Logistics costs remain alarmingly high: DCCI

Logistics costs in Bangladesh remain high, at an estimated 15 percent to 20 percent of the GDP, far above the global average of 8 percent to 10 percent, according to the Dhaka Chamber of Commerce and Industry (DCCI).

"The logistics sector in Bangladesh requires rapid transformation to ensure sustainable economic growth as the country prepares for status graduation from the group of least developed countries," said Taskeen Ahmed, president of the DCCI.

He was speaking at a discussion titled "Enhancing Bangladesh's Logistics Sector for Sustainable Economic Growth" organised by the DCCI on its premises in Dhaka yesterday.

He proposed six major reforms—digital platforms to connect shippers and transporters, warehouse automation, seamless multimodal transport networks, modernised ports, digital customs solutions, and greener logistical practices.

Besides, business leaders and experts emphasised that Bangladesh must urgently revamp its logistics sector to sustain growth and remain competitive in the post-LDC era.

Experts cautioned that high transport costs, poor infrastructure, and gaps in policies could hurt the country's export plans and overall development

They cautioned that high transport costs, poor infrastructure, and gaps in policies could hurt the country's export plans and overall development.

"Although Bangladesh's private sector-led growth has been globally exemplary, our heavy reliance on readymade garments and limited export markets poses risks," said M Masrur Reaz, chairman and CEO of the Policy Exchange of Bangladesh, while presenting a keynote paper at the event.

Against this backdrop, he stressed the urgent need to diversify export products and expand into new markets to protect the economy.

"To survive in global competition, we must strengthen trade cooperation and logistics capabilities," Reaz said.

He highlighted that reducing logistical costs by 25 percent could raise exports by about 20 percent, while even a 1 percent cut in transportation costs could boost exports by 7.4 percent.

Addressing the event, Sheik Moinuddin, special assistant to the chief adviser for road transport and bridges, said Bangladesh's global competitiveness post-LDC graduation depends on an integrated transport ecosystem covering roads, rail, waterways, aviation, ports, and digital networks.

Drawing on his experience in California and Hawaii, he stressed long-term planning over 25 to 50 years, warning that fragmented responsibilities across ministries hinder progress.

Moinuddin noted the lack of a comprehensive master plan as a major obstacle to logistics growth.

Abul Kasem Khan, chairperson of Business Initiative Leading Development (BUILD), said Bangladesh's logistics sector was stagnating, hampering economic goals.

He stressed that annual investments of 8 percent to 10 percent of the GDP, or around $20 billion, were needed in infrastructure and logistics, and the country was still lagging behind others in this area.

Although foreign direct investment in the country currently stands at around $1.5 billion, there is vast potential for more, he said. Khan urged the formulation of a 50-year master plan and a dedicated logistics ministry or authority.

He also suggested declaring 2026-2035 the "Decade of Logistics" to drive transformative growth.

Salim Ullah, chairman of Bangladesh Inland Water Transport Corporation (BIWTC), underscored the urgent need for a master plan to boost the multimodal transport system, calling it vital for the logistics sector's future.

Ullah added that a government committee was reassessing the logistics policy, while the BIWTA would soon draft a master plan to improve inland water transport management.

Speaking at the event, he said while the 2024 logistics policy proposed actions, it lacked a time-bound roadmap.

Ullah welcomed the government's fresh initiative to revise the policy under a new committee led by the railways adviser.

Md Habibur Rahman, member (admin and planning) of Chattogram Port Authority, said that by 2030, the capacity of the country's seaports, including the Matarbari deep seaport, would reach 10 million TEUs (twenty-foot equivalent units).

He said the private sector would need to significantly increase import and export activities to ensure the utilisation of this capacity.

He said railway services could become the most cost-effective and suitable option, especially in the logistics and transportation sector.

He opined that constructing a specialised expressway exclusively for trucks and lorries from the Chattogram port to Sitakunda could bring positive outcomes in the transportation process of import and export goods.

Alamgir Morshed, executive director of the Infrastructure Development Company Limited (Idcol), said long-term financing for the development of logistics infrastructure was a major challenge.

This was due to the fact that Bangladesh's financial sector is not in a very strong position, he said.

He proposed introducing multiple bond instruments to facilitate long-term financing in the infrastructure sector.

He also said that the gaps in capacity and expertise in the logistics sector create significant opportunities for foreign investors, which he believes should be seen in a positive light.

Humayun Kabir, senior project officer (transport) of the Asian Development Bank (ADB), said the ADB would extend technical assistance to help implement Bangladesh's logistics policy and was working closely with the government in this regard.