- 14 -

1. Historical Background of Chittagong Port

As an organization Chittagong Port has been in existence more than 120 years although the name and composition of the port management body had changed from time to time. A statutory body for management of the Chittagong Port was first established in 1888 under the Chittagong Port Commissioners Act 1887 (Bengal) which came into effect on 25th April, 1888. The port was administered jointly by the Port Commissioners and the Port Railway. To do away with the dual administration of Port Commissioners and Port Railway, the Port Trust was formed in July 1960. The government promulgated the Chittagong Port Authority Ordinance in 1976 and thus Chittagong Port Authority came in existence

The history of Chittagong Port can be traced back to the 4 th century BC. During the 9th – 15th

century AD, Chittagong was known as ‘SHETGANG’ to early European mariners. In the 16 th

century Portuguese sailors took great interest in the locality around Chittagong which was then popularity known as ‘PORTE GRANDE’. The port was established at its present location in 1887. By 1910, four jetties were constructed to handle 0.5 million tons of cargo annually. Since then the port has grown gradually to its present shape.

Introducing Chittagong Port

SHETGANG

The history of Chittagong port dates back to the fourth century B.C. Although the political status of Chittagong and its region in pre-historic time is rather sketchy, but the periplus of the Erythrean Sea documents a vivid picture of the Port of Chittagong. The Yemeni and the Arab traders of Babylon of ancient time used to trade with Greece, Macedonia and in the East with India, Java, sumatra and China. For the purpose of trade they used to call at the Indian ports of Surat, Cochin, Tamralipta and Chittagong. According to Ptolemi, the famous historian, Chittagong was one of the finest port in the near and far east at that time. Malayan history bears that the greatest sailor Buddha Gupta sailed from Chittagong to Malya in the 4th century B. C. Chittagong derives its name from the Arabic word “Shetgang” (shet-Delta, Gang-the Ganges). The Arab traders considered Chittagong to be the delta of the Ganges.

According to the works of Fa-hien, Hieu-en tsng, lbn Battuta, the port of Chittagong mingled with the ancient civilization of the world. Chinese, Turkish and traders from the Middle East and Europe used to trade with this part of the world through the port of Chittagong. Due to the southern part of Chittagong having emerged gradually from the Bay of Bengal, the actual site of the Port changed from time to time.

SAMUNDA

During the 9th century the Muslim traders from Arabia and Yemen started using the port of Chittagong as their base port and its control remained in their hands for quite sometime. During the period the activities of the Port increased tremendously and name and fame of the port reached far and wide. The Port was developed so much by the Arabians that within a period of 100 years she surpassed the great Port of Tamluk. The Arabs called the Port “Samunda”.

In the year 1517 Joaoda Silveria, the first Portuguese Captain reached the Port with his ship “LOPO SOANA” and the year 1526 marked the anchoring of vessels by Captain Caaz Penira at Chittagong. The third Portuguese Capitan Alfonso de Mellow landed at the Port near Chakaria in 1528. the Portuguese commanders who came to Chittagong name the Port as the PORTE GRANDE (a great Port ) and the records show the Porte Grande offered easy access and safe anchorage to ships of 20 feet draught.

- 14 -

BRITISH PERIOD

With the advancement of the British during the 17th and 18th centuries the Portuguese slowly gave way to them. The growing importance of Chittagong as a natural outlet for the Northeastern regions of the then British-India ultimately led to the enactment of Port Commissioner’s Act of 1887 which was introduced on 25th April 1888 and the commissioners for the Port of Chittagong started functioning. Four jetties were built between the period 1899 and 1910 by the Assam Bengal Railway and the Port was administered jointly by the Port Commissioners and Port Railway.

PARTITION OF INDIA

With the partition of India in 1947, the Port of Chittagong was suddenly subjected to heavy pressure of more commercial activities, being the only Port of the eastern zone of the then Pakistan. The railway and the Port immediately undertook a short and long term plan and during the fifties, nine jetties including seven new and a number of pontoon berths and moorings were constructed.

PORT TRUST

Such rapid development necessitated the reorganization of the Port Management and as a result Chittagong Port Trust was formed in July, 1960, to do away with the dual administration of the Port by the Port Commissioners and the Port Railway.

PORT AUTHORITY

Under the "Trust" system administration and quick development of the Port where not found to be picking up to meet the challenge of modernization and expansion. It was felt that more autonomy be given to the management for better administration and rapid development of the Port, hence by an Ordinance in September 1976, the Chittagong Port Authority came in to being.

PROSPECT

Port is a place where international shipping originates, terminates or transits and thereby of necessity making it highly dynamic subject to keep pace with increasing commercial and economic activities. In spite of constraints in men and material and financial limitations the Port Authority has concentrated all its attention to the development of the Port and better management so as make it the nerve centre of the economic progress. (Year Book’2008, CPA)

Historical Background’s Summary of Chittagong Port

4th Century BC : Used to be called SHETGANG. Ships from Middle East and China used this Port.

9th century : Omani & Yemeni traders landed in this Port.16th century : Used to be known as "PORTE GRANDE". Portuguese took

Great interest to use this port.1887 : Formal Port operation started from 25th April.1895-1910 : Four Jetties were constructed to handle 0.5 million tons of

Cargo. Port used to be administered jointly by Port Commissioners and Assam-Bengal Railway.

1960 : Chittagong Port Trust was formed.1976 : Chittagong Port Authority was formed.(Source: Chittagong Port Authority)

- 14 -

2. Contribution of CP in the Economy of Bangladesh

The Chittagong Port is the principal seaport of Bangladesh handling about 92% of import-export trade of the country. as such its importance in the national economy is paramount. The Chittagong Port Authority (CPA) is a basic service provider. Its objective focuses mainly on providing necessary services and facilities to the port users efficiently and effectively at competitive prices. With the economic growth of the country and government response towards globalization / trade liberalization, cargo handling at Chittagong Port has been rising sharply. Because of the steady growth in the volume of container arriving at the port, the port authority has been implementing various programmes in phases for creation of infrastructure facilities and procurement of handling equipment for container and containerized cargo. Some recent reforms initiatives undertaken by the port authority resulted enhanced growth in productivity & efficiency of the port including reduction in ship’s turn around time and container’s dwell time.

Chittagong port is the largest and main port of the country catering to 85% of imports trade and 80% of exports including the bulk of Bangladesh’s export-garments. Between 1990 and 2004, the share of trade in GDP doubled. An inland container Department (ICD), located in the capital city of Dhaka, operates under the Chittagong Port Authority. The second port is located in the Southern part of the country and is known as Mongla port. This port handles about 13% of exports and 8% of import into the country. The recent reform measures implemented by the government have seen the operational efficiencies of these two ports in terms of reduction of turn-around times of ships and container handling improve significantly.

During the year 2008 Chittagong Port handled 30.08 million metric tons of cargo including 1,069,999 TEUs containerized cargo which is around 92% of total maritime trade of Bangladesh. The GDP growth of Bangladesh economy is around 6-7% while the container traffic contribution to the national economy is remarkable. To meet the challenges of globalization and liberalization of world trade and economy, Chittagong Port has under taken many ambitious projects to enhance its capacity, improve efficiency and quality of service and also to develop adequate facilities to turn itself into a world class regional port.

As you all know, increasing both the port operations and the inland transportation system has long been a concern of the Government. The development partners are available, willing and ready to support these actions. Bangladesh’s Poverty Reduction Strategy gives high priority on infrastructure, specifically on power and transport, to achieve the country's economic growth and poverty reduction goals. The World Bank’s Country Assistance Strategy 2006-2009 also envisages increased support to infrastructure, with a focus on capacity expansion and improved governance.

The long-standing and multi-facet problems of Chittagong Port are well known to all: slow vessel turn-round times, low labor productivity, high number of trade-unions counterparts, restrictive and corrupt practices, poor onward connection, etc. In that context, the recent actions taken by last the Caretaker Government have contributed to dramatically reverse these trends, introducing important and rapid improvements in all aspects of the port activities:

1. The statistical evidence is showing that the Chittagong Port efficiency has increased by 30% and the cost of doing business here is already 40% lower. (www.worldbank.org)

- 14 -

2. In parallel, the overall shipping charges for in-bound cargoes have decreased significantly after cancellation of terminal handling charges. A private operator is now in charge of operating the Chittagong Container Terminal (CCT) which has helped improve the overall handling operations.3. The average turn around time of ships is about 3 days now, compared to 11 days even in January 2007. Although, the measured turnaround times by competitors, for example the private terminals at Karachi have an average vessel turnaround time of 16 hours and container vessels at general cargo berths require only 21 hours. Hence, there is still room for improvement in port operations. Available data on container handling charges suggests that the cost at Chittagong Port is much higher than ports in Karachi, India, and others in the region. (www.worldbank.org)

4. The port has the facilities for anchoring 10-12 ships at those three terminals at a time. The Chittagong Container Terminal (CCT) has the most sophisticated equipment, quay gantry cranes (QGC), for handling containers. The four QGCs were installed last year, at a cost of Tk 150 crore. The container handling at the CCT has been accelerated after installing sophisticated cranes. The ship-to- shore crane is used for unloading containers directly from a ship and keeping it in a certain place on the shore. This sophisticated crane has been imported from Japan. Japanese technicians installed it at the terminal and gave training to the local operators for running the cranes.

5. The CP has contributed to the business in Bangladesh and stimulated setting up of several container yards, expansion of port facilities to handle large container carrying trains, increase of cargo handling and storage facilities. RMG manufacturers also extensively use services of Clearing & Forwarding Agents for the purpose of customs clearance of inputs and finished goods. It is estimated that port usage fees earned from the RMG sector account for more than 40% of the income of the port authority.

6. The existing inland transport distribution system for containers in the country also needs to be improved significantly to help the port operate efficiently. The inland distribution system for transport of containers in Bangladesh currently depends mainly on road and partially by rail.

7. The DataSoft (Custom House Automation Project) Managing Director Mahbub Jaman told me that, the Chittagong Port contributes to the government exchequer both directly and indirectly. CPA earns USD 2.4 million to the government as direct taxes last financial year.

8. Finally, it is encouraging to know that the Government is planning to construct a river based ICD at Pangaon, Dhaka. The rail ICD, near Tongi, which is planned to be supported by the World Bank, will relieve congestion at the existing Kamlapur Railway ICD. The Bank will also appreciate operation and maintenance of this new ICD by the private sector.

There is also an urgent need for institutional reforms of the Chittagong port. The gradual changes to management structure of the port under the Landlord Model will make it more efficient and effective, with a stronger regulatory role. In addition, the recently introduced Automated System for Custom Data (ASYCUDA++) could be further simplified to allow an efficient handling and transit of legal import-export trade flows. Grameen Bank chief Prof. Muhammad Yunus after winning the noble prize has been advocating for opening up the Chittagong Port for the foreign direct investment.

- 14 -

To improve the public sector operator’s efficiency through the introduction of more competition from the private sector operators, it is important to finalize the Supply Operate and Transfer (SOT) concession for the New Mooring Container Terminal (NMCT) and hand over its operation and management activities to the private sector as soon as possible.

The functions of the authority shall be-1. To manage, maintain, improve and develop the port;  

2. To provide and maintain adequate and efficient port services and facilities in the Port

or the approaches to the Port.

3. To regulate and control berthing and movement of vessels and navigation within the

Port;

4. To do such acts and things as may be necessary or convenient to be done in connection

with, or incidental or conductive to, the performance of its functions under his

Ordinance. (CPA website)

Statistical Information:Major Imports & ExportImport: Food grain, Cement clinker, Sugar, Salt, Fertilizer, General cargo, Iron Materials, Chemicals, Coal and Edible oil etc.Export: Ready Made Garments, Knitwear, Fertilizer, Jute & Jute Products, Hides and Skins, Tea, Naphtha, Molasses, Frozen foods etc.

Cargo HandledCalendar Year Import (Tones) Export (Tones) Total (Tones)

2004 1,94,13,460 24,58,972 2,18,72,432

2005 2,29,89,122 28,95,769 2,58,84,891

2006 2,39,36,103 30,89,550 2,70,25,653

2007 2,42,36,261 33,92,974 2,76,29,235

2008 2,44,92,707 37,04,862 2,81,97,569

Containers Handled

Calender YearChittagong Port(TEUs)

Cargo (Tones)

Dhaka ICD (TEUs)

Cargo (Tones)

2004 6,88,771 65,55,885 68,567 4,36,088

2005 7,83,353 76,95,431 78,660 4,83,440

2006 8,76,186 85,17,130 77,567 3,25,305

2007 9,58,020 96,06,032 80,714 3,31,216

2008 10,69,999 102,16,055 82,458 4,34,628

Vessels Handled

- 14 -

Calendar Year No. of Vessels

2004 1764

2005 1892

2006 1957

2007 1945

2008 2099

Turn Around Time of VesselsPeriod Called VSL Sailed VSL Cont VSL Bulk VSL Lighters VSL

2002 1622 1602 620 982 3

2003 1719 1720 659 1061 14

2004 1858 1764 691 1073 0

2005 1982 1892 744 1148 0

2006 2078 1957 851 1106 -

2007 2050 1945 946 999 -

2008 2257 2099 962 1137 -

( Source: Chittagong Port Authority )The modernization of the Chittagong Port and other Ports is critical for Bangladesh’s economy. This will require well-coordinated efforts of the Government, Port management and labor, and donor partners. A better port service is the basis for a growing market share which is in Bangladesh’s best interest.

3. Existing Structure and Modus Operandi of CPThe port of Chittagong is the principal port of the People’s Republic of Bangladesh. It is situated on the bank right bank of the river Karnafuli at a distance of about 9 nautical miles from the shore line of the Bay of Bengal. River Karnafuli rising in the Lushai Hill falls in the Bay of Bengal after taking a winding course of 120 nautical miles through the districts of Chittagong Hill Tracts and Chittagong.

SEWARD LIMIT: With patenga Beacon as centre an arc is drawn seaward with a radius of 5½ nautical miles till it intercepts the coast line at positions: Lat 22º18’45’’ N. 91º46’30’’ Ein the north and Lat 22º08; 13’’N. Long 91º50’00’’ Ein the South, the area enclosed within the extremities of the arc will from the Seaward limit of the port of Chittagong.

UPPER LIMITS: Upper limits of the river water are formed by two straight lines, one drawn across the Karnafuli River in the North by joining the two pillars located at:-Lat : 22º24’33” NLong : 91º54’30”E andLat : 22º24’56” NLong : 91º54’11”Eand the other by joining the two pillars located at:-Lat : 22º25’07’’ NLong : 91º53’18” E andLat : 22º25’07” N

- 14 -

Long : 91º53’10” EThese limits include so much of the sea and of the River Karnafuli and the River Halda and the area that lie within 137.162 Meter, of high water Make at ordinary spring tide and the docks, warehouse, sheds, railway line and yards within the limits of the bounded area and such other area outside it as included in the Schedule iii of the Chittagong Port Act.

The seaward approach to the Port of Chittagong may be considered to e northwards of 10 fathom contour in latitude 20º24” North and longitude 91º3” East. The distance to the pilot ground from the south patches shoal being 46 nautical miles on direct course.The Port has the following recommended Anchorage Grounds:- ANCHORAGE “A” is formed by extending 2 (two) lines upto Port limit, one (1st) having bearing 337º45’ and the other4 (2nd) 310º30’ from the point having lat 22º12’ 30” N and long 91º47’ 00” E.ANCHORAGE “B” is formed in between 2nd and 3rd line having bearing 234º extended upto Port limit from the previous point.ANCHORAGE “C” is between 4th and 5th line having bearing 234º & 157º respectively, extended upto Port limit fro a point of lat 22º12’ 00” N and long 91º47’ 12” E.The space between 3rd and 4th lines is prohibited anchorage.“A” Anchorage is for vessels over 30ft draught.“B” Anchorage is for vessels entering the Port within 24 hours.“C” Anchorage is for vessels lightering and other vessels not scheduled to enter the Port within 24 hours. (Year Book’2008, CPA)

STORAGE FACILITIES

Within Protected Area No(s). Sq. MetersTransit Sheds 1-9 9 52,000Warehouses D, E, P,O 4 26,700Car Sheds 2 5,000Open Dumps - 90,000Outside Protected AreaWarehouses 6 32,500Open Dumps - 2,00,000Food Department (Grain Silo), T.S.P. Complex, Cement Clinker Grinding Company& Oil Companies have their own storage facilities (covered & open) adjacent to their berths.( Source: CPA An Overview, 2010)

FACILITIES

Jetties and Moorings :For Ocean-Going Vessels:

General Cargo Berths ----------------- 10

Container Berths ----------------------- 6

Specialized Berths for Bulk handling:

Dolphin Oil Jetty (For POL) ----------1

Grain Silo Jetty ------------------------ 1

Cement Clinker Jetty ------------------ 1

- 14 -

TSP Jetty ------------------------------- 1

CUFL Jetty ----------------------------- 1

KAFCO Urea Jetty -------------------- 1

Ammonia Jetty ------------------------- 1

Repair Berths :

Dry Dock Jetty ------------------------- 2

Mooring Berths :

River Mooring --------------------------9

For Inland Coasters and Vessels:

Jetty Berths (For (POL) -------------- 1

Concrete Berth (For Grain Handling)- 1

Pontoon Berths (For POL) ------------- 3

Pontoon Berths (For Cement) ----------1

Single Point Mooring ------------------- 10

( Source: Chittagong Port Authority )

OPERATIONAL INDICATORS

Indicators TargetAchievements

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

A. Turn around time of vessels (days)

5.10 4.76 4.24 4.57 4.93 6.38 5.07 5.51

B. Throughput per ship day

Container (Boxes) 200 177.91 206.40 228.21 239.83 226.53 290.17 364.27

General Cargo (Tons) 800 1239.67 1306.74 1686.24 1827.63 1563.70 1564.28 1593.94

C. Productivity per gang hour

Container (No.) 15 12.05 11.41 11.56 12.11 13.26 14.42 15.11

General Cargo (Tons) 20 25.15 26.60 26.15 28.25 30.29 30.15 29.12

D. Equipment availability (%) 70 66.08 68.98 66.76 49.94 47.68 44.61% 44.78

E. Waiting time of Ship (day) 2.50 1.12 2.42 1.96 1.44 1.64 2.47 3.53

F. Service time of Ship (day) 4.00 3.18 4.25 5.62 4.35 5.04 4.33 4.51

G. Berth occupancy (%) 70 67.93 71.76 68.23 69.38 86.29 66.15 62.21

( Source: Chittagong Port Authority )

- 14 -

FINANCIAL INDICATORS

IndicatorsAchievements

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

A. Capital Structure & Liquidity ratios:

i. Debt Equity Ratio 0.0026:1 0.00 0.00 0.00 0.00 0.00

ii. Current Ratio 1.45:1 1.13:1 1.26:1 0.95:1 0.78:1 0.83:1

iii .Quick Ratio 1.26:1 1.02:1 1.14:1 0.95:1 0.78:1 0.83:1

B. Productivity Ratio:

i. Turnover of Total Assets (Time) 0.18 0.16 0.17 0.17 0.17 0.19

ii. Turnover of working Capital (Time) 5.34 13.41 7.76 - - -

( Source: Chittagong Port Authority )

There is one public sector inland container depot (ICD) that is located in Kamlapur, Dhaka. The main purpose of the depot is to ease container congestion at the port jetty. The container is brought to Kamlapur in Dhaka directly by train immediately after being unloaded from the ship. The goods are released from the depot. The export cargo is also stored at the depot. The government also allowed private entrepreneurs to set up inland container depots. A total of 10 private depots have been established in private sector located at different places near Chittagong port.

The container handling at the lone public sector ICD at Kamlapur, however, is facing various problems due to inefficiency of the private handling company. The government had appointed Global Agro Trade Company (GATCO) for handling the container at the depot. The company showed inefficiency in handling the containers, as the handling equipment it installed there often.

4. Automation of Customs in Chittagong PortChittagong Custom House is the country’s main export-import hub. Under the National Burro of Customs, Chittagong Custom House (CCH) collects the indirect tax. In the national economy of our country it plays a vital role. During the current financial year targeted tax is about Tk.45, 000/ crore.

The much-awaited automation system for collecting taxes of imported goods launched at Chittagong Custom House from 6th Oct, 2008. Last Chief Adviser Dr Fakhruddin Ahamed inaugurate the automation system at Chittagong Custom House as chief guest.

The Way to Automation The World Bank funded Bangladesh Export Diversification Programme (BDXDP) project included a Customs Administration Modernization (CAM) programme as a sub-component, aiming at customs reforms, trade and tariff policy reforms. Earlier, UNCTAD helped install the Automated System for Customs Data (ASYCUDA++) for electronic data control. These initiatives were later followed by a host of measures put in place to expedite the customs automation system.

Major Steps towards Customs Automation in Bangladesh Year

Automation measures

- 14 -

1992 Introduction of ASYCUDA at the Dhaka Customs House (DCH)

1996 Introduction of ASYCUDA at Chittagong Customs House (CCH)

1999 Initiation of the Customs Administration Modernization Project-1

2001 “ASYCUDA++ Migration Project” designed to interface the ASYCUDA++ software with the computer system at five Customs Houses in the country.

2003 Introduction of direct trader input (DTI)

2008 (August) Initial automation of CCH; operation of Import General Manifest (IGM) and Export General Manifest (EGM) launched

2008 (October) CCH Automated; full operation started on 6 October 2008

2008 (October) Dhaka Chambers of Commerce and Industry sign a contract with DataSoft Management Services for the automation of DCH.

2009 (May) DCH Automated; (yet to begin full operation) (Source: Hossain, S.S., Deb, U., and Alamin, M. 2009)

Bangladesh has gone a long way towards modernizing its customs administration through massive computerization of customs offices and complete automation of customs procedures. The process began with the automation of clearance procedures at the Chittagong Custom House, the biggest customs station in the country that handle more than 85% of total volume of import and more than 80% of total volume of export of the country. This was done with the introduction of Version 2.0 of ASYCUDA (Automated System for Customs Data), a software developed and designed by UNCTAD, in 1994. This was followed by the supply of adequate number of computers to the Chittagong Custom House under the ETAC (Excise, Tax and Customs) Data Computerization project adopted by the NBR. The computerization and automation process later expanded to other major customs stations. Today the ASYCUDA System is being used by all the Custom Houses in Bangladesh- namely, Chittagong, Dhaka, Benapole and Mongla. This, in other words, imply that about 90% of the volume of trade (both import and export) of the country are actually fully automated by now. The National Board of Revenue has a plan to introduce the system at 4 Land Customs Offices in January and at 2 more LCOs in June next year, thereby expanding the coverage of automation to more than 95% of the total volume of trade in the country. Such computerization and automation programmes were carried out under various modernization projects undertaken by the NBR with funds from donor agencies. These include Customs Administration Modernization Project, Modernization and Automation Project etc. While continuing its focus on modernization through automation of procedures, the Customs Administration has, over the years, also followed closely the developments made by UNCTAD, and accordingly upgraded its automation software, from ASYCUDA version 2.0 to ASYCUDA+

+ version 16.f to ASYCUDA+ + version 18.d. The National Board of Revenue has already taken steps to upgrade its system further with the latest version (ASYCUDA World). The major features of the ASYCUDA++ system used by Bangladesh Customs are-

Declaration processing Selection of Lane (Green, Yellow, Red) Assessment of Goods

- 14 -

Payment and Release of Goods Log Register of users

In the meantime, the NBR has gone ahead with its attempt to introduce a Single Window System at the Chittagong Custom House. In 2008, CCH, in cooperation with Chittagong Chamber of Commerce and Industry, has undertaken an automation project with a view to enabling the users/stakeholders of Custom House to use online facilities through interfacing. Under the purview of that project, Bill of Entry Module for online submission of customs declarations (Direct Traders Input) by importers/c&f agents, and Manifest Module for online submission of Import General Manifest/Export General Manifest by shipping agents were implemented on October 06, 2008 and August 08, 2008 respectively. Plans are on to bring other stakeholders into the process through creating more interfaces. The NBR has decided recently to introduce the system also at the Dhaka Custom House, the second most important customs station in the country. The recent installation of container scanners at the Chittagong Custom House for quick and hassle-free examination of both in- and out-bound cargo is another positive step on the part of the NBR in its efforts to modernize its customs offices and procedures. While carrying out the above-mentioned computerization and automation of customs procedures, the Customs Administration in Bangladesh was driven by the desire to achieve the following objectives:

• To reduce cost of doing business; • To empower CHC to have better control over the information flow so that CHC can take

decision based on available data; • To improve efficiency and effectiveness of the customs system; • To ensure transparency & accountability; • To ensure protection of proper revenue; • To facilitate paperless transaction on an e-trade environment; • To minimize human interference; and • To make information available to stakeholders for better trade facilitation

5. Problems at Chittagong Port The Chittagong Port is the major exit point through which exportable goods are sent abroad. The business community looks for effective support of the officials in the Port for outflow and inflow of their goods. They go to different sections of the port for obtaining clearance before loading exportable goods on ships. Their experiences in the port areas are quite diverse. Some executives of export-import companies have raised allegations against some officials, who take bribe before giving necessary orders and clearances.

Exporters reportedly have to go to over 30 different desks for obtaining necessary support for export clearance. Officials at such desks normally try to delay the process, sometimes for days. As a result, the transfer of exportable goods, including finished garment, to ultimate buyers in different countries also gets delayed. Some buyers of readymade garment cancel their deals and go for deals with exporters from other countries. The same allegations await due attention from officials in the Chittagong Port and higher authorities in the country. (“Problems at Chittagong Port”, 2006)

Chittagong Port is a tidal port. The ships have to cross a nine nautical mile long channel for anchoring at the terminal. The ships can move on the channel only during high tide. Chittagong

- 14 -

port now has three terminals. General yard for anchoring bulk carrier ships, container terminal for anchoring container ships, and a newly built newmooring container terminal (NCT).

The port suffers from major inefficiencies compared to regional competitors and is a significant bottleneck in the economic development of the economy. A recent report compiled by the Asian Development Bank cites Chittagong port as having: “Overstaffing, labour strikes, cumbersome customs procedures, outdated and inefficient work rules, outdated and inflexible management”.

The garment manufacturing sector in Bangladesh is the major exporter. Those in the sector have already paid due rates and taxes to the treasury. They have enabled the fiscal authorities to bear the burden of increased revenue expenditure. Surplus resources are used for development of different sectors of the economy. Proper use of the facilities in Chittagong and other ports in the country is all too much important. The increase in export and import deals in coming years has to be property handled at all points including the ports at Chittagong, Mongla and Cox's Bazar.

The ministry-centric port management system is a complex bureaucratic process. It leads to unnecessary delays and opens up opportunities for wielding political influences. The CPA has to depend on the ministry for sanctions and advices on important decisions. As a result various complexities arise with regard to delayed decision-making, increasing the harassment of port-users.

Workers organizations operating at CP at the backing of different political organizations and kept the port hostage for fulfilling their self-interests and even on a trifling ground they resorted to suspend booking and enforcing blockade and strike. Moreover, uncontrolled workers' organizations disrupted normal port activities and led to indiscipline and manifold hassles and sufferings to the port users. It hampered proper planning process of the Port Authority and its implementation. (Financial Express, 2009)

Chittagong Port and Customs both these offices are require educated, experienced, and skilled manpower, which is necessary for operating highly technology dependent environment. Because I am an employee of Chittagong Automation Project, I found that many officials working in Chittagong Customs House cannot verify import-export documents and cannot operate computers by running new Automation System, ASYCUDA++ software without the direct cooperation of DataSoft (Automation Project software developer).

329.48 acres (which is 19% out of total 1708.63 acres) of land belonging to the port is currently under illegal possession. Of these, 232.31 acres are under possession of government/semi-government offices, 1.95 acres under trade unions or clubs and 95.22 acres under illegal possession of local people. (TIB Report, 2007)

The updating of the facilities and services in the major ports and the transport sector is all too much important in this context. Modern equipment including computerized working systems in offices has to be installed without loss of time. The prevailing problems vis-à-vis delays in the movement of ships and other facilities including containers have to be removed. Beyond that, preventive and curative measures for facing natural calamities that affect the port facilities have to be taken on a long term basis. Ports have to be made efficient channels of inflow and outflow of commodities for the business community, who contribute to the growth of the economy to expand their activities.

- 14 -

6. Conclusions and Recommendations The country’s containerized trade has defied the global economic meltdown as the premier seaport Chittagong achieved an 8.55 per cent container handling growth in the last calendar year. Shipping circles said this was mainly because of the rise in import volume. The Chittagong port, the principal port of the country, handles 92 % of the export-import trade worth US$37 billion. The port handled 1,161,469 TEUs (twenty-foot equivalent units) in 2009 against 1,069,999 TEUs, port statistics shows. Of them, the number of import (including empty) containers was 584,176 TEUs in 2009 against 531,954 TEUs in 2008. Export containers (including empty) totalled 577,293 TEUs against 531,954 TEUs in 2008. A total of 940 feeder vessels carrying containers called at Ctg port in 2009 against that of 962 in 2008. Shipping circles said the large-sized feeders have replaced small vessels. The Chittagong port’s turnaround time or ships dwelt time, an indicator of port’s performance, was on an average 2.48 days in 2009.Turnaround time of vessels was more than 10 days during the fag end of 2006 when political chaos prevailed in the country. (Haroon, 2010)

It is unlikely, simply because of its geographical position, that Chittagong will ever be a hub port on the major world container trade routing and it is likely that it will continue to be served for the containers from the likes of Colombo and Singapore. However, CPA strategic aim should be that it becomes the internationally important central port for the region, having in mind its location and opportunities that are provided from not only a developing Bangladesh economy but also in relation to the surrounding Indian states and Nepal.

Chittagong Port is not only the major opening to the economy of Bangladesh, but there is no second installation in Bangladesh equal to Chittagong considering its strategic, economic and political importance. The Port is a place where international shipping originates, terminates or transits and thereby of necessity making it highly dynamic venue which will keep pace with increasing commercial and economic activities.

The working situation in the port that existed in the port before January, 2007, and the fundamental reasons that promoted that situation, must not be allowed to return. Equally, the improvements that have been made in the last 12 months must not be allowed to be lost. To this end it is recommended;

1. CPA must be re-organized to provide an effective, firm and resolute management and be the focus for co-ordination of all port activity and development. The port policy should be to adopt the ‘landlord’ concept. A new Board structure and appointment arrangements will be required. Also a new management organization structure will be required that will reflect the new focus of CPA responsibilities. Legislative changes will require to the CPA constitution, regulations and bye-laws in order to bring them up to date and meet the requirements for autonomy of the new organization. A change of name for the new organization could also be considered as a demonstration of the new management. CPA will maintain direct control of all navigational matters in addition to the implementation of port health and safety, security and environmental issues. CPA will be responsible for the maintenance of good relationships across the whole port community.

2. An Inter Ministerial Working group be established to co-ordinate the various ministerial interests that might arise from the new organization. It will be necessary to link the new

- 14 -

organization with other revisions to legislation across all areas of GOB that might result from the Good Governance project.

3. The private sector should be able to invest in the port cargo handling operation facilities, working on terminal working contracts/agreements to service levels required by CPA. CPA will perform a supervisory and monitoring role on the port operations while guiding future port development. It will be necessary to ensure that the appropriate financial arrangements exist that will encourage investment from the private sector.

4. With a view to achieving more efficient Customs clearance arrangements, Customs regulations and procedures should be reviewed, including the Auction House arrangements and location.

5. As soon as possible a Port Master Plan Study by an Independent International organization should be implemented. The TOR should include a Tariff Study.

6. The recommended management advisers should be appointed. 7. There should be a Working Party comprising CPA and MOS personnel to oversee the

various stages required to move CPA from the present organization to the above new proposed arrangement. This Working Party will be a key item in the port strategic programme. The personnel issues alone will probably require that it functions for at least two years – maybe more.

In relation to Good Governance and Anti-corruption strategies, when implemented, the re-organization of CPA should provide;

• Clear lines of management responsibility and devolved authority • Shorter management chain and therefore less opportunity for interference • Quicker management response • More direct personnel regulation and control • Fewer people • Simplified tariff • Majority of port charges automatically prepared, invoiced and collected • Computer related operating systems • Monitoring with Management Information Systems • Potential for commercial competition to ensure cost effective charges

- 14 -

7. References

1. Chittagong Port Authority.www.cpa.gov.bd

2. The World Bank.www.worldbank.org

3. Chittagong Port an OverviewCPA An Overview, 2010

4. Chittagong Port Authority.Year Book’2008, CPA

5. Hossain, S.S., Deb, U., and Alamin, M. (2009). Impact of information technology in trade facilitation on small and medium-sized enterprises in Bangladesh. Asia-Pacific Research and Training Network on Trade (ARTNeT) Working Paper Series, No. 76, UNESCAP.

6. Financial Express, Jan 12, 2009http://www.thefinancialexpress-bd.com/

7. Problems at Chittagong Port. (2006, August 8)New Nation Online Edition

8. Problems and Potentials of Chittagong Port, TIB Report, 2007

9. Haroon J. U. (2010, January 12). Chittagong Port records 8.55pc growth in container handling. The Daily Financial Express. Retrieved May 20, 2010 from http://www.thefinancialexpress-bd.com/more.php?news_id=89087

10. Wikipedia, the free encyclopediahttp://en.wikipedia.org