BANGLADESH: Damco seeks bank help on sea-air shipments
Global freight forwarder and logistics services provider Damco is seeking help from the central bank of Bangladesh to resolve payment difficulties around its sea-air shipment business.
Damco Bangladesh provides logistics services to global retailers including H&M, Wal-Mart, Sears, JC Penney, Tesco, Target and Macy's - and is represented locally by foreign-owed subsidiary APM Global Logistics (Bangladesh) Limited.
The company has developed an innovative multi-modal transport solution - called sea-air - which has been popular with Bangladesh garment exporters during recent stoppages due to strikes and political unrest.
The sea-air product combines two separate transaction modes in one solution. It shortens the transit time in case of late production allowing the exporters to retain business and avoid penalties, the company says.
Firstly, goods produced in Bangladesh for export are consolidated in a warehouse in the country's port city Chittagong, and sent by container ship to Dubai. The goods are then re-consolidated into air-pallets and airlifted to the final destination countries, particularly in Europe and North America.
In Bangladesh, exporters pay Damco in the local currency for total sea-air shipments. But the airfreight leg has to be settled in US dollars in Dubai in line with the International Air Transport Association (IATA) rules and regulations, the company said in a nine-page paper submitted to the central bank.
Currently, Damco Bangladesh is not allowed to remit US dollars to settle the airfreight, and exporters are not allowed to settle it directly, as the cargo leaves Bangladesh on an original bill of lading (OBL), according to the paper.
Talking to just-style, a senior official of APM Global Logistics Bangladesh said sea-air is comparatively cheaper than pure airfreight, securing higher profits and more foreign exchange earnings for Bangladesh exporters.
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