Smart logistics: the backbone of Bangladesh’s post-LDC competitiveness

Bangladesh's export success has historically relied on a familiar mix: low labour costs, preferential market access, and the resilience of our entrepreneurs. But with our graduation from least developed country (LDC) status approaching in November 2026, that model is quickly losing ground.

Tariffs are set to rise, global compliance standards are tightening, and supply chains are becoming more digitised and diversified.

At the heart of this challenge lies a long-standing weakness: logistics.

At a recent Star roundtable on "Smart logistics for a competitive private sector", experts warned that unless logistics reforms are fast-tracked, Bangladesh risks a serious blow to export competitiveness in a post-preferential world.

A Costly Bottleneck

Currently, over 80 percent of our freight moves by road—the most expensive and inefficient mode. Rail handles just 4 percent, compared to nearly 20 percent in India. As a result, logistics costs swallow up close to 20 percent of our export expenses—one of the highest rates in Asia.

This hurts profit margins for exporters and increases lead times for buyers.

Md Mahbub ur Rahman, CEO of HSBC Bangladesh, posed a key question: "As we move toward a level playing field, are we ready to compete on equal terms?" Global buyers now expect speed, transparency, and resilience.

A recent HSBC survey across 13 countries revealed that 90 percent of companies are diversifying supply chains, with most investing in digital tracking tools. Yet, in Bangladesh, moving goods from Dhaka to Chattogram still involves up to 17 manual steps.

LDC graduation is not a threat in itself—but entering a highly competitive global trade landscape without preparation is. We need a roadmap, accountability, and contingency planning.

As Rahman noted, "If Chattogram Port is shut for even two days, what is our fallback?"

Infrastructure Isn't Enough

Often, logistics reform is equated with infrastructure—more roads, terminals, ports. But the issue runs deeper. Governance, policy coordination, and regulatory reform are just as vital.

Bangladesh ranks 88th in the World Bank's Logistics Performance Index and fares poorly in port and trade efficiency rankings. These reflect systemic inefficiencies, not just capacity constraints.

The National Logistics Policy of 2023 was a step forward, but implementation has stalled. Outdated regulations, such as colonial-era railway laws, continue to hinder private sector participation. Multiple ministries issue overlapping directives, leading to confusion and inaction.

M Masrur Reaz of Policy Exchange Bangladesh proposed designating the Ministry of Commerce as the lead agency and creating a logistics "war room" under the Chief Adviser's Office.

He also advocated bringing in global port operators like PSA and DP World.

However, recent protests in Dhaka and Chattogram highlight the importance of building public support and addressing concerns transparently.

Sectoral Voices Sound the Alarm

The cement sector spends nearly $500 million annually on logistics in a $3 billion market, according to LafargeHolcim CEO Mohammad Iqbal Chowdhury.

Waterways cost just a quarter of road transport but remain underutilised. In India, rail freight costs Tk 2 per ton/km, while in Bangladesh it is Tk 9.

In the air cargo sector, backlogs of up to 1,500 tonnes at Hazrat Shahjalal International Airport are common. Although Terminal 3 and new SOPs aim to reduce dwell times, without seamless systems, fast-fashion orders could shift to competitors.

The RMG sector is especially vulnerable. H&M's Ziaur Rahman and Pacific Jeans' Syed Tanvir both stressed that logistics reform is about systems and execution, not just infrastructure. Delays at ports, airports, and customs undermine lead times and risk buyer trust.

Former President of Freight Forwarders' Association Mahbubul Anam called for an integrated digital platform linking warehouses, ports, and container stations.

Kamrul Islam Mazumdar of the Inland Container Depot Association noted that unless regulation is separated from operations, even advanced projects like Matarbari deep-sea port may fall short of expectations.

The Clock Is Ticking

The roundtable highlighted critical reforms that are long overdue: digitising customs, operationalising bonded transit warehouses, expanding rail and waterways, and fast-tracking Bay Terminal and Matarbari with global partners.

Other key steps include establishing a known shipper regime, logistics financing plans, public-private dialogues, and workforce training.

These are no longer optional—they are necessities.

We now have just over two years until LDC graduation. In trade terms, that's a blink. Vietnam, India, and Sri Lanka are already racing ahead with integrated logistics ecosystems. If we delay, the gap will only grow.

The danger isn't graduation—it's graduating unprepared, dragging an outdated logistics system into a fast-moving, rules-based global economy. That would mean lost orders, shrinking margins, and diminished market share.

A Strategic Opportunity

But there's a silver lining. If done right, logistics reform can transform Bangladesh's export model from cost-driven to efficiency-driven. Smart logistics can unlock new sectors—agro-processing, pharmaceuticals, footwear—and position Bangladesh as a diversified supply chain partner.

Logistics is no longer a background issue. It is the backbone of competitiveness, the foundation of our post-LDC survival.

Graduation is inevitable. Tariffs are inevitable. So is global competition.

What is not inevitable is decline.

But reform requires urgency, coordination, and accountability. Only then can Bangladesh turn logistics from a bottleneck into a competitive advantage—and secure its place in the global economy.