Poor logistics holding exports back: experts

Bangladesh's export potential remains largely untapped as the country lacks adequate logistics at its ports and highways, according to various experts.

"If Bangladesh could reduce the overall cost of logistics by 25 per cent, then export earnings would grow 20 per cent," said Abdoulaye Seck, the World Bank's country director for Bangladesh and Bhutan.

As Bangladesh looks to become a high-income country, it needs to undertake some reforms in the financial, macroeconomic and trade sectors for higher export competitiveness.

"The country's export would increase by 7.4 per cent if transportation costs were reduced 1 per cent by ensuring better logistics," added Seck citing a recent study of the World Bank.

He made these remarks yesterday while speaking at a panel discussion on "Building Connectivity and Production Infrastructure for the Next Phase of Growth: Investing in Logistics and Economic Zones.

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) organised the event as a part of its ongoing three-day business summit at the Bangabandhu International Conference Center in Dhaka.

Seck also gave a five-point suggestion for the country's logistics sector, which includes ensuring logistics efficiency, improving the quality and integration of services, their capacity and management quality, and regional connectivity.

Seck then welcomed the government initiatives to formulate a national logistics policy.

Besides, he congratulated the industries ministry for including logistics as a critical sector in the industrial policy 2022.

Masrur Reaz, chairman of Policy Exchange Bangladesh, a private research firm, said the low speed of freight transportation is a major concern for the country's export competitiveness.

Currently, the average speed of goods-laden trucks plying the Dhaka-Chattogram highway, which handles 98 per cent of the movement of export-import goods, is 19 kilometres per hour.

"But if the average speed can be increased to 40 kilometres per hour, it would boost exports by some 8 per cent," Reaz said while delivering the keynote speech.

Bangladesh is lagging behind in the global logistics index as the country ranks 100th with a score 2.58 among 140 nations while India places 42nd and Vietnam 45th.

"If there were no traffic congestions in Bangladesh, the total costs borne by truck operators would be 35.5 per cent lower on average," he added.

Reaz went on to say that a particular ministry, government agency or department should be made responsible for growth in the logistics sector.

After Bangladesh graduates from a least developed country in 2026, the country's exports will face 8 per cent to 12 per cent duty.

"So, efficiency in logistics is very important to remain competitive in the global supply chain in the post-graduation period," Reaz said.

Syed Ali Jowher Rizvi, managing director of Summit Alliance Port, said Chattogram port is now handling 98 per cent of the country's total import-export activities.

"This is a good job, but they need more efficiency by ensuring quality management," he added.

While stating that limitations in the facilities available at the country's premier seaport are the main problem, Rizvi said digitalisation should be given the most importance to address the issue.

The Chattogram port authority currently acts as the owner, operator and regulator all at the same time, leading to delays in the logistics system.

"So, improved logistics are needed to make it one of the most successful multimodal ports," he added.

AK Azad, a former president of the FBCCI, said it is not possible for the government to overcome all challenges on its own as public-private partnerships are very much needed.

Among others, Alfred Sim, head of Cargo Solutions at Northeast Asia PSA International Pte Ltd, Md Miarul Haque, managing director of DHL Express Bangladesh, Shamimul Haque, country director of Dubai Port World, and Mohammad Salahuddin, secretary of the Prime Minister's Office, also spoke.

Abul Kasem Khan, director of the FBCCI, moderated the event.