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18 Mai 2023

Ruma Paul & Sudarshan Varadhan, Reuters

Bangladesh: Apparel suppliers to consider 'expensive' airlifts for exports in fear of discounts & cancelled orders by buyers due to delays caused by cyclone

"Apparel makers in cyclone-hit Bangladesh consider rare, expensive airlifts for exports", 19 May 2023

Apparel makers in Bangladesh are considering rare bulk exports by air to Europe and the United States, as they race to meet deadlines and avoid cancellations after a cyclone delayed shipments, caused power cuts and disrupted production...

Cyclone Mocha...left a trail of destruction that also has delayed businesses' return to normal in Bangladesh...

"We have to airlift goods now as we're missing the shipping deadline," said Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA). "We don't want to suffer losses or lose customers."

Bangladesh...has already been hit by weakening global demand, with exports falling in both March and April.

Buyers generally bear the cost of shipping. However, when goods are airlifted, all transportation-related costs are borne by the manufacturers, hurting their already thinning margins, Hatem said...

Air freight typically costs $8 to $10 per kg, according to industry players.

A large European buyer has asked one garment manufacturer to reduce delivered prices by 5% to account for the delay, an email reviewed by Reuters showed. Another garment owner...said some of his shipments had been delayed.

Power cuts in the last two months, first due to a scorching heatwave, and then the cyclone, have put more stress on apparel companies. Many factories are now running on power generators fuelled by expensive diesel.

"If this goes on, it'll be difficult to survive," said Mohammed Nasir, owner of a garment factory in the Gazipur industrial hub, north of Dhaka.

Fazlee Shamim Ehsan, vice-president at the industry body BKMEA, said if goods cannot be delivered on time buyers either seek heavy discounts or threaten to cancel orders.

"Now there are also chances of missing orders for the next season, as we are struggling to provide samples on time due to the regular power cuts," Ehsan said.