Beware of unscrupulous customers using port detention as an excuse to delay payment!

Chittagong, Bangladesh, known as the "world's largest congestion", has experienced severe congestion due to the impact of the Eid al Fitr holiday that began on June 4th. Unexpectedly, the house leak happened to be accompanied by continuous night rain. Last Friday (June 14th), a container ship collided with an outgoing oil tanker while entering Chittagong!

It is expected that there will be a significant delay in the export of goods to Bangladesh in the near future. Please be prepared by freight forwarders and shippers.

At present, Jida Terminal receives approximately 3000 to 4000 Teu of imported containers per day, and is currently transporting 1000 to 1200 Teu. The Chittagong Metropolitan Chamber of Commerce and Industry (CMCCI) issued a statement expressing concern about the serious congestion problem in Chittagong and hoping that government departments such as the Chittagong Port Authority can resolve it as soon as possible.

Md Omar Faruk, Secretary of the Chittagong Port Authority, stated that the number of imported containers will increase during each Eid al Fitr period. Due to a large number of ships queuing up to enter the port, and the inventory of imported cargo containers is no longer sufficient, congestion may further worsen.

It is reported that due to the recent Eid al Fitr holiday and traffic congestion between Chittagong and Dhaka, the speed of cargo dredging in Chittagong has significantly decreased. 44 cargo ships are still stranded at the anchorage waiting for unloading, and Chittagong's import containers have piled up like mountains.

To accelerate the speed of customs clearance for imported goods, Bangladesh will implement a new policy: pre declaration of manifest. Starting from July 1st, the Bangladesh National Taxation Bureau requires the submission of complete electronic shipping agent manifest information (including MBL+HBL combination information) 24 hours before the departure of the last port of call.

However, the distant waters cannot save the nearby fire, let alone the fact that oil is still pouring on the fire - on the morning of June 14th local time, a container ship named X-press Mahananda collided seriously with the departing oil tanker BURGAN while entering Chittagong, resulting in the closure of the already busy waterway for up to 3 hours.

The only fortunate thing is that the container ship X-press Mahananda is a public vessel that shuttles between Chattogram (Chittagong) and Colombo (Colombo Port), and there may not be many Chinese goods on board.

Chittagong is the largest and busiest port in Bangladesh, and it is also the trade gateway of Bangladesh, handling approximately 92% of the country's import and export trade. Here is a special reminder to beware of illegal Bangladeshi merchants using the pretext of demurrage and defaulting on payment.

Because Bangladesh Customs has a regulation:

If the goods remain at the port for more than 3 months (45 days for fruits and vegetables) without customs clearance, the goods will be auctioned by the customs, and the original buyer has the right of first refusal. The auction proceeds will be turned over to the national treasury. Goods that have arrived at the port must be returned or resold with the consent of the original buyer.

Chinese suppliers who have previously exported to Bangladesh have encountered unscrupulous buyers who have maliciously fraudulently used "port detention":

Seller A will ship the goods to Bangladesh in May, with a payment method of deposit+final payment, with the final payment being half of L/C and half of T/T. When the goods were about to arrive at the port, A urged buyer B to collect the final payment for the T/T portion, while B delayed payment due to demurrage and inability to clear customs. A believes it as true.

Shortly after, B stated that the issue of demurrage had been resolved, but there were other containers that had not been brought up before, resulting in a shortage of funds. He hoped to hand over the letter of credit to him first and pay the remaining balance within 1-2 weeks after receiving the goods. Due to the high risk, A has not agreed. Afterwards, B delayed payment due to reasons such as not working during Ramadan.

Until a month later, B Tu was in dire straits and said he had no money to pay. He offered A a little compensation and let A handle the return shipment on his own.

At this point, helpless A made a concession, stating that he could pay a portion of the final payment first and wait for the customer to have the money before paying the remaining amount. But B directly requested a 20% price reduction, otherwise we wouldn't want this batch of goods!

A stated that they want to force delivery and discuss the discount later. But B is also very strong, saying that if they do not agree to the discount, they will refuse to pay the letter of credit on the grounds that the deadline for presenting the documents on the letter of credit does not match. The delivery deadline is 21 days after shipment, which has already passed

At this point, A has actually entered the tiger's mouth and is left to be slaughtered by B. As long as we delay for a few more days and wait for the goods to remain at the port for more than 3 months, we can auction them back at a low price

Furthermore, do not assume that payment by letter of credit in Bangladesh is foolproof.

According to the relevant regulations of the Central Bank of Bangladesh on foreign exchange management, except for special circumstances, external payments for imports and exports generally must be made through bank letters of credit. But the letter of credit issued by the Bank of Bangladesh needs to be carefully considered by our foreign traders. There is a joke that goes like this: there are two types of letters of credit in the world, one is a letter of credit, and the other is a letter of credit from Bangladesh.

Many local commercial banks have poor credit standing for their letters of credit for external payments, and issuing banks do not operate in accordance with the Uniform Customs and Practice for Documentary Credits (UCP600). Even some top ranked banks often violate UCP600 regulations due to relocation of customers.

In the business of Chinese companies exporting to Bangladesh, there is often a situation where payment is not made on time under the normal presentation of letters of credit. This situation mainly occurs in the export of fruits and vegetables (ginger, apples, garlic), chemical products, and textile raw materials. The proportion of some importers and issuing banks with poor reputation who use picky documents to unreasonably refuse payment is as high as 100%!

On January 20th, my embassy in Bangladesh issued a notice warning of the significant risks posed by The Farmers Bank Limited in Bangladesh.

The delay in Chittagong is significant, and a new policy will be implemented starting from July! The list of banks with poor reputation in Bangladesh cannot be accepted by L/C either!!

Banks with poor credit in Bangladesh include:

Islam Ban kBangladesh Limited

Social Investment BankLtd

Mutual Trust Bank Ltd

Mercantile Bank Ltd

Bangladesh Krishi Bank (State owned Bank)

Sonali Bank (State owned Bank)

Asia Bank

Janata Bank (State owned Bank)

Soundhead bank Ltd

Uttara Bank Ltd

The Farmers Bank Limited

We need to strictly review the letter of credit to ensure that there are no discrepancies. If any discrepancies are found, the certificate must be changed before delivery, especially the delivery date, to comply with the provisions of the letter of credit. Even if the customer requests to accept documents with discrepancies, it cannot be accepted. We insist on changing the certificate before shipment. In addition, sufficient time needs to be allowed for shipment and delivery of documents.

Sometimes, doing foreign trade is like this, and if one is careless, it may result in a year-round harvest. It can only be said that there should be no sense of luck with the payment red line. The earlier you take action, the greater the initiative.

Source: Shipping information, compiled and published by the Lianying team, hacked and deleted.