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Modernising ports for trade competitiveness

Modernizing Bangladesh's Ports: A Key to Enhancing Trade Competitiveness

In an era where global trade dynamics are rapidly evolving, Bangladesh stands at a critical juncture. The nation's ports, long serving as the lifeline for its export-driven economy, are in dire need of modernization to keep pace with international standards and bolster trade competitiveness. This imperative stems from the recognition that efficient port infrastructure is not just a logistical necessity but a cornerstone for economic growth, job creation, and integration into global supply chains. As Bangladesh aims to transition from a least developed country (LDC) status by 2026, upgrading its ports could unlock unprecedented opportunities, particularly in the ready-made garments (RMG) sector, which accounts for over 80% of the country's exports.

At the heart of this discussion is Chittagong Port, Bangladesh's primary maritime gateway, handling approximately 90% of the nation's international trade. Despite its strategic location on the Bay of Bengal, the port has been plagued by chronic inefficiencies. Congestion is a persistent issue, with vessel turnaround times often exceeding five days—far higher than the global average of around two days seen in efficient ports like Singapore or Rotterdam. This delay translates into higher costs for exporters and importers, eroding Bangladesh's competitive edge in a market where time-sensitive deliveries are paramount. For instance, garment manufacturers frequently face penalties for late shipments, which can deter foreign buyers and shift business to competitors like Vietnam or India, where port operations are more streamlined.

The root causes of these inefficiencies are multifaceted. Outdated infrastructure, including shallow drafts that limit the docking of larger vessels, inadequate cargo-handling equipment, and manual processes prone to human error, all contribute to the bottlenecks. Moreover, the port's reliance on manual documentation and clearance procedures exacerbates delays, with customs processes sometimes taking up to a week. Environmental factors, such as siltation in the Karnaphuli River, further complicate navigation, forcing ships to anchor offshore and rely on lighter vessels for cargo transfer—a costly and time-consuming workaround.

Recognizing these challenges, the Bangladeshi government has embarked on ambitious modernization initiatives. A flagship project is the development of the Matarbari Deep-Sea Port in Cox's Bazar, funded primarily by Japan International Cooperation Agency (JICA) with an investment exceeding $3.5 billion. This port, expected to be operational by 2026, will feature a draft depth of 16 meters, allowing it to accommodate Panamax and post-Panamax vessels that Chittagong currently cannot handle. Equipped with state-of-the-art automated cranes, container terminals, and digital tracking systems, Matarbari promises to reduce turnaround times to under 48 hours, significantly enhancing throughput capacity. Projections indicate it could handle up to 8 million TEUs (twenty-foot equivalent units) annually by 2030, a quantum leap from Chittagong's current 3 million TEUs.

Complementing this is the expansion of Payra Port in Patuakhali, another deep-sea facility backed by Chinese investment under the Belt and Road Initiative. Payra, with its 16-meter draft and plans for coal terminals and industrial zones, is poised to serve as a hub for energy imports and heavy industries. The port's strategic positioning could alleviate pressure on Chittagong by diverting bulk cargo, such as coal and cement, thereby freeing up space for containerized goods. Additionally, the Mongla Port in Khulna is undergoing upgrades, including the installation of gantry cranes and improved rail connectivity, to better serve the western regions and facilitate trade with India via land ports.

These modernization efforts extend beyond physical infrastructure to embrace digital transformation. The introduction of a National Single Window (NSW) system, integrated with global standards like those of the World Customs Organization, aims to streamline customs clearance through electronic submissions and real-time tracking. Automation in cargo handling, such as RFID tagging and AI-driven logistics, is expected to minimize errors and corruption, which have historically plagued port operations. Furthermore, public-private partnerships (PPPs) are being encouraged to bring in expertise from international operators, similar to models in Dubai or Shanghai.

The economic implications of these upgrades are profound. Enhanced port efficiency could reduce logistics costs by up to 20%, according to estimates from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA). This cost saving would make Bangladeshi products more price-competitive on the global stage, potentially boosting exports from the current $45 billion to over $60 billion by 2030. In the RMG sector alone, faster turnaround could enable just-in-time manufacturing, attracting more orders from brands like H&M and Walmart. Moreover, improved ports would facilitate diversification into high-value exports such as pharmaceuticals, electronics, and shipbuilding, reducing over-reliance on textiles.

Beyond exports, modern ports would enhance import efficiency, ensuring timely access to raw materials like cotton and machinery, which are vital for industrial growth. This could stimulate foreign direct investment (FDI), with investors drawn to reliable infrastructure. For example, the establishment of special economic zones (SEZs) around Matarbari and Payra is expected to create over 100,000 jobs, fostering regional development in underserved areas. Environmentally, these projects incorporate sustainable practices, such as green energy for port operations and measures to combat coastal erosion, aligning with Bangladesh's climate resilience goals.

However, challenges remain in realizing this vision. Funding constraints are a major hurdle, with the government relying heavily on foreign loans and grants. Delays in project execution, often due to bureaucratic red tape and land acquisition issues, have pushed timelines back. Skilled labor shortages necessitate training programs to operate advanced equipment, while cybersecurity risks in digital systems must be addressed. Geopolitical tensions, including competition with neighboring ports like Kolkata in India or Colombo in Sri Lanka, could influence trade routes.

Experts emphasize the need for a holistic approach. Dr. Ahsan H. Mansur, executive director of the Policy Research Institute, argues that port modernization should be integrated with broader infrastructure development, such as the Padma Bridge and improved highway networks, to create seamless multimodal transport. Similarly, the World Bank's recent report on Bangladesh's logistics highlights that without regulatory reforms, even state-of-the-art ports may underperform.

In conclusion, modernizing Bangladesh's ports is not merely an infrastructure upgrade but a strategic imperative for sustainable economic advancement. By addressing inefficiencies and embracing innovation, the country can position itself as a formidable player in global trade. The success of projects like Matarbari and Payra will depend on effective implementation, international collaboration, and adaptive policies. As Bangladesh navigates its post-LDC future, efficient ports could be the gateway to prosperity, ensuring that the nation's economic sails catch the winds of global opportunity. With concerted efforts, the transformation could elevate Bangladesh from a regional trader to a global logistics hub, benefiting millions and securing long-term competitiveness.

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