Modernising ports for trade competitiveness

Bangladesh has entered a new chapter under a fresh political horizon, opening new opportunities for development. With a focus on governance reforms, economic liberalisation, and citizen-centric policies, the country aims to achieve stability and sustainable growth. Trade will remain central to this journey, as it drives inclusive growth and job creation. For a $459 billion economy, exports are critical and must grow further to capture a share of the $33 trillion global trade.

Yet trade competitiveness is held back by inadequate and inefficient port and logistics infrastructure. Poor road, rail and inland waterway links to ports increase transport costs and cause major delays. Logistics costs in Bangladesh reach up to 48 percent in some sectors, far higher than in competing economies. The World Bank estimates that targeted reforms could raise national export earnings by 19 percent, and even a 1 percent cut in logistics costs could lift demand for Bangladeshi exports by up to 7.4 percent. This is even more relevant in the context of the least developed country graduation and growing protectionism in global trade.

At the centre of these logistic challenges is Chattogram port, the country's main trade gateway. Handling 92 percent of seaborne trade and 98 percent of container trade, it faces high berth occupancy, long ship turnaround times, and delays in cargo clearance. These inefficiencies raise trade costs and reduce competitiveness.

The port sector suffers from outdated practices and frameworks. Chattogram port struggles with congestion, delays, high operating costs, environmental concerns and security risks. It ranks 337th out of 405 in the World Bank Container Port Performance Index. Ships face turnaround times of 3.23 days, compared with 0.86 days in Colombo. Import clearance takes around 11 days, and export border compliance takes about 36 hours.

Bangladesh still follows an outdated port management model that limits efficiency and private engagement. For decades, the Port Authority has been responsible for development, financing, infrastructure and cargo handling. This reflects the "tool port" model, where the authority owns and operates all major equipment and services. By contrast, India, Pakistan and Sri Lanka moved to the "landlord port" model in the late 1990s, separating ownership from operations to attract private investment and improve services.

Ports also operate under a tariff structure unchanged since 2008, restricting the ability to invest in expansion and upgrades. The current pricing does not reflect rising trade volumes, service needs or costs. Without updating the tariff, ports cannot generate the revenue needed for modernisation. Operational costs such as labour, maintenance, energy and security have all increased. Without a tariff adjustment, maintaining service quality and safety will be difficult.

While the RMG sector worries that higher tariffs may cut export margins, the main cost pressure lies elsewhere. Shipping lines and intermediaries often charge $150 to $200 per container in local fees, while actual port handling may cost only $50 to $70. These fees often include vague surcharges and documentation charges.

Strategic projects and global best practices offer a way forward. Many countries with complex trade needs have brought in experienced global terminal operators such as PSA International, DP World and APM Terminals. India, Vietnam and the UAE have opened up for not just investment, but also operational expertise. Bangladesh has taken early steps in this direction. The awarding of operations at Patenga Container Terminal and upcoming plans for Bay Terminal are encouraging. Projects like Matarbari Deep Sea Port and Bay Terminal could ease capacity limits and cut shipping costs by up to 15 percent. But without parallel investment in connectivity, warehousing and digital systems, these gains may fall short. Countries like Vietnam and Singapore show that integrating foreign investment, digital platforms and private sector know-how is essential.

The writer is the chairman of Policy Exchange Bangladesh