Bangladesh's Chittagong Port Denies Berthing to Maersk and CMA CGM in Fee Dispute

A significant dispute over port fees has intensified at Chittagong Port in Bangladesh, leading the port authority to revoke berthing permits for several vessels operated by major shipping lines. The authority cited the imposition of 'illegal surcharges' by the carriers as the reason for its decisive action.

The conflict originates from a comprehensive increase in port charges implemented by the Chittagong Port Authority. In September of this year, the authority announced sweeping fee increases, raising service charges by an average of 41%. This new pricing structure took effect on 15th October, marking the port's first tariff adjustment in nearly 39 years.

Among the specific changes, the average handling fee per container rose sharply from 4,395 taka to 16,243 taka (approximately £16.50). The handling charge for a 20-foot container increased from around £3.50 to £6.50.

Despite this substantial hike, analysts note that Chittagong's overall handling rates remain comparatively low globally, broadly aligning with other major Southeast Asian ports. However, the port's fee structure is notably complex, comprising over 150 distinct items. Some individual charges were already at elevated levels prior to the recent adjustment.

For example, Maersk's On-Harbour Charge (OHC) at Chittagong stands at US$120 per 20-foot dry container. This figure substantially exceeds rates at most Chinese ports, where comparable charges typically fall below US$100, and also surpasses those at major Asian hubs such as Busan and Laem Chabang.

Carriers Implement Surcharges in Response

In reaction to the unilateral port fee increases, shipping companies moved to implement their own surcharges.

Mediterranean Shipping Company (MSC) was the first to act, announcing a 'Port Cost Recovery Charge' effective 16th October. The charge is set at $100 per dry container, $150 per reefer container, and $200 per dangerous goods container for shipments to and from Chittagong, applying globally except for US and Asian routes.

Maersk and CMA CGM swiftly followed. Maersk implemented increases to its Chittagong terminal handling charges of USD 45 for 20-foot containers and USD 40 for 40-foot containers. CMA CGM introduced an emergency cost surcharge of USD 45 per 20-foot container and USD 70 per 40-foot container, capped at USD 350 per container.

Port Authority Retaliates with Permit Revocations

The carriers' 'counterattack' prompted a firm response from the Chittagong Port Authority. Citing 'illegal surcharges,' the authorities directly revoked berthing permits for seven CMA CGM vessels and two Maersk vessels. Denied permission to berth, the ships were forced to wait at anchorage, incurring substantial losses for the shipping companies.

Reports indicate that Maersk subsequently conceded and secured temporary permits, but on the condition that it refrains from charging customers any surcharges or additional fees. The company was also required to remove the price hike notice from its official website.

Costs Expected to be Passed On to Cargo Owners

Attention is now turning to the ultimate destination of these increased costs. According to estimates by the International Finance Corporation, following the widespread fee increases, Chittagong is projected to become the second most expensive port in the region.

The estimates indicate that each imported container will incur an additional cost of approximately 334 yuan, while each exported container will face an extra charge of around 178 yuan.

The Chairman of the Bangladesh Shipping Agents Association stated that liner companies are unlikely to absorb these additional costs themselves. It is considered highly probable that they will subsequently raise overall freight rates, thereby passing the costs on to cargo owners. The costs being passed on to shippers are reported to significantly exceed the actual rate increase implemented by Chittagong Port.

For local shippers, who have limited alternatives given that Chittagong handles approximately 92% of Bangladesh's import-export cargo and 99% of its container throughput, this situation presents a significant financial challenge.

The ongoing fee dispute not only highlights tensions between port operational costs and charging structures but also reveals the complex dynamics of competing interests within the global shipping market. Cargo owners utilising the Chittagong route are advised to confirm freight rates with shipping lines in advance and exercise caution regarding potential last-minute surcharges.