Air freight companies are working their way round new rules imposed by the Australian government on cargo from Bangladesh – just as international logistics firm Agility upgraded the South Asian nation’s reputation.

Air cargo from, or transiting through, Egypt and Bangladesh was granted an exemption for letter products and small items of cargo. The former is defined as weighing less than 500 grams and the latter less than 250 grams.

Disruptive as they are of the garment trade, the new rules are easier than a blanket ban imposed by Australian authorities would be, such as the ban on carrying any air cargo that has originated from, or transited through, Syria, Yemen or Somalia.

The air cargo industry understands security requirements, but the inclusion of Bangladesh rankles some. “In the case of Bangladesh, this is a new prohibition and the issue is not so clear and has greater impact due to the volume of inbound air cargo trade of, particularly, manufactured items of clothing,” an Australian Federation of International Forwarders (AFIF) official told Asia Cargo News.

“We would estimate around 10 million kilos of such air cargo is affected,” the official added.

Already, the industry is adapting by increased use of other airports – something helped by there being no direct flights from Bangladesh to Australia.

“For urgent consignments, the best solution found to date is airfreighting the goods as normal from Bangladesh to either Hong Kong or Singapore, then importing and customs clearing the goods at those intermediate airports, followed by re-exporting by air to Australia, having undergone approved security screening at the intermediate airport,” the AFIF official added.

No timelines for amending or lifting the ban have yet emerged, but AFIF, the Australian Embassy in Dhaka and Bangladesh Garment Manufacturers and Exporters Association have all said via their websites that dialogue is ongoing.

The dispute is a marked counterpoint to the movement towards more connectivity between Bangladesh and the rest of the world, something underlined by its moving up three spots to 28 in the 2015 Agility Emerging Markets Logistics Index. This is an annual, data-driven ranking accompanied by a separate survey of nearly 1,000 global logistics and supply chain executives.

Bangladesh scored well for “market compatibility” – business climate – and “connectivity,” as infrastructure and trade links both improved. The government, though, is aware that more needs to be done on all fronts.

“We also remain one of the least integrated regions of the world that needs a massive infrastructure build-up to promote rapid economic growth in the region,” Md. Shahriar Alam, State Minister for Foreign Affairs, said recently.

What Bangladesh is doing is obvious but hasn’t been done for the past 40 years, namely, starting to improve connections with neighbouring countries, especially India, where there have been tensions in the past.

A key part of this is accepting a role as a conduit for trade between the Indian mainland and its isolated northeast provinces.

“We are opening new rail and road links as well as land customs stations/land ports with the northeast and reviving old ones. We are revamping trade infrastructures to connect those border points,” Abul Hassan Mahmood Ali, Bangladesh’s foreign minister, said recently.

Under the BBIN (Bangladesh, Bhutan, India and Nepal) Motor Vehicle Agreement, new passenger bus and cargo services will be operational soon with a view to connecting Bangladesh and India with Nepal and Bhutan. “This is expected to be a ‘game changer’ in this sub-region,” the foreign minister added.

This might be read as rhetoric, but it does have bite as more changes are coming, including, it is thought, rail.

“It was agreed to commence discussion on the possibility of having a BBIN Rail Agreement drawing on the draft SAARC Regional Rail Agreement template. It was also agreed that land ports/ land customs stations crucial for sub-regional trade and transit would be given priority attention by all four countries,” Bangladesh’s Ministry of Foreign Affairs announced.

The weak spot, at least until money is found, is likely to be the ports, especially as plans for a new China-backed deep seaport at Sonadia are badly stalled.

These “have to be upgraded to attract business from neighbouring countries,” Kashif Choudhury a business analyst at LightCastle Partners, a business data firm said in a recent newspaper op-ed.

Chittagong, through which 92% of Bangladesh’s trade moves, handled a record 2 million TEUs in 2015, half of that of Mumbai’s Jawaharlal Nehru Port, the busiest port in the region, which handled 4.46 million TEUs in 2014-15.

“However, problems remain, as the Chittagong port can still only handle 40,000 TEUs at a time. So, capacity expansion capability will remain limited, unless substantial investments are made,” Choudhury added.

By Michael Mackey

Southeast Asia Correspondent | Bangkok