Bangladesh can add $20b to exports a year with better logistics

Bangladesh has an opportunity to boost its export earnings by about 20% a year by improving logistics services, economists and stakeholders said at a policy dialogue on Wednesday. 

The American Chamber of Commerce in Bangladesh (AmChem) organised the discussion titled "Logistics sector of Bangladesh – opportunities and concerns" at a city hotel.

Presenting a keynote, Md Mamun Habib, professor at Independent University of Bangladesh, said a lack of coordination among nine ministries and 20 agencies including, the Bangladesh Bank, the National Board of Revenue, the port authorities, and the transport authorities is hindering the logistics sector.

He suggested introducing a third-party temperature-controlled logistics services and cold storage facilities that will be situated and operated near airports, seaports, and land border crossings.

Prof Mamun said digitising the buyer-supplier relationship is a fundamental element for building robust supply chains through adopting advanced technologies, such as artificial intelligence, automation, Internet of Things, block chain, big data, etc.

Kabir Ahmed, president of Bangladesh Freight Forwarders Association, said the sector is like an orphan child, none is responsible to take care of it.

Dr Masrur Reaz, chairman at Policy Exchange of Bangladesh, the World Bank estimate shows that goods transportation in trailer trucks in Bangladesh almost costs double the amount in competing countries. 

He further explained that a trailer truck costs $0.12 per kilometre in Bangladesh, while the charge is $0.06 in Indonesia and $0.02 in India. 

In the logistics index considering infrastructure facilities and service quality, Bangladesh ranks 100th out of 140 countries, while Thailand stands at 34th position, India at 41st and Indonesia at 51st, he added.

"If we can make sure zero-congestion at Chattogram port to release goods a day, which will help to increase exports by 7.4%, Masrur Reaz, also said, adding, "If we can minimise domestic logistic costs by 15%, that will give us benefits to boost export earnings by another 7.4%."

Stating that goods movement speed on Dhaka-Chattogram Highway is 19 kilometres per hour on average, he noted, "We can increase speed up to 40 kilometres per hour, which will add another $3.5 billion to our exports."

It is not an easy job to bring such changes in a day, he said, adding, "We have no logistics policy yet."

The sector also needs foreign direct investment for long-term financing as well as for technical know-how, said Masrur Reaz.

Fazlul Hoque, managing director at Plummy Fashion, said Bangladesh should improve its logistics facilities by at least 2.5 times if we want to take apparel exports to $100 billion by 2030."

Presiding over the discussion, AmChem president Syed Ershad Ahmed said logistics improvement will lead to enhanced competitiveness of Bangladeshi products.  

"Better logistics can increase trade volume, diversify exports, bring foreign direct investment, and boost economic growth," he noted.
Improved logistics will help to reduce pervasive congestion and delays in the logistics system, be it roads, seaports or land ports, the AmChem president also said. 

Logistics sector in Bangladesh is not yet formally recognised by the government, which means the sector does not enjoy benefits or incentives like recognised sectors do, he continued. 

Mentioning that a lack of a National Logistics Policy has led to uncoordinated logistics sub-sectoral growth, he said at present, nine ministries and 21 government agencies are involved in setting up policies, regulations, planning, operating infrastructure, and providing services in the logistics arena. 

Syed Ershad suggests addressing poor intermodal interconnectivity and capacity constraints of ports in coordination with public and private sectors.