Letter of credit (L/C) shortages are bringing shipping services to a halt at Bangladesh's primary port of Chattogram.

Jetties designated for handling container vessels are remaining empty as fewer vessels arrive at Chittagong while the port's ambitious expansion programme is being thwarted by the government's austerity measures.

Routes suspended

International shipping group Mediterranean Shipping Company (MSC) launched a container shipping service on the Chattogram-China route in May 2022, which reduced shipping times by about 12 days.

But the Swiss-based company has suspended shipping goods from China to Chattogram. MSC officials reportedly say the suspension is due to complications in opening L/Cs that has reduced demand for imported Chinese goods in Bangladesh.

European services

Amongst other shippers attracted to expanded port facilities in 2022 was local company Reliance Shipping which has already suspended its services to the Netherlands and Spain and is expected to shut down its Chattogram-Italy route.

Bahrain-based Phoenix Shipping meanwhile suspended its Chattogram-Rotterdam-Liverpool route in October 2022, just a few months after it was launched.

Austerity measures

"Due to the government's austerity measures, opening L/Cs remained suspended or discouraged by the banks in the case of non-essential products," according to Mahbubul Alam, president of the Federation of Bangladesh Chambers of Commerce and Industry.

The import-dependent nation's economy has been hard hit by Russia's invasion of Ukraine, with prices shooting up, imports declining and the country's foreign currency reserves falling dramatically.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.