The growth will depend on government policy changes, improved service quality and reduced ground handling costs
Bangladesh’s air cargo industry is likely to double in the next five years, thanks to the capacity development of Hazrat Shahjalal International Airport (HSIA), according to industry insiders.
They said that it has the potential to grow multiple times, which depends on policy changes, improved service quality and reduced ground handling costs. They mentioned that HSIA charges the highest for ground handling among regional airports, which could be a barrier to this growth.
HSIA handles up to 900 tonnes of cargo in a day. On average, it handles 400 to 500 tonnes in a day, which is currently about 200 tonnes, as trade is slow at present.
Kabir Ahmed, president of the Bangladesh Freight Forwarders Association (BAFFA), said, “If we can change our policy and improve service quality, the cargo industry will be multiple times bigger by 2041, compared with the current status. However, it’s a lean time due to some national and international issues.”
He said that the state air carrier Biman Bangladesh, which is in charge of ground handling, should work on improving it.
Kabir added that state-owned carrier Biman can use about 8-9% of the total cargo transportation volume and it has the opportunity to increase the country’s share as well as introduce some private sector operators.
According to a publication titled ‘Contribution of Air Transport Industry to Bangladesh Economy’ by ICAB (Institute of Chartered Accountants of Bangladesh), Bangladesh Biman handled 14,000 tonnes of export cargo in 2020, which was only 8.46% of the total export cargo from Bangladesh. That year, Bangladesh’s export cargo volume was 165,474 tonnes.
Globally, the highest growth of the air transport industry is being enjoyed by the Asia-Pacific region. The Asia-Pacific aviation market was valued at $50.92 billion in 2020, and it is projected to reach $97.13 billion by 2026, registering a compound, the publication mentioned.
Kabir Ahmed said that the ground handling charge remains a major challenge for air cargo, which is currently about 18 cents per kg of goods while the regional charge is about 7 cents.
According to business insiders, some exporters are exporting their goods through Kolkata Airport due to the low service quality.
“Some international cargo operators have alleged that they have to handle their own cargo despite paying a high charge,” he said, adding that to improve the service quality of ground handling, the authority should sign a joint venture with internationally reputed operators. This would be the best option to increase Biman’s efficiency in ground handling.
Due to the lack of a cold chain in HSIA, Bangladeshi exporters are also facing challenges in exporting perishable fresh food products. A cold chain is needed to store and transport perishable products at appropriate temperatures to prevent the growth of harmful bacteria and maintain freshness.
Acknowledging it, Kabir Ahmed said hopefully, a cold storage will be added in the third terminal of HSIA.
Shams Mahmud, managing director of Shasha Denims, said the local market also has the potential to develop an air cargo market, which would be convenient and cost-effective.
“It would be from one city to another city without touching Dhaka. Currently, every air route is Dhaka-centric,” he added.
Establishing cold storages in Hazrat Shahjalal International Airport would be helpful in improving the air cargo business as well as the export of agricultural products.
The cost of per kg goods transportation from Dhaka to Europe is about $3 and from Dhaka to the US is about $3 during peak time, which is now $2.10 and $2.90, respectively.
Shams Mahmud said that Bangladesh has to sign a number of FTAs (Free Trade Agreements) to achieve the country’s export target of 2041 and when the export-import volume will increase and there will be technological upgradation, air cargo will become cheaper.
According to the International Air Transport Association (IATA), air transport in Bangladesh is forecast to grow by 168% in the next 20 years under the ‘current trends’ scenario. This would result in an additional 12.1 million passenger departures by 2038. If met, this increased demand would support approximately $2.1 billion of GDP and around 140,000 jobs.
IATA also mentions that Bangladesh’s air transport industry has experienced remarkable growth in the last decade. So far, it has created 17,000 direct jobs worth $246 million.
This industry supports 129,000 jobs in Bangladesh, notably 30,000 jobs in its supply chain and 65,000 jobs in the tourism sector.
Source: TBS News