Supply chain disruptions are a global phenomenon now and reports from international media suggest the problem may continue for a longer period. Large corporations with worldwide networks are worried about future business and supply management plans. How do you look at the problem from Bangladesh's perspective?
Logistics is a subset of a supply chain process that incorporates planning, management of any business. Tangible flow of goods is part of any company's business management plan. Outbound movement, inventories and supplies—all are parts of logistics. Many countries are well ahead of us in logistics. Our position is very poor in the latest logistics performance index (LPI). Among 107 countries, we are ranked 100th. Our infrastructures are poor, management and regulatory control are even poorer, weakening our overall logistics services. If we could manage whatever infrastructures we already have in hand, our situation might not have been so bad. You see, our Chattogram Port is managing its services more or less well after getting some off-dock terminals, although costs have increased as freight charges have gone up worldwide.
Big American ports—Long Beach, Los Angeles, Halifax are facing congestions now. Similar situations are seen at European ports like Amsterdam, Felixstowe. Workers shortage due to Covid-19 in many countries is one of the main reasons for such congestion. Many goods cannot be delivered, resulting in a stockpile of containers in ports. Few days back, I heard that several hundred ships were stranded on the US West Coast. US President Joe Biden is also concerned about the situation asking authorities to keep US ports open for 24 hours.
In Bangladesh, we have some good infrastructures which we cannot use properly. Take the Pangaon Inland Container Terminal. Green logistics are now in talks globally. If we could use Pangaon inland port properly, we could have transported consignments through river ways and reduced dependence on roads. Railway connectivity between Dhaka and the main port Chattogram is very weak. Kamalapur is not the right place for an ICD (inland container depot). Now it has been planned to shift the ICD to Dhirasram, which would take 5-7 years more. By this time, Pangaon is ready and we could have utilised this infrastructure. If we could have made it fully operational/usable, then we would be relieved of a lot of pressure in regards to goods transportation, particularly of the whims of truckers—you know how they create problems for businesses.
In the logistics sector of Bangladesh, about four million people are employed. It is a huge sector with some 1,100 freight forwarders, about 5,000 C&F agents—all are part of the logistic system. There are trucks, boats--- all of these together make the supply chain work. Economically logistics is a very important sector. But here we are not performing that way.
Logistics witnessed a sudden growth after '80s with the growth of RMG as international buyers faced challenges in transportation and global logistics companies started to step in. In the initial period, there was no regulatory framework. Logistics sector continued to grow bigger and help the export sectors grow fast. When you export, you also import at the same time. Here comes the issue of lead time, some other technical issues that matter in global trade to earn trust of global buyers. The sector played the prime role in raising Bangladesh's visibility in the world trade landscape as a potential sourcing destination.
We are making high-tech and sophisticated exports like pharma, for which specialisation is needed and logistics providers are ready to serve. Transport sector contributes a substantial amount to the economy, apart from creating employment to a huge population.
Unfortunately, the sector has not been recognised or evaluated duly in Bangladesh.
Since there is port congestion worldwide, large countries have already developed air cargo systems as backup mechanisms to keep trade flowing. Even our neighbouring countries like India and Pakistan have much better air cargo facilities than us.
Here, we have only two scanners at our main airport; those two machines were left out of order for months. One has been repaired, the other is still dysfunctional. Two new scanner machines were procured in April, but have not been installed so far.
Interestingly, there are nine ministries and 21 agencies to monitor the logistics services which I see as the biggest challenge for this sector in our country. They do not have coordination among them. Say, Biman is the handling agent, Civil Aviation is the facilitator. These two have coordination gaps. Blaming Biman is useless if Civil Aviation does not install a scanner. There should be a National Logistics Strategy in plan to reduce coordination gap among agencies involved in the sector. We need to have it immediately. If we are to stay in the international trade, if we want foreign investors to come to the economic zones which are in the making, then we must focus on logistics.
We are having such a big economic zone in Mirsarai, we can build a dry port there and connect it with Chattogram Port by rail. We can have a dry port at Ishwardi where we already have a railway link. We could have built another dry port at Saidpur connected to the rail network. Then goods from those EPZs could be shipped directly by train to the port. We did not focus on these infrastructures so far.
Waterways and railways are great advantages for Bangladesh, which are underutilised. We are relying heavily on trucks, putting all our efforts on roads despite the bottlenecks. We are raising the number of covered vans. Why are we not using the railway, why not waterways?
Waterways can be a very good option in Bangladesh.
In the case of Pangaon, authorities often blame the lack of interest of users…
When off-dock was first introduced in Bangladesh, users were not interested back then. We were the first to use off-dock CFS (Container freight station) in Bangladesh with Kmart cargoes. We had to face a lot of hassles. The then commerce minister intervened and talked to the then BGMEA president Mostafa Golam Quddus to make the system operational. You see, now the port bottlenecks could not be cleared if off-dock was not in operation. Today, 19 off-docks are serving the Chattogram Port. If you build two such off-docks in Dhaka for airfreights, then getting air cargo services will be easier.
But customs stand in the way in such expansion of services. Customs inefficiency is one of the reasons for our port congestions. There are some indicators to measure logistics performance. Customs efficiency is one of them, where we perform very poorly. They are not auctioning off [unclaimed] goods properly, taking a long time for clearance. We must have a more efficient customs service. They must go for full automation. The world has now moved to digital logistics. Now AMS is being practiced, when we ship any goods to the USA, those are getting customs clearance in advance. In contrast, when goods arrive here at Chattogram Port, it takes 5-7 days just to start the process.
We are now suffering from the impact of global supply chain problems.
We are suffering from global phenomena, such as higher freight charges. Buyers have accepted the hike more or less. For Bangladeshi merchandise, most of the freight charges are borne by customers. In a few cases of delayed shipment, our factories are to bear the cost. But meeting the lead-time remains a challenge. You have to deliver goods on time.
Frozen food exporters were complaining about a reefer container shortage to ship goods to Europe and US markets while the port is stacked with empty containers.
Most of those empty reefer containers are not usable. Those are damaged. Some have been converted to ship general cargoes due to surging demand for goods like apparels.
How big is the logistics sector now in Bangladesh?
Our logistics sector has shown remarkable annual growth. Let me explain by presenting some statistics. At the beginning of August 2019, the Chattogram port had 2,926 TEUs. By 2021, the number rose to around 4,000. The growth rate is spectacular, amounting to around 10%. The Dhaka airport has shown a similar growth rate.
We have a total of 1,100 logistics companies here in Bangladesh. The funny thing is very few of these companies actually offer logistics in an integrated way. Almost 500 out of the 1,100 logistics companies have been converted into C&F agents. Warehousing, distribution and C&F---are all being done by some big companies. All companies are trying to sell almost all kinds of products. Bangladesh has seen the rise of numerous individual and independent small organisations in the logistics sector. These numerous small organisations need to integrate themselves with the bigger companies, instead of working as third-party providers. Unlike parent full-fledged logistics companies, independent organisations often lack visibility. They are, however, fully suited to assist the parent logistics companies. For example, the Chattogram port has 5 CFSs, something that we invested in. This is an example of a very good joint venture. We are even ready to invest Tk200-250 crore for the construction of a cold chain. But we cannot do so as we have not yet received permission from the government. Bangladesh desperately needs cold chains to be constructed because it is impossible to transport items such as vegetables without them.
Why is the government not granting permission for the construction of cold chains?
This is a shining example of bureaucracy. Our Prime Minister's advisor understands everything. He himself keeps pushing for a change. But the bureaucrats don't let this go. They think granting permission for a change takes away their say in the government. They want to have control over everything. Referring back, take a look at our railways. Using the railways would make the logistics sector much more efficient. But they are hardly used at all. The railways are thus an unutilised advantageous opportunity for us. There is only one ICD at Kamalapur when we could have many more ICDs at much better locations including Dhirasram. I am thankful to the government for being generous when it comes to building infrastructure. But just building infrastructure is not enough. We must have proper management as well. Another example of a possible development is the construction of the Bay Terminal. The Bay Terminal could drastically enhance the state of the entire logistics sector by helping coastal shipping development reach a new, never-before-seen stage. The government has even managed secure land for the construction of the Bay Terminal. But unfortunately, it has not progressed further because of negligence of government officials concerned.
Did the BSC (Bangladesh Shipping Corporation) have any role to play?
Not really. They are a public shipping organisation who really didn't have much to do. Something would be possible if the BSC was merged with another public company, but there isn't much possibility of that happening either. They should have stuck to a free-hand strategy of shipping from Colombo to Dhaka and then from Dhaka to Singapore. They could have profited from it. But they failed to do that too. Nobody to blame but themselves.