Efforts are underway to restore calm in Bangladesh a few weeks after civil unrest saw the 15-year tenure of Prime Minister Sheikh Hasina come to a swift end.

There has been a gradual reopening of critical infrastructure that was temporarily closed due to the political turmoil.

Businesses, particularly garment factories, were heavily impacted by closures, although many have started to resume operations with the situation improving towards the end of last week. Some factories remain closed due to safety concerns, but there is a noticeable trend towards reopening.

According to a report, the garment industry estimates a functional loss of approximately six days of production, though the total impact may be greater.

The airport experienced a brief closure with some air carriers suspending flights. However, flights have resumed operations in and out of Dhaka.

There were border closures which affected both the movement of people without proper visas and the transport of goods. However, trucking routes have reopened, alleviating the backlog that had accumulated.

The port of Chittagong had also faced closures, causing significant congestion and delays in container handling. Reports indicated high utilisation, making it difficult to efficiently unload arriving ships. This congestion has led to a backlog of vessels waiting to dock, with reports suggesting around 50 vessels were affected as of last week. These issues are expected to improve as labour availability stabilises and operations normalise.

“There has been considerable speculation about the potential impact on Bangladesh’s exports, particularly in the garment industry,” Judah Levin, Head of Research at Freightos, explained.

“When disruptions like this occur, businesses that rely heavily on a specific region may start considering diversifying their supply chains or shifting some of their volumes elsewhere.

“We’ve seen this happen before, but I’m not sure that this particular situation will trigger a significant shift away from Bangladesh, given its strong manufacturing specialisation.

“The impact will be felt, but I don’t expect it to result in a large-scale move away from the region.”

Industry patterns

Ocean carriers are increasingly relying on transhipment hubs like Singapore for goods destined for South Asia, the Middle East, and other Red Sea destinations. These goods are no longer being shipped directly as part of long-haul services.

South Asia, including Bangladesh and parts of India, was already dependent on transhipment. However, with more goods being rerouted through these hubs—goods that would typically be shipped directly—congestion is increasing.

This buildup of volumes has contributed to rising ocean freight rates since May. Earlier in the year, we saw a significant spike in rates across all shipping lanes, and this recent development has continued to push rates higher.

Ocean freight rates for the entire region have been on the rise, partly due to the situation in the Red Sea. Capacity was being redirected to routes affected by the diversions created to cope with this situation. This shift, combined with the Lunar New Year demand and other disruptions, caused rates to spike at the beginning of the year.

In May, the congestion from transhipment, which had been gradually building since the start of the year, began to have a more pronounced impact. This congestion coincided with the early start of the ocean peak season, driven by concerns over potential delays later in the year due to the Red Sea situation. As a result, rates started to spike again, not only on long-haul routes from Asia to North America and Europe but also on smaller regional markets.

“These inter-Asia routes, which depend on the same transhipment hubs, suffered from congestion. Additionally, capacity was shifted away from these regional trades to the main routes from Asia to North America and Europe, where demand and rates were extremely high. This shift in capacity further drove up rates in other markets, including Bangladesh. This pattern has been consistent across the region,” Levine outlined.

“So while the political unrest in Bangladesh has exacerbated the situation, it’s not the sole cause for these rate rises.

“The extent of the impact on air cargo will likely depend on how quickly the ocean freight situation stabilises, as this will determine the overall pressure on air cargo rates.”