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Economic growth

Bangladesh's Logistics Sector Faces Urgent Overhaul

Strategic Insights

— 2 min read

Bangladesh's rapid economic growth is being undermined by outdated logistics, high transport costs, and congestion, experts warned at a seminar hosted by the Dhaka Chamber of Commerce and Industry. The country's ranking in the World Bank's Logistics Performance Index 2023 is far behind its regional peers, with a dismal 88th place overall and a 176th ranking in the "trading across borders" category. Dr. M Masrur Reaz, chairman of Policy Exchange Bangladesh, pointed out that logistics costs range from 15 to 48 percent of product prices, hindering exports. Effective implementation of the 2024 National Logistics Policy and large-scale investments in multimodal infrastructure are urgently needed.

Key Takeaways:

  • Bangladesh ranked 88th in the World Bank's Logistics Performance Index 2023, far behind regional peers like India (38th) and Vietnam (43rd).
  • The country fared even worse in the "trading across borders" category, ranking 176th out of 190.
  • Logistics costs in Bangladesh range from 15 to 48 percent of product prices, depending on the sector, posing a significant constraint.
  • A 25 percent reduction in logistics costs could boost exports by 20 percent, while cutting transport cost or dwell time by just 1.0 percent could increase exports by 7.4 percent.
  • The National Logistics Policy requires effective implementation to realize efficient logistics and create a seamless supply chain.
  • Private and PPP investment in logistics is still below 2.0 percent of GDP, against the 8-10 percent needed.
  • Bangladesh needs at least $20 billion in FDI annually, but is attracting just $1-2 billion.
  • Infrastructure, regulatory reforms, and skilled manpower are essential for reducing cost and improving speed.

Statistics:

  • $230 billion: estimated logistics investment Bangladesh needs by 2032.[1]
  • $1 trillion: estimated logistics investment Bangladesh will need by 2041.[1]
  • 15-48 percent: logistics costs in Bangladesh as a percentage of product prices.[2]
  • 88th: Bangladesh's ranking in the World Bank's Logistics Performance Index 2023.[2]
  • 176th: Bangladesh's ranking in the "trading across borders" category.[2]
  • 20 percent: potential increase in exports with a 25 percent reduction in logistics costs.[3]
  • 7.4 percent: potential increase in exports with a 1.0 percent reduction in transport cost or dwell time.[3]
  • 2.0 percent: current private and PPP investment in logistics as a percentage of GDP.[4]
  • 8-10 percent: required private and PPP investment in logistics as a percentage of GDP.[4]
  • $1-2 billion: annual FDI Bangladesh is attracting.[5]
  • $20 billion: minimum FDI Bangladesh needs annually.[5]

Sources:

  • [1] Alamgir Morshed, executive director and CEO of Infrastructure Development Company Limited (IDCOL)
  • [2] Dr. M Masrur Reaz, chairman of Policy Exchange Bangladesh
  • [3] Dr. M Masrur Reaz, chairman of Policy Exchange Bangladesh
  • [4] Abul Kashem Khan, chairperson of BUILD
  • [5] Abul Kashem Khan, chairperson of BUILD

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