Sea freight: income dream sets sail
Sea freight is expected to be a good source of direct foreign currency for Bangladesh in a few years as big business conglomerates are increasingly buying ocean-going ships cashing in on the troubled US and European economies.
The sector, which now boasts 70 ocean-going ships, can earn $200-300 million in freight charges a year, according to industry people. These ships’ capacity ranges between 30,000 and 100,000 tonnes.
“The economic crisis in the US and Europe has forced many owners to sell their ships at low prices. Asians, including Bangladeshi buyers, have been taking the opportunities,” said Azam J Chowdhury, chairman of East Coast Group, which has bought two such ships recently.
The company has purchased another tanker ship, which will be delivered next month, with over one lakh tonne capacity at $22.5 million, to carry oil.
According to businessmen, each ship can earn $2-5 million annually by transporting goods, depending on the capacity.
“It is a very good business. The increase in fleet will boost foreign currency earnings,” said AKM Shahidul Islam, managing director of United Sea Liner.
A 30,000-40,000 tonnes-capacity ship now costs $10-12 million, according to the industry people. Islam, who is in the business for over 30 years, said an investor can get his money back in just five years.
Top conglomerates and traders have now entered into the lucrative business, which was earlier dominated by the shipping businessmen only. Major groups including Meghna, Bashundhara, Akij, Abul Khair, East Coast, HRC and KSRM have bought the ships in the last few years.
Besides, freight earnings the sector will help Bangladesh create highly-paid jobs. According to the sector people, a ship employs 25-30 crews who are paid in foreign currency. Top crews can earn as much as $25,000 per month.
But ship-owners have some reasons to be worried such as high bank interest rates, lack of crews, rising piracy and the continued volatility and dampness in global freight markets.
“We have serious shortage of crews and often we have to hire people from China and Taiwan to run the ships,” said Mostofa Kamal, chairman and managing director of Meghna Group of Industries, who has bought such a ship recently.
Chowdhury of East Coast Group fears more on the growing attacks by Somali pirates. “Many of our crews do not want to go to the Middle East countries because of the piracy on the Arabian Sea,” said Chowdhury.
Somali pirates have already hijacked a Bangladeshi-flagged ship — MV Jahan Moni, owned by KSRM, in early December last year. The ship, with 25 Bangladeshi crew members, is still in the pirates’ hands.
Chowdhury suggested the government sign a protocol agreement with countries such as the UAE, Bahrain and India, to protect Bangladesh’s ships and crew.
Islam of United Sea Liner believes 15-16 percent bank interests rates are “very high” and make the business costly at initial stages.