence of Bangladesh and the knowledge, insight, and wisdom has been passed on from him through my father to me and my sister, Raimah.

We understand the dynamics of the business having been involved in all possible aspects and more importantly given the diversity of Karnaphuli Group's activities, we also have a clear understanding of the needs of the trade. We are fortunate to have been perfectly positioned both from the supply and demand perspective and this gives us a clear competitive edge in managing, planning, and expanding our footprint in this sector. Currently, our group of companies are engaged in one capacity or another with approximately 35% of Bangladesh's container (7,32,000 TEUs handled in 2019) throughput but this predominant position motivates us to excel even further.

The business landscape in Bangladesh will no doubt undergo more changes in the future and from a generational perspective, I am sure our engagement in shipping is for the long term.

TBS: Karnaphuli Group has included two container-carrying vessels to its fleet.  What kind of responses did you receive for this? Do you have plans to include more ships to your fleet in the future?

​HHC: The response from the trade bodies as well as shippers and importers has been very enthusiastic and positive. We have had full support and cooperation from DG Shipping, PO/MMD, Chattogram Port Authority and Bangladesh Ocean Going Ship Owners' Association. We are also receiving good support from some of the major shipping lines as well as NVOCCs and Freight Forwarders.

We have, within the past few months, established the credibility and schedule integrity of the service and in fact we are the only line to offer and maintain a fixed day of the week service connecting Chattogram with the important transhipment hubs of Singapore and Port Klang. Having established the service in such a short span of time, we are looking forward to inducting more ships into our fleet, both to increase the frequency of our existing service and also launch new routes.

TBS: How did the exporters and importers have benefitted from this? Does it allow them to transport goods faster? 

​HHC: As a Bangladesh Flag Vessel, we are entitled to priority berthing and this has enabled us to maintain our fixed day of the week service (arrivals and departures). None of our competitors have been able to do so. Hence, containers loaded on our vessels have arrived on time and as per schedule, allowing containers to connect with long haul vessels of respective carriers with the shortest possible time.

As RMG is an extremely time sensitive commodity that must reach their destinations within stipulated time, we feel that our exporters have benefitted from this fast and reliable transit. This has in turn significantly enhanced the credibility and goodwill of "Made in Bangladesh" brand amongst foreign buyers in a very competitive environment.

Other than the trade being benefited, we feel Chattogram Port's productivity has also benefited from the relatively faster turnaround time of our vessels (at times we have sailed within 48 hours as opposed to the traditional 72 hours). In addition, we have contributed to easing the yard congestion as we have tried to assist whenever Chattogram Port has a requirement to load empty containers.

TBS: In the International shipping business, what possibilities does Bangladesh have?

​ HHC: Shipping is the backbone and an integral part of international trade. Bangladesh is one of the fastest growing economies in the world and is on track to be a Top 30 Global Economy in the foreseeable future. Ocean transportation will play an even greater role in facilitating continued growth and adding vibrancy, dynamism, and competitiveness to the Bangladesh economy.

We believe in the potential of Bangladesh as a maritime nation. Thousands of Bangladeshi Seafarers are employed in ships around the world and are already skilled, trained and available to man Bangladesh Flag Vessels. In fact, we are the only company in global container shipping to employ 100% Bangladeshi crew on our ships and we look forward to employing more as we increase the size of our fleet.

TBS: To realise the country's true potential in the international shipping business, what measures should be taken?

​HHC: The government, under the leadership of Prime Minister Sheikh Hasina, has been very engaged to enhance port productivity and also promote investment in the shipping sector. It has rightly identified the strategic importance of the shipping sector by enacting the Bangladesh Flag Vessel (Protection of Interest) Act of 2019 to encourage ownership and investment of Bangladeshis in ocean-going vessels, saving valuable foreign exchange, and create huge employment opportunities for Bangladeshi seamen.

The provisions of this law need to be appropriately implemented for the country to reap its full benefits. The Bangladeshi business community also needs to come forward and support the spirit of this legislation. In many countries of the world, including our region, similar legislation is in place to encourage and support local ship owners.

As ship owning and operating is very capital intensive, and entry level barriers are high, concessional finance as well as fiscal incentives should be made available to encourage Bangladeshi investors in both private and public sectors.

TBS: In the shipping business, do you think Bangladeshi companies are facing any crisis?

​HHC: I would not use the term crisis, but there are certainly challenges we are experiencing in owning and operating Bangladeshi ocean going container ships. As Bangladeshi companies enter this sector, there is apprehension that vested groups who have monopolised this sector all along will resort to ways and means to hinder the growth of Bangladesh Flag Vessels.

As per various estimates, which have been widely reported in the media, Bangladesh's total expenditure on account of freight payments is $8 billion and non-Bangladeshi Flag Vessel owners are the primary beneficiary of these revenues.

TBS: What would you suggest to the new entrepreneurs in this industry?

​​HHC: This is a vibrant and exciting sector and the potential rewards and risks are also high. There are no shortcut routes to success and any entrepreneur will be challenged to the extreme. However, if one has the understanding of the business, the right vision and acumen and a strong management team with sound finances, the sky could be the limit.

TBS: Has Karnaphuli Shipping ever faced any major challenges?

Hamdan Hossain Chowdhury: Business environment is inevitably a challenging one and there are many variables which are beyond our control. When my late grandfather started business, he embraced diversity as a policy and we have continued on that path. The ongoing Covid-19 situation continues to be a challenge for us as it is for companies around the world. Through innovation and adaptation, we are responding to the new normal as we stand by our Karnaphuli family.

TBS: Where did you study? What inspired you to come to the shipping industry?

HHC: After completing my schooling in Bangladesh, I graduated from the University of Toronto with a double major in Political Science and Management. Thereafter, I transitioned into the logistics sector by getting advanced certifications from the Canadian International Freight Forwarders Association before joining the family business at Karnaphuli and engaging myself in the shipping sector.

TBS: In the present shipping industry, which sectors your company is working in?

HHC: Shipping and logistics covers many spheres of activities and is becoming increasingly important with the advancement of Bangladesh's economy and its integration with the global supply chain. Karnaphuli Group through its various fully owned and associated companies, is closely engaged in all aspects of this sector, such as owning and operating ocean-going container ships (the only Bangladeshi company), shipping agency and husbanding, clearing and forwarding, transportation and distribution, off dock depot / container yard.

In addition to ocean transportation and related logistics and support services, Karnaphuli Group is also involved in aviation; and EasyFly Express (a Karnaphuli company) is authorised by Civil Aviation Authority of Bangladesh to operate domestic, regional, international cargo flights. Additional aircraft will be inducted into its fleet by Q1 2021 to further expand its operations.