Why Bangladesh needs an efficient Logistics Policy?

Bangladesh’s poor logistics performance is constraining economic growth. The country ranks low in global logistics indices, emphasizing the need for fundamental reforms. Bangladesh’s economic prosperity has been recognized by everyone.

However, concerns about a lack of local and foreign investment to continue the economic growth journey have arisen. Good logistics is one of the factors for attracting domestic and international investment.

Ports, all kinds of freight transit, warehousing and storage, and third-party logistics, such as freight forwarders and ports, are all part of the logistics industry. Logistics services are essential for economic growth. They enhance foreign investments and create diversity in export which helps to facilitate a dynamic infrastructure.

World Bank. (2023) stated that Bangladesh ranked 88th out of 139 nations in the 2023 Global Logistics Performance Index (LPI). The country ranked third out of the five South Asian economies evaluated in the 2023 index, trailing only India (38th) and Sri Lanka (73rd).

LPI is an important component of global efforts to better understand logistics performance in the face of increasingly complicated supply chains. The survey-based LPI assesses six aspects of logistics performance across the country: trade and transportation infrastructure, customs and border management, logistics service quality, shipment timeliness, ability to track and trace, and the availability of competitively priced international shipments.

The transport counts for the majority of direct logistical costs, with road transport being the most common mode. According to one assessment, road transport charges in Bangladesh range from $0.06 per 16-ton truck to $0.12per trailer. Shippers and service providers engage in costly actions to deal with logistics system congestion and unreliability. These costs are more than those in many developing and developed countries. (Herrera Dappe, M., Kunaka, C., Lebrand, M., & Weisskopf, N. (2020).

Because of inefficient logistics services, industries keep vast inventories of raw materials and completed items. Inventory carrying costs account for 17-56% of total logistics expenses; in most industries, the amount exceeds 30%. Inconsistent delivery and congestion harm large portion of inventory, ranging from 53 to 75% depending on industry.

Shippers usually collaborate with more than one service provider to fulfill each cargo in a multimodal transport system. Most logistics service companies specialize in a single logistics service category, such as road or water. The integrated multimodal transportation is extremely limited. Among other obstacles, there is an overreliance on road-based freight transportation.

The majority of container freight traffic takes place between Greater Dhaka and Chattogram, with roads accounting for 95% of the modal split.

Bangladesh plans to achieve upper middle-income level by 2030 and high-income status by 2041. For that, we must achieve this lofty aim through seamless commercial connectivity, solid infrastructure, and greater export and logistical efficiency that encompasses a wide, complex, and multidimensional environment. It includes all types of freight transportation and associated infrastructure, including ports, land ports, storage and warehousing facilities, and third-party logistics services such as freight forwarders. Despite this, Bangladesh’s logistics sector lacked a uniform structure until recently, making it chaotic, costly, and inefficiently coordinated.

Logistics is a huge, intricate, and multidimensional domain. includes all types of freight transportation and associated infrastructure, such as ports, land ports, storage and warehousing facilities, and third-party logistics services like freight forwarders. sector lacked a uniform structure until recently, making it chaotic, costly, and inefficiently coordinated. Sector lacked a unified framework until recently, leaving it chaotic, expensive, and lacking in efficient coordination.

New logistics strategy, which provides a national framework and goal, promises to make the logistics sector more efficient, transparent, and hassle-free, while stimulating robust economic growth. Vision, promises to make the logistics sector more efficient, transparent, and hassle-free in order to spur vigorous economic growth.

The National Logistics Policy 2024, a collaborative effort of numerous stakeholders from the corporate and public sectors, exemplifies home-grown and inclusive policymaking. The Prime Minister’s Office (PMO) provided effective leadership and timely coordination, as well as active collaboration with stakeholders, to help obtain a thorough understanding of the logistics sector’s issues and potential.

Given Bangladesh’s export-oriented economy, the National Logistics Policy plays a crucial role in upgrading logistics infrastructure and meeting ambitious export targets. World Bank. (2024) mentioned that , As Bangladesh transits from its least-developed country (LDC) status, degradation of the duty-free regime in the European Union, the country’s major export destination, will increase the cost of exports to the EU by 8.16%, potentially making Bangladesh’s products less appealing.

Bangladesh has 10,000 Kilometers of river pathways that can be used to carry commodities around the country in an efficient and technologically creative manner, potentially reducing the pressure on roads and highways. A multimodal logistics service providers that employs multimodal transportation can lower logistics costs.

According to World Bank estimations, Chattogram Seaport is the world’s 64th busiest port. However, due to inefficient port administration in terms of container handling, a lack of infrastructure, and contemporary technology, this port lags behind other Asian seaports.

It is also vital to deploy modern equipment and information technology, improve the quality of logistics services, develop national logistics policies, increase coordination among relevant parties, and revise customs policies. Service providers are distinguished by low skill levels, poor asset quality, and limited use of information technology (IT) tools, which are becoming more common in many other countries. Without a foreign investment, no country can develop a competitive logistics infrastructure on its own. Bangladesh prohibits 100% foreign participation in some logistics sub-sectors, such as warehousing and storage and temperature-controlled logistics.

Bangladesh has showed amazing economic resiliency over the last two decades, but maintaining this momentum would require more than just higher output. logistics system is the foundation of a competitive economy, allowing businesses to transport goods more quickly, cut costs, and better integrate into global value chains. country prepares for post-LDC graduation and strives to become an upper-middle-income country, logistics reform must become a national priority rather than a sectoral worry. Logistics system is the foundation of a competitive economy, allowing businesses to move goods faster, save money, and integrate more effectively into global value chains. Logistics reform must become a national priority rather than a sectoral concern as the country prepares for post-LDC graduation and pursues its goal of becoming an upper-middle-income country.

The National Logistics Policy 2024 provides a promising roadmap, but its success will ultimately depend on timely implementation, institutional coordination, sustained public and private investment, and the adoption of modern technologies. By strengthening transport networks, improving customs efficiency, expanding multimodal connectivity, and fostering innovation across the logistics sector, Bangladesh can transform logistics from a long-standing bottleneck into a powerful engine of economic growth, investment, and global competitiveness.

Ahamad Ar Rafi Thakur: MPSM (Brac University).Post Graduate Student (Applied Economics) at University of Vienna.