Blockade could dent supply chain, economy

The economy, which is already reeling under the pressure owing to persisting volatility in the foreign exchange market and higher inflation, is set to face another major setback as the nationwide blockade could disrupt the smooth operation of the entire supply chain.

The three-day blockade to be enforced by opposition parties BNP and Jamaat-e-Islami from today might make it difficult for exporters to supply products to global buyers on time, importers might not be able to receive goods from ports, and the movement of essential goods and products may witness obstacles.

The fresh challenge comes at a time the lingering fallout of the Covid-19 pandemic, higher inflation at home and abroad, the Russia-Ukraine war, and the conflict in the Middle East have already crippled the economy.

Experts and businesspeople say programmes such as hartals and blockades will add further woes to the economy and hurt consumers as regular economic activities usually come to a standstill amid fears and uncertainty.

"This is not good for the economy. It is suicidal and political parties should take care of the economy," Md Saiful Islam, president of the Metropolitan Chamber of Commerce and Industry, told The Daily Star over the phone.

He said if raw materials can't be transported to factories, production will be hampered. "Then, factories will not run smoothly. This will ultimately affect the economy."

Mahbubul Alam, president of the Federation of Bangladesh Chambers of Commerce and Industry, echoed Islam.

He added: "The economy suffers a loss of more than Tk 6,000 crore a day when hartals and blockades are observed."

"The economic situation is already in bad shape and it will face another blow from the political turmoil and programmes like blockades and hartals."

The BNP observed countrywide hartal on Sunday, the first such programme by any major political party in the country in recent times.

Mohammad Ali Khokon, president of the Bangladesh Textile Mills Association, said the country has been almost free of political deadlocks for many years.

"Now, it is coming back. This kind of political unrest will impact the economy in general and the garment and textile sector in particular."

The textile sector is the main supplier of raw materials to the garment sector, the second largest in the world.

"If the supply chain is disrupted for any reason, the whole garment industry will be in trouble," Khokon said.

"It is an ominous sign that political unrest is returning at a time when the economy is suffering from the dollar crisis, higher inflation, the impact of Covid-19 and the Ukraine war."

Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association, says the garment sector has been on track to overcome the effects of the pandemic, the war, and an elevated level of consumer prices in major export destinations as the confidence of international retailers and brands about Bangladesh is improving.

"But the internal political crisis will affect the supply chain as the transportation of goods and raw materials might suffer disruption."

He said the ongoing labour unrest and the political unrest will erode buyers' confidence.

Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association, said political unrest is always a matter of concern for the apparel industry.

Many local garment makers will face challenges while negotiating orders with international buyers during the blockade, he said.

"There is a possibility that orders might shift from Bangladesh to other countries because of political unrest."

Hatem urged political parties to ensure that the garment sector does not fall victim to any political agitation and requested them to keep the export sector out of the purview of blockades like they did in the past.

Khairul Alam Suzan, vice-president of the Bangladesh Freight Forwarders Association, said the blockade has created fears and uncertainty among businesses.

"I have received calls from several businesses about whether they will send cargo or take delivery from the port tomorrow. They are concerned about whether vehicles will reach their destinations safely and timely. But we can't give any assurance to any."

Suzan said the blockade may affect the smooth movement of vehicles with exported and imported goods.

"And this will disrupt the supply chain and industries will be unable to get the imported raw materials to make finished goods while exporters will not be able to send their export consignments on time to maintain lead times."

Besides, he said, if the political situation turns volatile, the supply of essential commodities, including imported ones, is likely to be disrupted, leading to price spiral.

If goods are left in the port undelivered, the cost of businesses will increase since they will have to count detention charges and demurrages.

"A supply chain disruption will affect us in various ways," Suzan said.

Shams Mahmud, managing director of Shasha Denims Ltd and Shasha Textiles Ltd, leading exporters, said: "This is indeed a worrying time for everyone involved in the RMG industry. The flare-up of political and industrial unrest will not be beneficial to anyone."

He said they have forecasted the situation and taken measures to have adequate stocks on hand to supply fabrics to the factories they work with.

"However, because of the worsening situation, the delivery by these factories has, in some cases, been deferred. This will create late delivery issues for them."

"Personal safety is the top priority for every garment and textile mill owner."

Mahmud, also a former president of Dhaka Chamber of Commerce and Industry, said if any further deterioration of law and order takes place, it will have a negative domino effect on the industry.

"We hope the main foreign exchange earning sector will be kept out of all these problems."

According to Mahmud, any disruption in the supply chain of garments will result in air shipment, which is expensive.

FBCCI's Alam said, "We will take some initiatives so that we can make political parties understand the importance of saving the economy."