Challenges in Bangladesh's Logistics Policy and Its Impact on Competitiveness

Logistics costs in Bangladesh account for 15-20% of the country's Gross Domestic Product (GDP), which is nearly double the global average. This high cost of logistics presents significant challenges to the nation's competitiveness, especially as Bangladesh aims to enhance its efficiency with the announcement of the National Logistics Policy in 2024.

The State of Logistics in Bangladesh

Despite the introduction of the National Logistics Policy, logistics delays continue to undermine Bangladesh's competitiveness. A substantial gap exists between policy formulation and its actual implementation. This issue is highlighted by field research conducted by North South University, which reveals that unpredictable clearance times continue to affect logistics firms across the country. The Chattogram port, a critical hub for Bangladesh's trade, is ranked 334th out of 348 global ports, exacerbating these challenges.

Transportation inefficiencies further compound the problem. The journey from Dhaka to Chattogram takes approximately 20 hours, and with 80% of goods being moved by road, demurrage costs and cargo delays are prevalent. Lead times to Western markets remain substantial, at 40 to 45 days, contributing to an unpredictable logistics environment that stifles growth.

Policy Commitments and Implementation Gaps

The National Logistics Policy includes several robust commitments aimed at improving the logistics landscape. Key initiatives include the establishment of a National Single Window, the proposed harmonization of licensing processes, development of multimodal freight corridors, and the modernization of cold-chain logistics. A comprehensive digital documentation system is also required to streamline operations.

However, the implementation of these commitments faces challenges due to the fragmentation caused by over 20 government entities. Comparatively, countries like Vietnam have significantly digitized their customs processes, and India has initiated private sector involvement in freight rail. Türkiye and Malaysia have enhanced their ports with automation, setting benchmarks Bangladesh is striving to meet.

Workforce Challenges in the Logistics Sector

Labor shortages remain a persistent issue within Bangladesh's logistics workforce, which has one of the highest vacancy rates across industries. A survey of 1,000 logistics leaders indicated that 37% report high workforce shortages, and 58% say these shortages adversely affect customer service. The logistics industry requires both skilled white-collar workers and essential blue-collar workers for its operations.

There is a significant focus on workforce development in the logistics sector, with robust training programs and the integration of technology in operations being crucial. The development of pathways to new-collar roles, the importance of retraining and upskilling, and collaboration between private and public sectors are essential steps. Hands-on logistics programs in schools and the encouragement of lifelong learning policies, including advanced training in AI and robotics, are also vital for building a resilient workforce ready for growth.

Implications of Bangladesh's Graduation from LDC Status

Bangladesh is set to graduate from its Least Developed Country (LDC) status in November 2026. This graduation will bring an end to export-linked subsidies under World Trade Organization (WTO) rules, necessitating a shift from cash incentives to productivity-focused strategies. As Bangladesh's export strategy must comply with global trade rules, the removal of exemptions from WTO agreements poses a challenge.

WTO-compatible measures, such as duty drawback schemes, are essential to support the transition. A study by the Asian Development Bank (ADB) and Research and Policy Integration for Development (RAPID) highlights the challenges in this transition, noting that WTO rules remain unclear for graduating LDCs. It is imperative for Bangladesh to focus on enhancing productivity and competitiveness while redirecting resources to WTO-compliant support measures.

In conclusion, while Bangladesh's logistics policy aims to increase efficiency and competitiveness, significant challenges persist in terms of implementation, workforce development, and compliance with international trade regulations. Addressing these challenges is crucial for Bangladesh to maintain its competitive edge in the global market.