Breaking News: A Compromise That Averts Logistics Crisis
In a significant development for Bangladesh's logistics and export sectors, container depot owners have agreed to moderate their handling charge increase to 20% from the previously announced 81% following intensive negotiations with Chittagong Port Authority (CPA) and key industry stakeholders.
This resolution comes after months of tension that threatened to disrupt the country's $50+ billion export industry, particularly the ready-made garment (RMG) sector, which depends heavily on efficient inland container depot (ICD) operations.
Key Takeaway
The compromise provides interim relief for exporters while establishing a framework for developing a transparent, standardized tariff structure over the next six months through international consultants.
Timeline of the Dispute: How We Got Here
Timeline of Events
Initial Announcement
The Bangladesh Inland Container Depots Association (BICDA) announced an 81% increase in handling charges for empty containers and related services, effective September 1, 2025.
Standoff Begins
BICDA enforced the new charges, but exporters, freight forwarders, and shipping agents refused to pay, arguing the increase was excessive and unjustified. This created a standoff affecting container movements across all major depots.
Service Stoppage Threat
Depot owners announced a complete service stoppage to press their demand, threatening to paralyze Bangladesh's export supply chain during the critical pre-holiday shipping season.
Strike Postponed
At CPA's urgent request, depot owners postponed the strike for one month, allowing time for negotiations to find a middle ground.
Breakthrough Compromise
A comprehensive stakeholder meeting at Chittagong Port, chaired by CPA Chairman Rear Admiral S M Moniruzzaman, resulted in the breakthrough compromise.
The Historic Meeting: All Stakeholders at the Table
The January 2nd meeting represented an unprecedented gathering of Bangladesh's maritime logistics ecosystem:
Government Authority
- Chittagong Port Authority (CPA)
Depot Operators
- Bangladesh Inland Container Depots Association (BICDA)
Shipping & Logistics
- Bangladesh Shipping Agents Association (BSAA)
- Bangladesh Container Shipping Association (BCSA)
- Bangladesh Freight Forwarders Association (BFFA)
Export Industry
- Bangladesh Garment Manufacturers and Exporters Association (BGMEA)
- Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA)
This multi-stakeholder approach ensured all voices were heard, from those bearing the costs (exporters) to those providing the services (depots) and those facilitating trade (shipping lines and forwarders).
The Compromise: Key Terms and Conditions
1. Interim Charge Increase: 20% for Six Months
Instead of the controversial 81% hike, depots will implement a 20% increase for an interim period of six months, allowing:
- Exporters to absorb costs without severe competitiveness damage
- Depot owners to recover some increased operational expenses
- Time for proper market study and standardization
Financial Impact Example
| Scenario | Charge per Container | Impact |
|---|---|---|
| Previous Charge | $150-200 | Baseline |
| Under 81% Increase | $270-360 | +$120-160 |
| Under 20% Compromise | $180-240 | +$30-40 |
| Savings vs 81% | - | $90-120 saved |
2. Standardization Commitment: International Consultants
The game-changing element of this agreement is CPA's commitment to establish a scientific, transparent tariff structure within six months by engaging international logistics consultants.
Benchmark Studies
Consultants will compare Bangladesh depot charges with regional competitors (India, Sri Lanka, Vietnam, Thailand) to establish competitive yet sustainable rates.
Cost Analysis
Detailed examination of actual depot operational costs including land, equipment, labor, utilities, and regulatory compliance expenses.
Efficiency Metrics
Assessment of depot operational efficiency to ensure costs aren't inflated due to poor management or outdated practices.
Transparent Formula
Development of a clear pricing formula adjustable based on inflation, currency fluctuations, and verifiable factors.
Dispute Resolution
Establishment of formal process for future tariff revisions without service disruptions.
3. Review and Adjustment After Six Months
At the end of the interim period, new standardized charges will be implemented based on consultant recommendations, which could result in:
Lower Rates
Rates lower than 20% if consultants find current operations inefficient
Higher Rates
Rates higher than 20% if cost analysis justifies it (with transparent documentation)
Variable Pricing
Differential rates based on service type, container type, and dwell time
Understanding Bangladesh's ICD Ecosystem
To appreciate the significance of this dispute and resolution, it's important to understand the critical role ICDs play in Bangladesh's trade infrastructure.
What Are Inland Container Depots?
ICDs are specialized facilities, typically located near ports but outside the port's customs boundary, that provide:
1 Empty Container Management
- Storage and positioning of carrier-owned empty containers
- Delivery of empties to exporters' factories
- Reception of loaded export containers
- Maintenance and cleaning services
2 Container Stuffing/De-stuffing
- LCL (Less than Container Load) consolidation
- Container packing supervision
- Cargo securing and dunnage
- De-vanning of import containers
3 Customs Facilitation
- Customs bonded area operations
- Export documentation processing
- Container examination facilities
- Duty-free import processing for export industries
4 Storage & Warehousing
- Short-term container storage (free period + detention)
- Cargo warehousing before stuffing
- Special cargo handling (garments, temperature-controlled)
5 Value-Added Services
- Container repair (minor and major)
- VGM (Verified Gross Mass) certification
- Fumigation services
- Cargo insurance facilitation
- Digital documentation and tracking
Bangladesh's ICD Capacity
Strategic Importance
Bangladesh's ICDs handle approximately 65-70% of export containers and 40-45% of import containers, with Chittagong Port jetties handling the remainder. This makes them absolutely critical to the country's \$55 billion+ export economy.
Key Facilities Include:
- Saif Powertec ICD (one of the largest)
- Summit Alliance ICD
- Bengal ICD
- PHP Glass ICD
- Karnaphuli ICD
- Multiple private off-dock facilities
Why Did Depot Owners Want an 81% Increase?
While the figure seemed shocking to users, depot operators argue they face legitimate cost pressures that have accumulated over nearly a decade without tariff adjustments.
1. The "Frozen Tariff" Problem
10 Years Without Revision
According to BICDA, depot charges haven't been meaningfully revised since 2015-2016—nearly 10 years of operational cost inflation with no revenue adjustment.
Cost Inflation During This Period (2015-2025):
Land Prices
Near Chittagong Port
Equipment Costs
Reach stackers, handlers
Labor Wages
Due to minimum wage increases
Diesel/Fuel
Compared to 2020 levels
Electricity
Tariff increases
Spare Parts
Mostly imported
Cumulative Effect
Depot operational costs have increased by an estimated 150-200% over the decade, while revenues remained essentially flat.
2. Major Cost Components
Operational Cost Distribution
Land and Infrastructure
25-30%Container depots require substantial land area—typically 5-20 acres depending on throughput capacity. In Chittagong's port vicinity, land is scarce and expensive:
- Prime depot land: Tk 30-50 million per acre (2025 prices)
- Comparison to 2015: Tk 10-15 million per acre
- Annual rental (leased facilities): Tk 3-5 million per acre
Example: Medium-Sized 10-Acre Depot
| Land investment | Tk 300-500 million ($2.7-4.5M) |
| Infrastructure (roads, drainage, buildings) | Tk 100-150 million |
| Total capital tied up | Tk 400-650 million |
| Requiring 10-12% return | |
Equipment Investment & Maintenance
30-35%Modern depot operations are equipment-intensive:
Major Equipment Costs:
| Equipment | Cost per Unit | Quantity Needed |
|---|---|---|
| Reach Stackers | $400,000-600,000 | 3-5 units |
| Empty Container Handlers | $150,000-250,000 | 2-4 units |
| Forklifts | $30,000-80,000 | 5-10 units |
| Container Repair Equipment | $100,000-200,000 | 1 set |
| Weighbridges/VGM Systems | $50,000-100,000 | 1-2 units |
| IT Systems and Software | $30,000-50,000 | Annual |
Financing Costs: Equipment is typically financed at 10-12% interest rates over 5-7 years, creating significant debt service burdens.
Maintenance Costs:
- Reach stacker maintenance: $3,000-5,000 per month per unit
- Spare parts (mostly imported): Subject to currency fluctuations
- Downtime costs: Equipment failure can halt operations
Labor Expenses
20-25%A typical medium-sized depot employs 80-150 workers
Wage Structure (2025):
| Position | Monthly Salary |
|---|---|
| Skilled equipment operators | Tk 35,000-45,000 |
| Container handlers/laborers | Tk 18,000-25,000 |
| Supervisors and foremen | Tk 30,000-40,000 |
| Documentation staff | Tk 25,000-35,000 |
| Security personnel | Tk 15,000-20,000 |
Total Monthly Labor Cost (100-person depot)
Additional Labor Costs:
- Provident fund contributions
- Festival bonuses (2 months' salary annually)
- Overtime during peak seasons
- Health insurance and benefits
Energy and Utilities
10-15%Depot operations are energy-intensive:
Electricity
- Equipment operation (reach stackers, handlers, lighting)
- Office and administrative buildings
- Reefer container plug-ins (temperature-controlled cargo)
Diesel
- Backup generators during load-shedding
- Mobile equipment operation
- Monthly consumption: 5,000-8,000 liters
Water & Other Utilities
- Container cleaning operations
- Facilities maintenance
Regulatory Compliance
5-8%New regulations have added expenses:
VGM (Verified Gross Mass) Compliance
- SOLAS Convention requirement since 2016
- Certified weighbridge systems: $50,000-100,000 investment
- Calibration and certification: Annual costs of $5,000-8,000
- Software integration with shipping lines
Environmental Compliance
- Wastewater treatment for container cleaning
- Hazardous material handling protocols
- Environmental impact assessments
Security Requirements
- CCTV systems covering entire facility
- Access control systems (biometric, RFID)
- 24/7 security personnel
Digital Integration
- Integration with Bangladesh National Single Window (NSW)
- EDI connectivity with shipping lines
- Container tracking systems
3. Currency Impact
Bangladesh Taka Depreciation
Impact on Imported Items:
- Equipment and spare parts (all imported): 40-48% more expensive in taka terms
- Technology and software licenses: Priced in USD
- Insurance premiums: Often USD-denominated
4. Revenue Erosion
While costs increased 150-200%, depot revenues remained stagnant because:
Fixed Tariffs
Rates set in 2015-2016 weren't formally revised
Competitive Pressure
Individual depots couldn't raise rates unilaterally without losing customers
Shipping Line Pressure
Carriers often negotiate lower rates due to their bargaining power
Free Time Extensions
Increasing competition led to longer free storage periods, reducing detention revenue
Financial Squeeze Result
Many depots report profit margins declining from 15-18% (2015) to 5-8% (2025), with some operating at break-even or losses.
Why Users Rejected the 81% Increase
While depot owners' cost pressures are real, the proposed 81% increase faced fierce resistance for equally valid reasons:
1. Export Competitiveness Threat
Bangladesh's RMG sector, which accounts for 85% of total exports, operates on notoriously thin margins of 5-8% net profit.
Impact Calculation:
| Average depot charges per container (current) | $150-200 |
| Under 81% increase | $270-360 per container |
| Additional cost | $120-160 per container |
For a typical 40ft container of garments:
Sounds small? Here's why it matters:
Annual Volume Impact:
A medium-sized RMG exporter handling 500 containers/month:
Competitive Context
When competing with Vietnam, India, or Cambodia for orders, buyers make decisions based on total landed cost differences of 2-3%. A depot-related 0.15% increase, combined with other cost pressures, can tip orders to competitors.
2. Lack of Cost Transparency
Users demanded answers to critical questions:
What specifically justifies 81%?
- No detailed cost breakdown was provided
- No independent audit of depot operations
- No benchmarking against regional competitors
Are depots operating efficiently?
- Are they using modern equipment or outdated machinery?
- What are actual profit margins?
- Are there productivity improvements possible?
How do Bangladesh costs compare globally?
| India ICD charges: | $120-180 per container |
| Vietnam depot charges: | $100-150 per container |
| Sri Lanka CFS charges: | $80-130 per container |
| Bangladesh (current): | $150-200 per container |
| Bangladesh (with 81% increase): | $270-360 per container |
Critical Finding
If implemented, Bangladesh would have had the highest ICD charges in South Asia—a non-starter for export competitiveness.
3. Timing and Economic Context
The proposed increase came during challenging economic conditions:
Global Factors:
- Weakening demand in key export markets (US, EU)
- Inflation pressures affecting consumer purchasing power
- Increased freight rates due to Red Sea disruptions
- Rising raw material costs
Domestic Factors:
- Currency depreciation increasing import costs (fabrics, accessories)
- Energy cost increases
- Working capital constraints due to banking sector challenges
"We're already struggling with multiple cost pressures. An 81% depot charge increase, without any efficiency improvement or value addition, is simply unacceptable and threatens our global competitiveness."
— Industry source, speaking on condition of anonymity4. Absence of Standardized Process
Users argued there was no transparent, scientific mechanism for determining depot charges. Unlike port charges, which follow formal tariff schedules with government oversight, depot charges appeared arbitrary.
Key Concerns:
No regulatory oversight or approval process
No periodic review mechanism based on objective criteria
Risk of future arbitrary increases without justification
No protection against monopolistic pricing
This lack of structure created uncertainty and undermined trust between depot operators and users.
The 20% Compromise: A Win-Win-Win Solution
The negotiated settlement addresses concerns of all parties while establishing a path toward long-term stability.
Benefits for Depot Owners
Immediate Revenue Relief
- 20% increase provides partial cost recovery without full relief
- Estimated additional revenue: Tk 200-300 million collectively across all depots
- Helps cover most pressing cost increases (labor, energy)
Legitimization Through Standardization
- International consultant study will provide independent validation of cost structure
- Creates transparent framework for future adjustments
- Removes stigma of "arbitrary pricing"
- Builds credibility with users
Long-term Sustainability
- Standardized tariff ensures periodic reviews based on objective criteria
- Protection against prolonged cost-revenue mismatches
- Industry stability attracts investment in capacity expansion
Benefits for Exporters and Users
Manageable Cost Increase
- 20% instead of 81% is $30-40 per container instead of $120-160
- Can be absorbed without major competitive damage
- Provides time to adjust pricing with buyers
Predictability and Transparency
- Six-month timeline provides planning certainty
- International consultant study ensures fair, market-based pricing
- Future adjustments will be formula-based, not negotiated under crisis
Maintained Competitiveness
- Bangladesh depot charges remain competitive regionally
- No shock to export pricing
- Preserves buyer confidence in Bangladesh supply chain
Benefits for Bangladesh Trade Ecosystem
Crisis Averted
- Service stoppage would have disrupted $4-5 billion in monthly exports
- Maintained buyer confidence in Bangladesh reliability
- Protected tens of thousands of jobs in export sector
Structural Reform
- Establishes precedent for evidence-based tariff setting
- Creates model for resolving similar disputes in future
- Strengthens overall logistics governance
International Credibility
- Shows stakeholder collaboration capability
- Demonstrates government commitment to export competitiveness
- Sends positive signal to global buyers and investors
What the International Consultant Study Will Examine
CPA's commitment to engage international logistics consultants is the cornerstone of long-term resolution. Here's what this study is expected to cover:
Regional Benchmarking
Comparative Analysis of ICD/CFS Charges:
India
India's larger market and competition keeps rates lower
Sri Lanka
Scale and efficiency can reduce unit costs
Vietnam
Investment in technology pays off
Thailand
What value additions justify higher prices?
Regional Comparison Summary
* All figures in USD per TEU/Container
Cost Structure Analysis
Detailed breakdown of depot operating costs:
Fixed Costs
- Land/rent amortization
- Equipment depreciation
- Insurance
- Management salaries
- Regulatory compliance
Variable Costs
- Labor (per container handled)
- Energy consumption
- Equipment maintenance
- Consumables
Semi-Variable Costs
- Security
- Administrative overhead
- IT systems
Efficiency Assessment
Operational Productivity Metrics:
Equipment Utilization
- Reach stacker hours of operation vs. idle time
- Containers handled per equipment unit per day
- Maintenance downtime percentages
Labor Productivity
- Containers handled per worker per day
- Comparison to international benchmarks
- Opportunity for automation
Space Utilization
- Ground slot efficiency (containers per acre)
- Vertical stacking optimization
- Dead space reduction opportunities
Dwell Time Analysis
- Average container dwell time at depots
- Free time policies vs. regional norms
- Revenue optimization through better detention charge structures
Technology and Modernization Gaps
Assessment Areas:
Yard Management Systems (YMS)
Current adoption level and optimization potential
Automation Potential
Automated stacking cranes, AGVs, and smart systems
Digital Documentation
Moving from paper-based to digital processes
System Integration
Integration with port and customs systems
Track-and-Trace
Real-time visibility capabilities
Investment Requirements
If efficiency improvements require modernization, consultant will recommend:
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Pricing Formula Development
The consultant will develop a transparent, formula-based pricing mechanism that includes:
Base Cost Components
- Weighted average of verified operational costs
- Reasonable profit margin (typically 12-15% in logistics industry)
- Efficiency factor (penalties for below-benchmark performance)
Adjustment Mechanisms
- Annual inflation indexing (tied to Bangladesh inflation rate)
- Currency adjustment factor (for USD-denominated costs)
- Volume-based discounting (encouraging growth)
- Service quality metrics (rewards for reliability and speed)
Review Periodicity
- Annual cost review with minor adjustments
- Comprehensive review every 3-5 years
- Emergency review mechanism for extraordinary circumstances
Simplified Pricing Formula Structure:
Governance Framework
Recommendation for Ongoing Oversight:
Joint Committee Structure
Depots, users, CPA, and ministry representatives
Dispute Resolution Mechanism
Formal process for addressing conflicts
Performance Monitoring
Regular reporting and transparency
Penalty Provisions
Non-compliance consequences