Challenges for Bangladesh’s logistics sector - Op-Ed - observerbd.com
Difficulties in the transportation industry of Bangladesh
Bangladesh is currently entering a phase of development and faces many obstacles. One of the main challenges is the requirement for an efficient and fast lead time, strong logistical services, and the development of various transportation methods. Authorities and decision-makers understand that having a well-functioning logistics system is crucial for the country's advancement. They are increasingly aware of the need to support and address the demands of this sector.
At present, the industry is dealing with insufficient infrastructure, traffic jams on the roads, ineffective border crossings, a scarcity of storage facilities, limited use of advanced technologies, and irregular enforcement of policies. These issues are seriously impairing the overall efficiency of logistics operations, delaying deliveries and transportation of goods, raising transportation expenses and time, and hindering the progress of digital tracking systems, digital documentation, and automation.
In order to tackle the difficulties encountered by the transportation industry and harmonize it with the country's ambitions for progress, the Bangladeshi government has acknowledged the necessity for policy assistance and taken certain actions. A few of these actions include the creation of a national policy for transportation, investments in infrastructure, digitalization projects, the establishment of special economic zones, simplification of customs procedures, partnerships between the public and private sectors, and the enhancement of skills.
The Ministry of Industries made a notable announcement on September 25, 2022, unveiling a thorough Industrial Policy. This policy marks a significant shift as it recognizes the importance of logistics in expanding exports. It is the first time that logistics has been acknowledged as a key sector, showcasing the government's dedication to its advancement. The policy covers 21 sub-sectors within the logistics industry, demonstrating the government's plans to prioritize its growth in the upcoming years.
Numerous research projects have been undertaken to assess how well Bangladesh's transportation and distribution systems measure up against those of other nations. These investigations have emphasized the necessity for additional enhancements to the nation's logistical framework, as it strives to transform into a developing nation by 2026 and a developed one by 2041.
Conversely, the government has formed a committee consisting of 29 members. This committee's objective is to create a nationwide strategy for logistics development. The primary goal is to enhance the efficiency of goods and services transportation while promoting the overall growth of the logistics sector.
The head chief of the PMO executive unit will act as the secretary of the committee.
The main tasks of the committee consist of formulating the National Logistics Development Policy, providing policy support, and promoting the efficient execution of current policy structures in order to attract investments in the field of logistics.
Moreover, the committee will provide extensive direction in the creation of policies and growth tactics specifically customized for the logistics sub-industry.
These two new advancements show that there are serious initiatives happening to improve the transportation and delivery industry in Bangladesh. Taking advantage of our beneficial position on the map, which gives us wide access to a large sea expanse, as well as having two natural harbor points, the economy of our country is consistently expanding. The government has dedicated considerable resources to developing the necessary infrastructure, and the private sector has also made remarkable strides, especially in the regions around the Chattogram port.
When we compare Bangladesh to other Asian nations, we can see that some countries have already implemented strategies to improve their logistics systems and infrastructure in order to boost their economic progress. Take Vietnam, for instance. They have also devised a comprehensive plan to integrate all their services and address their logistical challenges. They have recognized that the lack of efficient connections between different modes of transportation is a shared issue between our countries.
They are in search of logistics support service providers who do not have their own physical assets, like truck brokers, freight forwarders, and third-party logistics companies, to join them in order to bring about more order and efficiency.
In the last few decades, significant progress has been made in Inland Container Depots (ICDs) through investments from the private sector. These depots have become instrumental in facilitating exports and have become increasingly important for the country's economy. As the nation's economy continues to grow, so does the significance of these depots. Presently, nearly all exportable goods, about 98 percent, are processed through these ICDs. Consequently, exporters no longer have to face delays arising from port congestion, allowing them to adhere to their shipment schedules without any interruption.
Currently, there are 19 Inland Container Depots (ICDs) that play a crucial role in managing exports. These depots follow international standards, effectively assisting in the export process and contributing to the continual increase in the country's foreign exchange earnings. In addition to ICDs, other sectors of transportation and logistics should be enhanced to strengthen the international trade of the country.
In Bangladesh, there are around ten ministries and twenty four government organizations responsible for managing the logistics industry. Similar to other nations, there is a requirement for a central ministry to regulate this sector and minimize logistics expenses. The utmost priority is to establish efficient coordination, allowing for comprehensive logistics support through a single document.
According to the data, the worldwide economy will grow by approximately $9 trillion by 2030 through the enhancement of trade facilitation efforts, which can reduce average trade expenses by 14 percent. In order to remain competitive in reducing business expenses, the improvement of logistics is absolutely essential. In today's competitive and intricate business era, the development of logistics infrastructure is considered a crucial aspect in guaranteeing industrialization. We must attain our goals of expanding our exports, creating employment opportunities, increasing investments, and attracting foreign direct investment (FDI) for further socioeconomic advancement. Therefore, our main focus should be directed towards the advancement of sophisticated logistics infrastructure.
The suggested policy for the enhancement of the national logistics industry should include easier requirements and regulations in order to bolster the sector.
Bangladesh must not lag behind while other nations in South and Southeast Asia are progressing in providing logistics assistance and have already implemented plans and approaches.
The logistics industry also faces a significant challenge in providing transportation to neighboring countries through the current road infrastructure. In recent times, there has been an increase in the movement of goods from India to Bangladesh, and the government has allowed the use of Bangladeshi roads for this purpose. However, from a business perspective, I believe that our roads are not adequately equipped to handle this heavy vehicle traffic. Constructing robust roads that can withstand the weight of these vehicles is crucial, and regular maintenance will be essential to ensure smooth and efficient transportation for both countries. This will help reduce delays and alleviate the difficulties faced by vehicles crossing the border.
When it comes to road infrastructure and upkeep, it is important to prioritize elements such as maintaining and repairing roads, managing speed, regularly monitoring and evaluating their condition, and resurfacing them. These efforts are necessary to ensure that the roads can handle heavy traffic from vehicles effectively and remain in a good state.
By giving priority to these operational factors, Bangladesh has the potential to enhance their road systems in order to enable smooth transportation of goods, minimize waiting times, and establish a convenient setting for vehicles.
The individual who penned this blog post holds the esteemed position of being the leader of the Bangladesh Inland Container Depot Association (BICDA) and also serves as the Chairman of multiple organizations including Qns Container Services Ltd, Qns Shipping Logistics Ltd, and Qns Enterprise Ltd.
