Business leaders call for logistics reform to boost trade competitiveness

Infograph: TBS

Business leaders, exports and policymakers have called for comprehensive reforms to modernise Bangladesh's logistics sector, warning that excessive logistics costs are significantly undermining the country's trade competitiveness.

Bangladesh's logistics costs are currently estimated at 15%–20% of GDP, far above the global average of 8%–10%, they said at a seminar titled "Enhancing Bangladesh's Logistics Sector for Sustainable Economic Growth", held at the Dhaka Chamber of Commerce and Industry (DCCI) headquarters today (29 June).

In his welcome speech, DCCI President Taskeen Ahmed said it is crucial to reduce logistics costs, especially as Bangladesh prepares to graduate from its least developed country (LDC) status.

He cited Bangladesh's low ranking – 88th out of 139 – in the 2023 Logistics Performance Index and flagged issues such as port congestion, customs delays, and fragmented infrastructure.

It is crucial to reduce logistics costs, especially as Bangladesh prepares to graduate from its least developed country (LDC) status

Taskeen Ahmed, president, DCCI

Taskeen outlined a strategy centred on digitalisation, multimodal transport, warehouse automation, and green logistics. He called for port upgrades at Chattogram and Mongla, faster progress on Matarbari and Payra ports, and expanded capacity at inland terminals like Pangaon.

He said Bangladesh needs a resilient and sustainable logistics system and urged greater investment in electric vehicles, solar-powered warehousing, and circular economy solutions. 

He noted that global disruptions, such as the Israel–Iran conflict, highlight the importance of building shock-resilient supply chains.

"This is a defining moment to future-proof our logistics and safeguard the future of Bangladesh's trade," he said.

Export potential

Policy Exchange Bangladesh Chairman Masrur Reaz delivered the keynote address, identifying critical bottlenecks and policy gaps that are limiting efficiency and global competitiveness in the logistics sector.

"Bangladesh lags behind its regional peers in competitiveness, innovation, and skills," he said. Citing World Bank data, he added that a 25% cut in logistics costs could boost the country's exports by as much as 20%.

"A 1% cut in transport costs could raise apparel exports by 7.4%, and trimming dwell time by one day could produce the same result. Ensuring a minimum transport speed of 40 km/h could boost exports by 3.7%," he said.

Masrur called for greater alignment between policy, investment, and implementation to unlock the sector's full potential.

Massive investment needed

Abul Kasem Khan, chairperson of Business Initiative Leading Development (BUILD), said that unless Bangladesh invests at least $20 billion annually in logistics infrastructure, the country will not reach upper middle-income status by 2041. At present, annual investment is below $1 billion, he noted.

He added that improving infrastructure is a long-term process. "China took 40 years. India and Vietnam are still working on it. We must also be patient and persistent."

IDCOL CEO Alamgir Morshed said logistics development requires long-term investment, but Bangladesh's banking sector is geared towards short-term lending. "That model won't work much longer," he warned.

He called for new financing mechanisms, such as bonds and alternative financial instruments, to meet long-term capital needs.

'Port capacity means little without access'

Addressing complaints about port congestion, Habibur Rahman, additional secretary and member of the Chittagong Port Authority, said many businesses misuse the port as a storage depot. "A port is like a station. People arrive, finish their work, and move on – it's not a place to stay," he said.

He projected that by 2030, Bangladesh's seaports would have a handling capacity of 10 million TEUs, but warned that without proper infrastructure, this capacity would be underutilised. With land availability shrinking by 2% every five years, he said rail offers the most cost-effective solution.

He proposed a dedicated expressway for trucks and lorries from Chattogram Port to Sitakunda and stressed the importance of private sector involvement at Pangaon River Port.

BIWTC Chairman Salim Ullah said the government has formed a committee to reassess the national logistics policy. He added that BIWTA will soon develop a master plan to modernise the inland waterway system.

Multimodal vision for future

Sheikh Moinuddin, special assistant at the Ministry of Road Transport and Bridges to the chief adviser, said Bangladesh must develop a multimodal transport system that integrates roads, railways, waterways, air routes, seaports, and digital infrastructure to remain competitive after LDC graduation.

He identified the absence of a long-term master plan as a major barrier to logistics development and said a 25-to-50-year integrated transport blueprint is now being prepared.

He urged stronger private sector involvement and greater stakeholder participation in policymaking to ensure effective implementation.