Multimodal transports to reduce business costs

Despite lower transport costs and other facilities, rail and inland waterways are still neglected in business operations in the country due to a lack of political willingness, inadequate policy support, and a lack of coordination between different concerned ministries.

Experts and sector insiders have stressed applying a multimodal transport system to reduce business costs, engaging the private sector, and ensuring adequate logistics support to bring more foreign investors.

They urged the government to invest 6-8 per cent of total GDP in infrastructure development which is now 3.6 per cent.

Inland water transportation cheaper than roads  

Domestic businessmen and researchers say that the transportation cost will decrease by 30-33 per cent, compared to road transport, if inland waterways can be utilised properly.

Bangladesh has nearly 700 rivers and the country fails to capitalise on the opportunity due to a lack of proper initiatives and giving excess priority to road connectivity only.

Talking to The Business Post, Federation of Bangladesh Chamber of Commerce & Industry (FBCCI) Director Abul Kasem Khan said, “The transport cost will reduce by 33 per cent if the government introduces cargo movement from Chattogram to Dhaka. So, the government should take immediate initiative in this regard.”

“Bangladesh needs around $350 billion investment by 2030 in infrastructure development to face the challenges after the LDC graduation in 2026 and considering the country’s economic size,” he informed.

He urged the government to engage the private sector to bring more domestic and foreign investment in the logistic support sector to combat global competitors.

Speaking at a workshop, Martha B Lawrence, global lead of the Regional Connectivity and Logistics Knowledge Group of the World Bank, said if Bangladesh can improve logistics support adequately, the exports will increase by 20% and logistics costs will be reduced by 25%.

The World Bank Group, the industries ministry, and the BUILD jointly organised the workshop, titled “Formulating National Logistics Industry Development Policy for Bangladesh and Experience from Global Good Practices” in Dhaka.

“Logistics costs are high in most sectors in Bangladesh due to inefficiencies in the system, extreme levels of congestion (on roads and in ports), a large number of empty trips, limited competition among transport modes, and the disorderly situation in the transport sector,” she observed.

Road Transport and Highways Division Secretary ABM Amin Ullah Nuri said the use of water transport is quite less, although it is comparatively cheaper, useful for bulky goods, and during natural calamities.

He informed that Bangladesh has about 14,000 kilometres of waterways (rivers/canals) of which about 5,968 kilometres remain navigable during monsoon and 3,865 kilometres are navigable during the dry season.

“Waterways suffer from navigational hazards like shallow water and narrow width of the channel during dry weather, siltation, bank erosion, absence of infrastructure constrained by the absence of proper surface road links to facilitate the smooth transit of cargo,” he added.

Nuri recommended mobilisation of more resources for railway and inland waterway transportation.

Multimodal transport system stressed to reduce costs

Experts called upon the government to emphasise the multimodal transport system engaging the private sector for sustainable economic development.

Abul Kasem, also the former chairperson of BUILD, said, “The government of India has invested around 99,000 crore rupees through the Sagarmala Public-private Model Project to ensure port-led economic growth by considering their potential coastal areas. The Sagarmala is a successful project. We can follow it.”

He also said policymakers should consider the global good practices and strategies of the countries like India, China, Singapore, and Hong Kong to design the nation’s logistics policy and strategy. Necessary policy reforms need to be ensured by removing the regulatory bottlenecks to attract more domestic and foreign investments in the logistics sector.

“Now economic zones are being built in an unplanned way. We must consider connectivity first to make any economic zone or port successful. We have to understand why the Pangaon Port has failed. Discussion with private stakeholders is needed before implementing any project to take proper advantage,” the entrepreneur said.

Strong connectivity among all the water, air, rail, and roadways is needed to transport products easily and to reduce costs, he said, adding, “We need investment-friendly logistics support. All ports must be functional to reduce business costs.”

Speaking as the chief guest at the workshop, Railways Minister Md Nurul Islam Sujan on Thursday said there is no alternative to ensure transport cost efficiency without using the modern railway system.