#1AmCham Policy Dialogue on "Logistics Sector in Bangladesh - Opportunities & Concerns" By Prof. Md. Mamun Habib, Ph.D., FCILT, SMIEEE School of Business & Entrepreneurship, Independent University, Bangladesh Visiting Scientist, University of Texas, Arlington (UTA), USA Editor-in-Chief, IJSCM, UK and ISCTJ, USA Adjunct Professor, UCSI & Unirazak, Malaysia and PUP, Philippines [email protected], [email protected], [email protected] Organized by the American Chamber of Commerce in Bangladesh (AmCham) The Sheraton Hotel, Banani, Dhaka, July 27, 2022#2• Logistics Industry in Bangladesh EXPRESS DELIVERY The logistics industries in Bangladesh have been thriving for years in line with the steady growth of exports and imports the industry marking the highly progressive. Logistics Chattogram port over the years has been acting as the principal gateway handling around 85% of county's seaborne trade. It needs to address some key challenges including infrastructure development, process improvement and efficient management procedures.#3● Challenges faced by Global Logistics Industry Transportation Issues High Order Intensity Ratio Reducing Transportation Costs Transportation Roadblocks Shortage of the Drivers Port Sector Issues Improving Supply Chain Visibility Tax Structure and Warehousing Problems Lack of Skilled and Specialist Personnel Adopting New Technologies Source: https://navata.com/cms/challenges-faced-by-logistics-companies/#4Key Challenges faced by Logistics Industry Poor Infrastructure (Insufficient integration of transport networks, IT, warehouse and distribution facilities) Trade Regulations (Regulations exist at a number of different tiers, imposed by national, regional and local authorities) Trained Manpower (Both in third party logistics sector and the manufacturing and retailing sectors are very weak as a practical level). 4#5Logistics Index 2022 AGILITY EMERGING MARKETS LOGISTICS INDEX 2022 BANGLADESH Overall Rank: 39 th out of 50 emerging countries Overall Score: 4.44 out of 10 BANGLADESH'S PERFORMANCES ON FOUR METRICS B DOD DOMESTIC LOGISTICS INTERNATIONAL LOGISTICS OPPORTUNITIES OPPORTUNITIES BUSINESS FUNDAMENTALS DIGITAL READINESS Score: 4.99 Score: 4.38 Score: 3.44 Score: 4.38 Rank: 20 Rank: 41 Rank: 44 Rank: 34 OVERALL INDEX SCORES FOR 2022 1 China 8.5 8 out of top 10 ranking 2 India 7.21 positions are 3 UAE 6.72 held by emerging markets from RANK 4 Malaysia 6.32 Asia Pacific 27 Pakistan 4.78 and the Gulf. 33 Sri Lanka 4.60 39 Bangladesh 4.44 Source: Agility Source: World Bank Transport and S&P Global Market Intelligence#6Logistics Index 2022 Bangladesh dropped one position to rank 39th among 50 of the world's most promising emerging logistics markets. Various factors that make them attractive to logistics providers, freight forwarders, air and ocean carriers, distributors and investors. Bangladesh's overall score in these metrics is 4.44 out of 10 the previous year. - same as To support the export growth and diversification, we have to enhance Logistics Index. 6#7Inland Container Depots (ICDs) NEW ICDS NEEDED TO HANDLE INCREASED EXPORTS 19 Private ICDS in Chattogram Capacity: 76,000 TEUS ICD capacity needs to be increased by 1 LAKH TEUS B HHH Current investment in ICDs: TK12,000CR Bangladesh's annual exports hit $52 BILLION in FY22 BGMEA aims to export goods worth $100 BILLION by 2030 Around 35,000 PEOPLE work in the ICDS Source: TBS, July 23, 2022#8• Inland Container Depots (ICDs) These 19 private ICDs, also known as off-docks, usually have around 25-30% vacant space. We need new investment in setting up ICDS so that we can better handle growing export boxes. Goods are not loaded or unloaded inside the port anywhere in the world. 8#9Evolution of ICDs and Export No. of ICDs Export Statistics 1998 ........ 1 1998-99.... $ 531.29 Core 2007 ........ 7 2007-08... $ 1411.08 Core 2021 19 2020-21.... $ 3875.83 Core 2022 21 [19+2 more in final 2021-22.... $ 5000+ Core stage] [Source: EPB] [Source: BICDA] 9#10ICDs Congestion Hundreds of covered vans carrying export cargoes are seen waiting in a long queue for entering a private ICD in Chattogram. [Source: Daily Star, July 7] 110 • The ICDs have been facing an acute congestion of export containers within their premises for a few weeks now. In Chattogram, ICDs handle almost 95% of export goods for shipment and 38 types of import goods.#11• · ● Necessity of Expansion of ICDs Exporters are already suffering from a crisis of vehicles and exorbitantly high truck fares due to the stalemate. ICDs have a lack of infrastructure and efficiency as well as a shortage of workers which was delaying the handling of export cargoes. ICDs have been experiencing a growth in export cargo by around 19 percent in the last six months till June 2022. There is no alternative of expansion of private ICDs, but we have to resolve the bureaucracy as well. 11#12CTG Port Capacity SUPPLY CHAIN IN SHAMBLES SUPPLY CHAIN RUNS ON 4 PILLARS: (status) PLANNING (Good) SOURCING (Bad) MAKING DELIVERY (Bad) (Bad) 1 Demand for sugar, lentil, edible oil, flour and gram- goes up by 20 TO 30% during Ramadan Demand for trucks rise 20% during this time Chattogram port's storage capacity: 49,019 TEUS, Now it has: 49,468 TEUS On Saturday 11 VESSELS at jetties were waiting for offloading of goods ☐ Another 30 CONTAINER vessels at outer anchorage for berthing CTG Port, April-May 2020#13UNDAI *MAERSK CTG Port Safety Issues The Chattogram port has not yet completely implemented the security measures specified by the ISPS Code and the IMDG code. • The Chattogram port is still conducting container delivery service from the main port. Scanners have only been installed at six out of its 12 gates. [Source: TBS, June 23, 2022] 13#14Colombo Port, SriLanka CUSTOMS Container Port Performance Index (CPPI), 2021, Colombo port in 22nd position in the world and top ranking in South Asia. • Common challenges for the ports are handling time, process complexity, competitiveness, administrative & port management. Due to delay of product unloading in the container terminal, we are visualizing supply chain disruption, high cost and low competitiveness. [Source: TBS, June 23, 2022]#15● . • ICDs Safety Issues ICD Policy is being assessed following the devastating fire from dangerous goods at a container yard in Chattogram. After Sitakundu incident, an eight-member committee was recently formed to evaluate the existing policy This committee will review required equipment in ICDs, infrastructural facilities and management of flammable materials, arrangements of required yards and sheds, safety and security arrangements. 15#16● • ICDs Safety Issues The NBR issues an ICD license to a private company after an eight- step process. Some container depots were found accommodating diesel pumps on their premises. Inadequate fire safety measures ● Renewal of their licenses • Most of them lack proper arrangements for handling hazardous products. 16#17• Dhaka Airport Cargo logjam hits Bangladesh exports after scanning failures at Dhaka Airport in September 2020. wwwww Dhaka airport had been hit by significant export delays and congestion after five of its six x-ray cargo screening machines failed. • Backlog issue . Cold chain and storage facilities [Source: The Load Star, September 2020] 17#18• Biman $2-AFO Dhaka Airport In April 2020, the cargo terminal at Dhaka Airport was facing troubles with huge stockpiles of uncleared imported shipments. During that time, the airport was left with huge cargo backlog and congestion The airport warehouse was having more than double its capacity to store imported cargo. [Source: Bangladesh Post, September 2020] 18#19. Opportunities and Concerns NBR should review the facilities before issuing licenses and regular monitoring is essential. NBR should adopt automation in all possible levels at the same time to focus more on expanding Tax net. All projects going anti-environment and against the notion of green economy should be abandoned. Ecosystem must be adopted. We have to ensure off dock CFS and port authorities to be equipped with modern facilities Trained human resource with maintaining ethical issues. 19#20. • Opportunities and Concerns Bangladesh Bank, NBR, port authority, transport authority, nine ministries and 20 agencies are the regulating bodies. It's highly recommended to adopt automations in all ports activities, implementation of the concept of a modern warehousing management system. Government has to give appropriate focus on Logistics sector and to put efforts to enhance Country's Logistics Index. Due to delay of export cargos, exporters were incurring losses as truckers were charging excessively high fares. 20 20#21• • • Opportunities and Concerns Look at the airport, there is no professional scanner. Regarding airport situation, infrastructure development and efficient management procedures, etc. deserve special attention. TQM concept would be applicable. Coordination among port Authority, civil aviation, customs and other stakeholders are very crucial. Traditional mindset would be changed to contribute more for the betterment of the society. Third-party temperature-controlled logistics (TCL) services and cold storage facilities would be situated and operated near airports, seaports, and land border crossings. 21 21#22• ● Reshaping the Future Digitizing the buyer-supplier relationship is a fundamental element for building robust supply chains. With advanced technologies, like Artificial Intelligence (AI), Automation, Internet of Things (IoT), Block chain, Big data, etc., supply chains could quickly switch to alternative providers when regular suppliers face disruption. Let us create smart and agile industry driven resilient supply chains with maintaining ecosystems is the key to building a global trade and investment network that's capable of weathering future storms (Supply Chain Disruption).#23Questions & Answers [email protected], [email protected] [email protected] THANK YOU FOR YOUR ATTENTION!