Logistics is the most important factor in today’s trade and commerce and gains even more in significance from Bangladesh’s perspective!
The second largest exporter of apparel globally after China, Bangladesh apparel industry has set sight to earn US $ 100 billion in exports by 2030 and an efficient logistics sector will be a key determinant that would decide which direction it would all go!
From US $ 52.08 billion in the 2021-22 fiscal year (July 2021-June 2022) to US $ 100 billion by 2030, the support logistics and infrastructure will provide in helping achieve the feat is rather challenging, to say the least.
But are things shaping up on the expected lines?
“There are massive changes taking place in Bangladesh in terms of infrastructure development and logistics,” claimed an expatriate who is very closely associated with the logistics sector of Bangladesh for more than two decades now, while speaking to Apparel Resources (AR).
From the upcoming new terminal at the Dhaka international airport to a deep sea port, which would be up and running soon not to mention the recently inaugurated Padma Multipurpose Bridge, considered a symbol of pride for the country, Bangladesh is on a never-before seen development spree.
Expansions and evolutions at the heart of growth
The new terminal at Hazrat Shah Jalal International Airport (HSIA) is being constructed on 542,000 square metres of land and will have a floor space of 230,000 square metres!
“When the third terminal is completed, it will double the airport’s annual passenger and cargo handling capacities,” underlined the Project Director of the third terminal, AKM Maksudul Islam, who recently updated a visiting Bangladesh Garment Manufacturers and Exporters Association (BGMEA) delegation that after completion of the terminal, the airport will be able to handle five lakh tonnes of cargo from the current two lakh tonnes.
On 28th December 2019, Prime Minister Sheikh Hasina inaugurated the construction work of Taka 21,300 crore ‘Third Terminal of Hazrat Shah Jalal International Airport (HSIA)’, aimed at increasing the airport’s passenger and cargo capacity.
Currently, most of Bangladesh’s foreign trade is carried out through sea and land ports, where nearly three-quarters of it is being done through the Chittagong port alone, while on the other hand, Hazrat Shahjalal International Airport currently has only 2 lakh TEUs of cargo handling capacity as there is no separate cargo village.
However, the new terminal’s 27,000 square metres Import Cargo Village will be able to unload over 2,73,470 tonnes of cargo every year, while the 36,000 square metre Export Cargo Complex will be able to offload about 5,47,47,941 tonnes of cargo yearly. Besides, it will be possible to reduce the time of clearance of goods in import-export through modern equipment.
What’s more, since the new terminal will have two separate cargo villages for export and import, imported and exported goods can be stored at the airport if needed.
“Export, import and domestic and foreign investment of the country are also growing with the economy of Bangladesh. In such a scenario, the new terminal with modern facilities will further boost trade and commerce,” held BGMEA Vice-President Shahidullah Azim, who added the third terminal at Hazrat Shahjalal International Airport will open new doors of opportunities.
Meanwhile, work is also in progress for Matarbari deep sea port, which is in Dhalghata, Maheshkhali Upazila of Cox’s Bazar even as State Minister for Shipping Khalid Mahmud Chowdhury has expressed hopes that the Matarbari deep sea port will become operational from either the middle or end of 2023.
It needs no mention that the absence of a deep sea port has emerged as a major obstacle for the garment exporters, who have to now depend on the feeder vessels to transport export consignments.
Prime Minister Sheikh Hasina on her part in the meanwhile assured Payra sea port will also be transformed into a deep sea port in the future even as she added Payra Port has a special importance as it is situated in between Mongla and Chittagong ports.

“As a port, we most of the time tend to forget Chittagong Port is a river port and not a sea port in its classical sense, which means that there would be limitations in terms of the size of the vessels that can berth here. There are many other challenges too,” elucidated Anshuman Mitra Mustafi, Managing Director of A.P. Moller-Maersk to AR.
Chittagong Port handles bulk of Bangladesh’s exports including all-important apparel shipments.
However, both Anshuman (in 2018 Anshuman took over the charge of Maersk) and the expatriate, who have seen all the development take place before his eyes thanks to his long stay at Bangladesh, are all praise for the Chittagong Port notwithstanding the shortcomings.
“Chittagong Port did very well during the Covid-19 period when many globally well-known ports were negatively impacted,” said Anshuman who believes a port cannot be used as a storage area, referring to the stockpile of import containers at Chittagong Port, which at times pose a challenge to smooth cargo handling and movement of the export containers.
The expatriate stated, “When I came here around 22 years ago, there were only around four gantries at the Chittagong Port whereas today there would be 14-15 gantries at the minimum. The port initially was saddled with a lot of problems including labour issues but is operating extremely well today.”
He, however, observed given the increase in volume of export and imports, the infra and cargo handling capacities at Chittagong Port is not commensurate.
Coming up of a deep sea port will help ease the current situation even as Mongla Port can also lessen the burden on Chittagong Port to a great extent, said the expat veteran of logistics.
The transhipment woes
“Bangladesh only has river port and this is the reason why we have to either use Singapore, Colombo or Hambantota and Port Klang as the transhipment ports,” opined a garment exporter to AR.
Bangladesh’s exports and imports have been third-country dependent as feeder vessels transport goods to a third-country port where goods or containers are boarded on mother vessels sailing for destination ports across the continents.
Similarly, a reverse procedure is followed for imports wherein mother vessels discharge imported goods at the third country port from where the feeder vessels transport goods to Chittagong or Mongla Ports.
The Port of Mongla is a link sea port located at Mongla sub-district of Khulna division and is the second largest and second busiest port of Bangladesh, lying close to the shore of Bay of Bengal and Pashur river.
Fuelled by the growth in global trade through the years, transhipment plays a vital role in the global supply chain allowing cargo to reach different parts of the world. However, third-country EXIM cargoes are prone to both man-made and natural risks.
In April 2021, over 25,000 imported containerised goods were stuck due to the pandemic, in the seaports of Sri Lanka, Singapore and Malaysia, holding up or slowing down industries due to raw material shortages even as it posed all-new challenges for the apparel exporters, hard pressed to meet the short turnaround times in today’s age of fast fashion.
“If mother vessels can berth directly at the port, shipping time could be almost halved,” claims the Director of a local entity, considered a major player in the logistics sector of the country.
Direct shipping opening up new vistas!
From an international trade perspective, direct shipping is preferred to third-country EXIM and given the prospects on offer while also taking into consideration the challenges faced in the past on account of traffic pile-up at transhipment ports and other issues, the Chittagong Port Authority (CPA) took the initiative and made direct shipment of 952 TEUs containers from Chittagong to Ravenna Port in Italy in February 2022, which reached there in just 16 days.
The learning curve continued to grow in the days to come as CPA with the cooperation of Main Line Operators (MLOs) and Shipping Agents subsequently successfully launched direct shipping services to seven of its 20 major routes even as it was said to be working to launch direct shipping to other destinations as well including Slovenia, Thailand, Portugal and the Middle East.
“Besides halving the voyage time, it has also cut shipping costs by 40 per cent. All European destinations are now being connected to direct shipping routes. For example, container services from the Koper Port in Slovenia are connected to Austria, Slovakia, Hungary, Poland, Italy, Germany, Croatia, Bosnia and Herzegovina and Serbia,” explained a shipping agent of a prominent shipping line to AR.
Many challenges remain still
Irrespective of all the developments in recent years, many challenges are still to be addressed.
As per estimates, improvement of all the components in the logistics channel can increase the cost-effectiveness of Bangladesh’s exports by 18.3 per cent with contribution of 7.4 per cent from adequate number of ICDs at production intensive zones, 3.5 per cent from improvement of local haulage and a further 7.4 per cent from efficiency improvement of customs clearances even if Bangladesh is said to be missing out on its real export potential by 20 per cent due to poor infrastructures, inefficient logistics services and a cumbersome and time consuming customs clearance procedure.
“A lot of reform is happening along with digitisation. Along with digitisation, a great deal of human interventions can be made away with and so would the bottlenecks that are manmade,” believes an industry player with deep knowledge and understanding of the logistics sector in Bangladesh.
According to the Agility Emerging Market Logistics Index 2022, Bangladesh ranked 39 among 50 emerging economies as it scored only 4.44 out of 10, while China, India, Vietnam, even Pakistan and Sri Lanka were way ahead of the second largest economy of South Asia, targeting US $ 300 billion in overall exports in 2041 to become a developed nation.
Meanwhile, as per Global Competitiveness Index (GCI 2019) that ranks countries by infrastructure, ICT adoption, Business Dynamism, Innovation Capacity, Bangladesh stood 105th, way behind its trade competitors Vietnam, India and China even if as per World Bank’s Logistics Performance Index, 2018, Bangladesh ranked 107 among 150 countries in terms of timeliness, 79 in tracking and tracing goods, 102 in logistics quality, 104 in international shipment, 100 in infrastructure and 121 in customs clearance.
Suggested remedial measures
Given the existing scenario, experts, industry professionals and business leaders emphasised comprehensive steps for a significant improvement in all the indices without which exporters’ low competitiveness would hurt the economy, while local market logistics costs also need to be reduced, they said.
Proper infrastructures for sea, land and airports, integrated and automated network for efficient services at every logistics point and removing all supply chain bottlenecks are at the top of their recommendation lists even as they emphasised the under-process national policy for modern logistics in Bangladesh to be accommodative for enough foreign direct investments as globally reputed logistics companies not only invest their capital, but also bring expertise without which the country cannot catch up to keep up its growth.
“There are some global players operating in Bangladesh and more are willing to commence operations,” maintained Anshuman adding there are regulations which mandate 60 per cent local stakeholding and 40 per cent stake for foreign ownership and have their own merits, but claimed, “If we have to change the present logistics landscape to handle export target of US $ 100 billion, the ownership model will have to be suitably looked at.”
Besides, Anshuman also feels there is a challenge in terms of capacities as there has been no new CFS operating in the near future even if the license is issued immediately.
“We have therefore approached existing CFS operators and collaborated with them to build dedicated warehouse for us to operate from. This in short term will add capacity,” said the MD of Maersk in Bangladesh.
Maersk has been successful to get two projects up and running in this direction, claimed Anshuman, as per whom the first one should be completely handed over to it soon and would be the single largest warehouse, with an area of about two lakh square feet.
“As a single warehouse, I think that would be the biggest one and we have also declared launch of another facility at Vertex Container Depot where we proposed a partnership to provide us with a customised warehouse to operate from,” further added Anshuman.
Importance of improved logistics from regional perspective
In the context of Bangladesh, the subject of logistics is gaining prominence not only in the seaborne trade but also in the developing connectivity programmes under the Comprehensive Integrated Multimodal Economic Corridor Network including Bangladesh, China, India, Myanmar Economic Corridor or connectivity programmes under the auspices of Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation, South Asia Sub-Regional Cooperation as the connectivity programmes present both extraordinary opportunities and challenges to Bangladesh for its active participation in the regional and sub-regional trade logistics as well as in global logistics.
“In order to yield optimum benefits of the connectivity programmes, we have to address our preparedness. Capacity building is the issue that lies at the forefront of our successful participation where we severely lack a comprehensive policy, skill and knowledge in the sector, a legal framework and dominance of cartels particularly at our waterfront,” said an industry expert, who underlined Bangladesh needs to have skill development programmes for the people and bureaucrats at policy-making bodies, regulatory authorities, cross border checkpoints and, above all, in the industry and service sectors in order to make any remarkable progress in the logistics sector of Bangladesh.
As a matter of fact, Bangladesh Foreign Trade Institute was established with this objective in mind and it is about time the institute is put to its full potential to train the human resources in the logistics sector, he claimed.
“We have already allowed Bhutan, Nepal and India to use Chittagong and Mongla ports,” opined Bangladesh Prime Minister addressing an event in the meanwhile.
Government throws in the hat
Taking cognisance of the role and importance of the logistics sector, Bangladesh Government has formed a 29-member committee to ensure an efficient transportation of goods and services and the overall development of the logistics sector in the country.
Md Tofazzel Hossain Miah, Principal Secretary to the Prime Minister Sheikh Hasina will chair the committee – National Logistics Development and Coordinating Committee, according to a gazette notification issued in this direction on 25th January, this year.
As per the notification, the committee will formulate the National Logistics Development Policy, provide policy support and facilitate existing policy frameworks to attract investment in the logistics sector.
It will also provide overall guidance in formulating policies and development strategies for the logistics sub-sector.
On top of that, the committee will monitor, review and evaluate the progress of implementing the overall logistics development strategy even as the move comes as the logistics sector is failing to support the fast-growing economy amidst reports of how poor logistics and clearance services in the country’s ports and highways are leading Bangladesh to miss out on at least 20 per cent of its export potential.
Exporters fetched more than US $ 52 billion from overseas shipments the previous fiscal year even as it would be possible to earn at least US $ 63 billion if the logistics services are improved, according to the private research firm Policy Exchange of Bangladesh while more than 80 per cent of the respondents in a recent survey said finding the availability of transport and logistics services was relatively easy, but the cost of logistics services was excessively high.
However, with so much effort going towards improving the logistics and infrastructural landscape, it’s just a matter of time before the ecosystem is able to reach the standards that will not only be efficient and robust enough to handle Bangladesh’s requirements but also help develop the country as a regional hub in terms of transportation and connectivity, opined an industry player to wind up on a positive note.