Experts Say/Port inefficiencies raise trade costs, threaten investment and export competitiveness

Bangladesh’s efforts to reduce import-export costs and attract foreign investment are increasingly challenged by port inefficiencies and weaknesses in its logistics system. Delays in container clearance at Chattogram Port, poor coordination among customs, banks and shipping agents, congestion caused by empty containers, and excessive dependence on road transport are increasing business costs, disrupting production and weakening the competitiveness of Bangladeshi exports.

The problem extends beyond port infrastructure. Economists argue that improving efficiency across the entire supply chain—from unloading containers to delivering raw materials to factories—is essential to lowering costs and meeting international delivery deadlines.

The government views the proposed 15-year concession agreement with Dubai-based DP World to operate Chattogram Port’s New Mooring Container Terminal as a major step towards improving operational efficiency. Commerce Minister Khandakar Abdul Muktadir in an event said recently that the agreement aims to increase the port’s capacity and make Bangladesh’s production and export costs more competitive internationally.

Rejecting criticism that the agreement amounts to selling the country, the minister described it as a time-bound arrangement to improve terminal operations. Bangladesh would decide whether to renew or terminate the agreement when the concession expires, he said.

He also maintained that existing port employees would not lose their jobs and could benefit from improved wages and facilities as efficiency increases.

However, analysts caution that a new operator or additional infrastructure alone cannot resolve the country’s logistics challenges without broader institutional reforms.

According to Sakif Shamim, chairman of the Centre for Strategic and Economic Research (CSER) and managing director of Labaid Hospital Group, Bangladesh’s logistics costs amount to approximately 16 percent of gross domestic product (GDP), compared with a global average of around 10 percent. The gap increases production and transportation expenses, raises the cost of imported raw materials and ultimately puts additional pressure on consumers.

A CSER analysis titled Trade Disrupted by Port and Infrastructure Bottlenecks: What Bangladesh Must Do to Reduce Logistics Costs highlights the scale of the problem. An imported container typically remains in the yard at Chattogram Port for six to eight days, compared with two to three days in Colombo and Ho Chi Minh City.

These additional days can delay the delivery of raw materials to factories, disrupt production schedules and force exporters to pay for air freight to meet deadlines.

Chattogram Port handled approximately 3.2 million twenty-foot equivalent units (TEUs) of containers in the 2024-25 fiscal year. Yet, by the end of June, around 9,330 TEUs remained trapped in the port yard, occupying approximately 22 percent of its space.

Some containers had reportedly remained there for nearly five years because of customs complications, court cases and other legal obstacles that prevented their release or auction.

The accumulation reduces the space available for incoming cargo and places additional pressure on trucks, depots, ships and customs operations.

The report also points to weaknesses in coordination among government agencies and commercial service providers. Although Chattogram Customs House introduced round-the-clock assessment services in September, continuous customs operations do not guarantee uninterrupted cargo clearance. Banks must process duty payments, shipping agents must issue delivery orders, and transport operators must move containers out of the port.

Restrictions on the Real-Time Gross Settlement (RTGS) system during holidays and limitations on large transactions through the National Payment Switch can prevent timely payments. During the September 18-19 weekend, port deliveries reportedly reached only 2,423 TEUs, compared with 3,500 to 4,500 TEUs on regular working days.

Bangladesh already has several digital trade platforms, including ASYCUDA World, the Bangladesh Single Window and the port’s terminal operating system. Nevertheless, customs data have indicated an average cargo-release time of around 11 days. In the 2023 Container Port Performance Index, Chattogram ranked 348th among 405 ports.

Chattogram Port Chairman Rear Admiral S M Moniruzzaman said the introduction of the Port Single Window would allow users to complete tasks previously requiring visits to multiple offices through a single digital platform. The system is expected to integrate services involving the port, customs, banks and freight forwarders, reducing processing time and improving accountability. The authority has also built a one-stop service building at a cost of approximately Tk 800 million to simplify access and reduce security risks.

Another growing challenge is the accumulation of empty containers. Bangladesh imports more containerised goods than it exports, creating an imbalance that puts pressure on inland container depots. The gap between import and export containers increased from 177,832 TEUs in fiscal 2021-22 to a record 329,996 TEUs in fiscal 2025-26. Of the approximately 106,000-TEU capacity across 24 private inland container depots, around 57,000 TEUs of space are occupied by empty containers, restricting storage for export cargo.

Transport infrastructure presents additional obstacles. More than 80 percent of the country’s freight moves by road, while rail accounts for approximately 4 percent, compared with around 20 percent in India. Greater use of railways and inland waterways could reduce transportation costs and ease road congestion.

The government is pursuing new infrastructure projects, including the Laldia Container Terminal, construction of which began on August 30, with operations targeted for 2030, and the proposed Bay Terminal.

On October 1, the government gave policy approval to a draft agreement for DP World to operate New Mooring for 15 years. Under the proposed terms, the company would pay $50 million upfront and invest at least $90 million during the first decade. The terminal currently handles approximately 44 percent of Chattogram Port’s container traffic.

CSER argues that these investments must be accompanied by measurable performance targets, transparent contracts and effective accountability. Operators should be assessed against clear benchmarks for vessel waiting times, container-handling rates, yard utilisation and cargo-release times, with penalties or contract reviews for persistent underperformance.

The analysis recommends clearing long-stalled containers through transparent auctions, aligning banking services with 24-hour customs operations, and using artificial intelligence-based risk assessment to expedite low-risk shipments while subjecting higher-risk cargo to closer scrutiny. Regular container trains linking Chattogram with Dhaka and major industrial centres, stronger rail connections to inland depots, and expanded river transport are also essential.

It further calls for a powerful National Logistics Council to coordinate ports, customs, banks, roads, railways, waterways and shipping operators. Without a permanent coordination mechanism, responsibilities will remain fragmented across agencies.

The urgency is growing as Bangladesh prepares for its scheduled graduation from least developed country (LDC) status, currently targeted for 2029 following the government’s request for a three-year extension. With preferential trade benefits potentially declining and US reciprocal tariffs adding pressure on exporters, improvements in cost, quality and delivery reliability will become increasingly important.

The central challenge, analysts conclude, is not simply building more ports or terminals, but making existing infrastructure work faster, more transparently and at lower cost. By clearing stranded containers, coordinating services around the clock, reducing empty-container congestion and expanding rail and waterway transport, Bangladesh could substantially strengthen its trade competitiveness without relying exclusively on expensive new infrastructure.

In international trade, competitiveness depends not only on the price of a product but also on how quickly and reliably it reaches the buyer. Unless Bangladesh addresses inefficiencies at every stage of the logistics chain, new infrastructure alone will not eliminate the cost burden facing businesses and consumers.