About 92 percent of the country's import-export trade and about 99 percent of container transport are transported through Chittagong Port. But with the development of Chittagong Port, the income will increase by Tk 1500 crore annually due to the new tariff.
Chittagong Port is the main gateway to the country's economic activities. Through various changes in its 138 years of institutional journey, the country's import-export trade is constantly preparing itself to meet the needs of the future, becoming prosperous. Along with this, there is pressure to upgrade itself to global standards. Infrastructural and technological development has to be done through new projects to provide services in line with the changing world.
A huge amount of money is required to implement this huge project. But the main source of income of Chittagong Port, service charges or tariffs, still remains in the 40-year-old structure. There is no balance between expenses and income. However, at the same time, tariffs have increased in other ports and regional ports of the world. The fares of ships plying the Chittagong Port route have also increased several times.
Although ship operators have constantly increased fares in consideration of fuel costs, manpower costs, ship construction costs and other costs, the tariff of Chittagong Port has not changed even in 40 years. Not only ship fares, but also the service quality of various service providers related to the port has increased significantly.
In addition to infrastructural development, the salaries of port officials and employees, equipment purchase and fuel costs, support vessel purchase, movement and repair costs have increased manifold. Keeping in mind the reality of increasing operating costs and development costs, the government took the initiative to increase service charges or tariffs in 2019. Although the initiative was taken earlier in 2013, it did not see the light of day due to opposition from stakeholders.
The government appointed IDM in 2020, a renowned Spanish consulting firm, to determine realistic tariffs considering the tariffs of international and regional ports. The tariff, proposed by the consulting firm and discussed with stakeholders for a long time in the presence of shipping advisors, was published in the gazette on September 14 this year.
According to port sources, with extensive development activities, the operating costs have increased manifold. In the 1985-1986 fiscal year, Chittagong Port handled only 39,056 TEU containers, and in the just-ended fiscal year, this number has reached 3.2 million TEU. In terms of numbers, handling has increased by about 81 times. Development through business-friendly massive investments has made it possible to increase handling. The authorities have had to work to increase the capacity of the port from the beginning to conduct handling activities. New terminal construction, equipment and technology have been added to the old infrastructure. In 1986, the Chittagong Port fleet had 19 support vessels/boats including tugboats, pilot boats, ambulance boats, water and fuel supply vessels, and by 2025, this number had increased to 38.
The authorities have to spend a huge amount of money on purchasing, operating and repairing this large number of support vessels. Over time, the challenge of transforming into a green port to adapt to the global commitment to digitalization and reducing carbon emissions has been added.
In the just-ended fiscal year, 32,96,067 TEUs of containers were handled, 13,07,24,783 metric tons of cargo, and the number of ships was 4,077. In the fiscal year 2023-2024, 31,68,690 TEUs of containers, 12,32,42,748 metric tons of cargo, and the number of ships was 3,971. In the fiscal year 2022-2023, 30,07,375 TEUs of containers, 11,82,97,643 metric tons of cargo, and the number of ships was 4,253.
Increased infrastructure development costs: Chittagong Port has had to spend the most money on infrastructure development. This has led to a significant increase in the number of terminals, yard space, and modern equipment in the port.
The largest terminal at Chittagong Port is the Newmooring Container Terminal (NCT). The construction of this terminal, which was completed in 2007, cost Tk 5 billion. Another Tk 2,500 crore was spent on adding equipment. Another modern terminal at Chittagong Port is the Chittagong Container Terminal (CCT). This 450-meter-long terminal has 3 jetties. Patenga Container Terminal (PCT) was added to the operational activities of Chittagong Port last year. It cost about Tk 1,200 crore more to build.
The construction of the country's main seaport Matarbari Port is underway. This port has been included in the activities of Chittagong Port with a liability of about 9.5 billion taka in 2023. It will cost about 24 thousand crore taka to build it. The Matarbari Port Channel is ensuring the country's energy security. Chittagong Port is providing necessary support including preservation of this channel, security for ship movement. For this, a huge amount of money has to be raised. If the tariff is not adjusted, this cost will reach an unbearable level.
Bay Terminal is being built near Chittagong Port. Foreign investment will be made in two terminals of this terminal, one terminal will be built with the port authority's own financing.
Pangaon Inland Container Terminal has been built in Keraniganj of Dhaka. This terminal, built at a cost of about 157 crore taka, started operational activities in 2013. The Inland Container Depot located in the capital Dhaka has been built to facilitate the transport of Dhaka-bound cargo containers. Apart from this, work has to be done to ensure car sheds, chemical sheds, auction sheds, yard expansion, construction of facilities, housing for officials and employees and community facilities.
As the current 11 percent growth, we will have to handle 5 million TEU containers after the next 5 years. The yard has been expanded from 54 thousand to 62 thousand. A heavy lift jetty is being built at a cost of Tk 350 crore. About Tk 33,321 crore is now required to implement all the projects under implementation and planned by Chittagong Port. Chittagong Port will have to provide this huge amount of money. To continue the trend of development, we have to survive in the competition in foreign trade, especially in the transportation of goods by sea. If we cannot, we will fall behind. Which will greatly hinder the development and employment of the country.
Chittagong Port are now being provided through online platforms. Terminal Operating System Online, Payment, Digital Access Control, Data Exchange System, CTMS, etc. have been added. The implementation of Maritime Single Window (MSW), cyber security and server system is under implementation. Initiatives have been taken to incorporate AI-based cargo and vehicle tracking and monitoring technology. Huge investment is required for this technological change.
Chittagong Port is located on the banks of the tidal-dependent Karnaphuli River. The port authority has to carry out conservation dredging throughout the year to maintain the navigability of the Karnaphuli Channel. Capital dredging has been carried out to maintain the navigability of the main port area from the channel for a long time, which was completed very recently. As a result of this, waterlogging in the city has reduced to a large extent by removing waste from the mouth of the canal. Chittagong City's waste coming to Karnaphuli through the canal is always hampering the dredging activities. The port authority is having to gain momentum, the cost of dredging is increasing significantly. At the same time, the operational cost has increased. Container handling is now done at Chittagong Port through the world's most modern key-gantry crane. Along with this, there are all the modern equipment for container handling, including RTGs and rail-mounted gantry cranes. The purchase of these equipment is costly, as is its maintenance and repair. Since 1986, the cost of this sector has increased manifold.
It is known that the cost of the expenditure sector and changes of Chittagong Port has increased manifold. The salaries and allowances of officials and employees have increased by 1,259 percent since 1986. The fuel cost of equipment and support vessels has increased by 184 percent since 1994, the price of gas has increased by 196 percent, the price of fuel oil has increased by 318.15 percent from 2007 to 2024. Revenue expenditure has increased by 3,581 percent from 1986 to 2024. The consumer price index has increased (Consumer Price Index). Since 1986, this index has changed by 730 percent, which is about 5.7 percent in the last 5 years.
As per the ISPS Code, the outer anchorage limit of Chittagong Port has now been extended to 62 nautical miles including the Mirsarai-Sitakund coast, which was once only 10 nautical miles. The authorities are working round the clock to ensure the safety and surveillance of ships operating in this vast sea area. 350 watchmen have been appointed. All modern technologies including VTMIS have been added.
The authorities are having to spend an increasing amount of money every year to ensure salaries and allowances, accommodation, medical treatment, educational institutions and other services for the officers and employees of the port. In addition, training is being provided continuously to increase the efficiency of the port. Chittagong Port is practicing and implementing international norms and guidelines. Chittagong Port, like various ports in the world, is practicing and implementing international codes like ISPS and IMDG by following all the standards of IMO. Round-the-clock monitoring of the entire port through CCTV, digital access control, UVSS, database creation, use of security equipment, etc. are part of the implementation of the ISPS Code. The authorities are implementing new security measures every year in light of the IMO delegation's inspections and post-inspection instructions.
Current tariff structure: Among the ports that have direct shipping traffic with Chittagong Port, the ports of Singapore, Malaysia and Sri Lanka constantly adjust their tariffs in line with the global market. Most ports in neighboring India review their tariffs after a certain period. In this case, Chittagong Port is completely different. Although the operating costs have increased several times, it is collecting tariffs in the 40-year-old structure.
It is lagging behind in competition with global and regional ports. Along with the efficiency and capacity of providing services, the financial structure of the port acts as one of the indicators of competitiveness. At the same time, not only the operating costs or infrastructure costs have increased, but inflation has increased by about 284 percent. The tariffs of Chittagong Port are much lower than other ports in the Bay of Bengal region. For example, the handling and storage cost per TEU container of Chittagong Port and Terminal in Bangladesh is $134, the South Asia Gateway Terminal in Sri Lanka is $147, and the Yangon Port in Myanmar is $142.
Need for tariff increase: After 1986, the tariff of Chittagong Port was not reviewed until 2019. In 2007, the tariff was increased in 5 service sectors out of 52 services in the port's service sector. Not only the increasing infrastructure and operational costs of the port, but also to survive in the global market, tariff review has to be done constantly in line with market demand. With the increase in tariff, a positive trend is also seen in service provision. Tariffs play an important role in providing competitive services with neighboring ports. Tariffs that are consistent with market prices attract investors to invest more in the port sector. This increases the speed of service along with the development of the port.
Ports around the world are now having to take on the challenge of implementing the green port concept to implement the global commitment to take carbon emissions to zero. Chittagong Port is no exception. Chittagong Port has already started implementing the transformation into a green port as per the demands and instructions of IMO. The authorities are moving forward with this concept in new infrastructural and technological development work. Existing infrastructure, equipment and technology are being used to ensure full compliance. As a result, the Chittagong Port Authority always conducts activities considering the interests of the country, not increasing tariffs, but determining or adjusting consistent, sustainable and realistic tariffs.
Acceptable method of tariff increase: Chittagong Port has followed all the most widely used global methodologies. The port authority has determined the tariffs at the final stage by practicing all the steps - market analysis, exchange of views with stakeholders and government approval.
After taking the initiative to review the tariffs, the authority assigned the responsibility of determining the tariffs in line with international standards and neighboring ports to the Spanish consulting firm Idom in 2020. The consulting firm reviewed the operational costs of the port, asset replacement costs and project costs, and the tariffs of 17 international ports, including 10 in Asia. In addition, the country's inflation rate has been taken into consideration.
Before the tariff proposal, the consulting firm visited the respective offices of the 10 major stakeholder associations of the port and sought their suggestions and advice. In addition, almost all the indicators including Key Performance Indicators (KPIs) such as vessel waiting time, container duel time, storage time, yard space management, pilotage, tag service, jetty site service, equipment service and annual growth were reviewed. Tariffs of service sectors that were not applicable to Chittagong Port were excluded.
After all the scrutiny and analysis, the consulting firm presented the tariff proposal in 2022. After that, the port authority exchanged views with the port users or stakeholders several times to finalize the tariff, and also took written opinions. Finally, the Ministry of Shipping held two more meetings with the stakeholders in the presence of the Shipping Advisor on June 2 and August 25 of this year.
Before the final approval, the Ministry of Shipping reduced the tariff proposed by the consulting firm by 10 percent, taking into account the views of importers, traders and finally the general consumers. Then, the Finance Ministry approved it on July 24 and the new tariff was published in the form of a gazette on September 14. The common people of the country will get the real benefit of the tariff increase.
According to port sources, according to the feasibility study report conducted at different times, the tariff of Chittagong Port is the lowest compared to other regional ports. If the increased tariff is taken as the tariff, the tariff per container will increase by Tk 3,800. As a result, the cost of goods per kg of goods on consumers will increase by a maximum of 12 paisa and 15 paisa for every product worth Tk 100. This will not have a negative impact on the standard of living of consumers. Meanwhile, the tariff will not affect the country's exporters either. The transportation cost of most of the goods exported from our country, especially ready-made garments, is borne by the importers of the concerned countries. Exports are made on a Freight on Board (FOB) basis. That is, the importer concerned will bear the cost of transporting or shipping the goods. More than 80 percent of exports from our country are done through this method.
To overcome the crisis, the government has added modern equipment, as well as new technologies and terminals, increasing the speed of service provision. Where earlier a ship had to wait 6-7 days at the outer anchorage to unload goods, now ships are getting on-arrival berthing (as soon as the ship arrives). In addition, the turnaround time has come down to 2 to 2.5 days. That is, within this time, ships can unload and load containers and set off again. As a result, importers get their products in the fastest time. They do not have to count on additional costs. As they benefit from this, there is no additional cost pressure on consumers either. The money saved in this provides an opportunity to further reduce the price of products.
Government's directives and port authority is working jointly with customs to further increase the speed of providing these services. It is emphasizing on technological development. In addition, the government is working to increase ship movement, large ship berthing, and direct shipping in addition to providing services. If direct shipping and large ships are loaded, it will be possible to transport a larger number of containers at once, which will save 40-50 percent on transportation costs.
If the income of Chittagong Port increases due to the increase in tariffs, the country's income will also increase: because the government receives a huge amount of money from the port's income in customs and income tax. Which the government spends on the development of the people of the country, that is, the real beneficiaries are the common people. In addition, the planned projects can be implemented with its own financing. Investing money from investment institutions does not yield the desired benefits.
In the last 25 years, Chittagong Port has given about 23,411 crore taka to the government in various sectors. Of this, 9,092 crore as corporate tax, 5,045 crore as VAT, 1,064 crore as VAT deducted from vendors, 815 crore as income tax, and 1,255 crore as non-tax revenue. As per the government's demand, Chittagong Port has provided 4,800 crores in two phases and 462 crores for the development of Payra Port. In addition, 831 crores have been provided as municipal tax and 47 crores as LD tax. This information shows that if the revenue of Chittagong Port increases, the country's revenue also increases.
As a result of tariff adjustment, the port has had to focus on providing services more efficiently and quickly than before. Investments have to be made for port expansion, technology and equipment addition. As a result, positive changes have been reflected in all indicators. As a result, the costs of traders are decreasing, and products are reaching the market faster.
Without a consistent tariff structure, on the one hand, one has to lag behind in competition, and on the other hand, it is not possible to increase technology and equipment and capacity due to the financing crisis. As a result, the quality of service decreases due to the traditional method of providing services, the time it takes to transport goods, and the cost also increases. This has an impact on consumers. Therefore, we have had to adjust the tariff based on reality.
The opportunity to formulate a sustainable, realistic, practical and competitive tariff policy is in the institutional tariff policy of every international port in the world. As a result, tariff reviews are conducted based on operating costs and market conditions at the end of a specific period. The tariff review of Chittagong Port after a long 40 years has given rise to extensive discussions among the concerned parties. Along with this tariff review and implementation, the Board of the Port Authority has already decided to appoint an international standard consultant.
The formulation of the tariff policy will not create any complications in the future. The tariff review will be conducted at a specific time according to the policy. The tariff will take a sustainable, realistic and competitive form.
To implement the vision that the government has taken to transform Bangladesh into a manufacturing hub, Chittagong Port must be developed to world standards. In addition to adding infrastructure, machinery, technology, it must also be in a competitive position in terms of financial structure. If we want to survive in the outside world, we must increase our capacity in port services along with the development of technology. There must be financial capacity, realistic and sustainable financial structure. Which will ensure the highest quality of service as well as ensure domestic and foreign investment.
To implement the concept of green shipping or green port, we have to focus on this sector now. Only then will Bangladesh move forward on the path of manufacturing hub of high-end products, and it will be possible to achieve speed to market. The country's production capacity will increase, along with employment. In addition, as the most promising port in South Asia, Chittagong Port will lead the shipping sector in the region in the future.
The new tariff formulated in line with the tariffs of the ports in the region will take Chittagong Port one step further in the competitive market. The financial capacity of the authority will increase. The ability to implement projects with its own investment with international organizations will also increase. Employment of the country's people, foreign income and ultimately the country's revenue will increase.
