Ninety percent of Bangladesh’s edible oil market relies on imports. A significant concern for the market currently is the transportation crisis in importing these products. Due to a shortage of tankers, entrepreneurs are struggling to bring the required amounts of edible oil from Malaysia and Indonesia. The transportation cost has also increased. Importers claim that because of the tanker shortage, transportation expenses have increased by $10–15 per ton. Business leaders fear that if this transportation crisis persists, the price of edible oil could become unstable again.

Industry insiders say the current political situation, the reserve crisis, and the instability in the banking sector have prevented many businesses from making timely payments for imported goods. As a result, ships carrying goods have been forced to wait longer than expected at the ports. Additionally, smaller tankers transporting edible oil to Bangladesh often return empty, further discouraging shipping companies from operating in the region.

Adding to this, China has significantly increased its edible oil imports in recent months. India is also expected to see a rise in demand and imports for edible oil due to the upcoming Diwali festival. Given the current scenario, shipping companies find it more profitable to transport goods to China and India compared to Bangladesh. This has created a sense of mistrust among edible oil exporters and importers to Bangladesh. However, with the banking sector gradually stabilizing, shipping industry officials hope the crisis will soon subside.

Khairul Alam Suzan, director of the Bangladesh Shipping Agents Association, told Bonik Barta, “Shipping companies are more interested in routes where freight charges are higher. In countries like China and India, both demand and freight rates are higher. Meanwhile, securing ships to import edible oil into Bangladesh, which has lower demand, is already challenging. Additionally, due to the situation in the past few months, there has been uncertainty about whether products will be unloaded on time after a ship’s arrival. On top of that, small oil tankers often return empty from Bangladesh. Because of this, there has been a slight shortage of ships transporting edible oil to Bangladesh over the past one to one and a half months. But as the country’s situation improves, we expect this shortage to ease soon.”

In terms of time and transportation costs, importing edible oil from Malaysia and Indonesia to Bangladesh is both convenient and profitable. Business leaders claim that to maintain imports, they currently have to incur additional expenses. They expect that if the complications related to LC (letter of credit) payments through the country’s banking channels are resolved quickly, this temporary crisis will be alleviated.

When contacted, Biswajit Saha, Director of Regulatory and Corporate Affairs at City Group, one of the country’s leading edible oil importers, told Bonik Barta, “The majority of the edible oil in the country comes from Malaysia. Since the small tankers that transport edible oil are currently engaged in transporting goods to other destinations, our freight charges have increased by $10–15 per ton.”

A visit to the country’s largest wholesale commodity market, Khatunganj, revealed that palm oil is currently selling at around BDT 138.25-138.50 per liter, super palm oil at BDT 141.50-141.75, and soybean oil at BDT 152.20 to BDT 152.45. In the past month, palm oil traded between BDT 109.32 and BDT 131.30 per liter. Over this period, wholesale palm oil prices have risen by about BDT 6.70 per liter. In June, crude palm oil sold for $874 per ton in the global market, while in July, the price rose to $896. In August, palm oil bookings increased to $933. However, in the first week of September, booking prices surged to $1,000–1,010 per ton. Given the rise in global booking prices, business leaders expect wholesale prices to increase further.

Industry insiders indicate that changes in Bangladesh’s political landscape, issues surrounding several banks’ transactions, administrator appointments, and the ongoing dollar crisis have created some uncertainty for exporters concerning payments for previously imported edible oil. Since the formation of the interim government, suppliers have been closely monitoring the situation in Bangladesh. In addition to the rising booking prices and increased demand in several Asian countries, there is currently a temporary shortage of oil tankers heading to Bangladesh. Due to the short distance involved, small tankers (with capacities of 7,000 to 15,000 tons) are preferred for transporting palm oil, and companies are importing at higher charges due to this increased demand, according to mill owners.

When contacted, Tariq Ahmed, Director of Operations and Marketing at TK Group, one of the country’s major edible oil importers, refiners, and marketers, told Bonik Barta, “Global demand for palm oil is currently high. Indonesia has been blending palm oil for diesel production for a few years. This year, Indonesia increased the conversion rate of palm oil into diesel from 35 percent to 40 percent.” He further noted that due to the rise in palm oil prices and increased imports in several countries, Bangladesh is facing some delays in palm oil imports.

Among the top edible oil importing companies in Bangladesh are TK Group, City Group, S Alam Group, Abul Khair Group, and Bashundhara Group. At one time, companies like MEB Group, Mostafa Group, SA Group, Rubaiya Group, and Nurjahan Group were also involved in the edible oil trade, but these companies have since exited the market due to significant losses and debt defaults. While 20–25 percent of the country’s demand for soybean oil is met through bottled oil and 5 percent through loose sales, palm oil fulfills the rest of the edible oil demand. One hundred percent of the imported palm oil comes from Malaysia and Indonesia.