Security issues forced Lufthansa Cargo to suspend its freighter service to Dhaka last summer, but the German carrier is planning to return to the capital of Bangladesh in the near future.
“Bangladesh developed well for us,” said Frank Naeve, vice-president Asia-Pacific, adding that the only reason for the decision to pull out of this market was security.
In June, the German civil aviation authority issued a ban on cargo flights to Bangladesh, citing “information provided by our law enforcement authority and intelligence services”, which prompted the authority to consider shipments from Bangladesh to Germany as “high risk.”
Germany followed the UK and Australia, which had earlier issued bans on direct cargo flights from Bangladesh. The government in Dhaka had taken steps to beef up security systems and protocols at Hazrat Shahjahal International Airport and hired British security firm Redline Aviation Security for US$9.34 million on a two-year contract, but these efforts failed to sway the aviation authorities in those countries.
Taking in about US$5.1 billion worth of goods, Germany is Bangladesh’s second-largest export market, closely behind the US, which imports goods worth US$5.23 billion from the South Asian country. About 95% of Bangladesh’s exports are related to the garment trade.
Shipping garments by ocean from Bangladesh has also been challenging as Chittagong, the country’s largest seaport, has struggled with congestion.
The bans on direct flights have forced exporters to move these flows via third countries, where they have to be re-screened. The resultant rise in costs has undermined the competitiveness of garments from Bangladesh vis-à-vis other origins, such as Cambodia.
Phnom Penh has experienced an influx of international freighter operations since Cathay Pacific mounted a weekly Boeing 747F link to Hong Kong in 2015. The past year has seen the arrival of freighters from Turkish Airlines, Emirates, AirBridgeCargo and Malaysia-based Raya Airways. Operating for DHL, Transmile started a 737-400F operation between Phnom Penh and Bangkok in August, which runs five times a week.
The rise in traffic has overwhelmed Phnom Penh’s airport, forcing forwarders to ship some of their Cambodian garment exports via Thailand or Vietnam.
Naeve does not see enough demand in Cambodia to warrant a Lufthansa freighter service to Phnom Penh. He said that Indochina is interesting in the mid-term, but for now the German airline is content to sell offline, using Bangkok and Singapore as transit points.
Lufthansa intends to resume all-cargo flights to Bangladesh as soon as possible. “We’re working on a solution,” said Naeve. “It’s an interesting market with good growth.”
Bangladesh-based Bismillah Airlines sees good potential for air freight exports. It recently leased a converted 747-400 freighter to run two weekly frequencies between Dhaka and Hong Kong.
In late August, the Bangladesh Freight Forwarders Association mounted a campaign asking the authorities to facilitate the approval of charter flights to cope with backlogs at Dhaka, which have been attributed to the heightened security requirements and particularly to a shortage of capacity after some carriers cut service. By one estimate, 300-400 tons of weekly lift had exited the market. Moreover, delays of up to a week at the congested Chittagong port have forced shippers to turn to air freight.
Chittagong has operated at the limits of its capacity for years, but so far plans for a second major port have been going nowhere. Shippers and forwarders hope that a new plan will have legs. The government has tasked a consortium that includes Hamburg Port Consulting (HPC) and Sellhorn Engineering from Germany and local company KS Consultants with a feasibility study for the establishment of a new at Patenga. According to HPC, this could be finished in 2017 and lead to the completion of the project by 2021, if progress is swift.
By Ian Putzger
Air Freight Correspondent | Toronto