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With only 8 Bangladesh-flagged container ships are in operation in 2023[7] — far below what’s needed to handle 50% of the country’s cargo volume. However, domestic container capacity may increase by six new vessels by 2028, but this will still leave a significant shortfall in container shipping transport demand.[8]
It has been reported there are concerns that restrictions on foreign-flagged vessels can lead to waiver processing delays, administrative bottlenecks, and disruptions in transhipment routes, particularly between Chattogram and Colombo, a key hub for international garment shipping.[2][3] It is believed some shipping operators report that shipping costs have increased on certain routes[2], potentially eroding profit margins and making Bangladesh less competitive compared to regional rivals like Vietnam and India.
The RMG sector contributes over $38 billion (2023) annually, accounting for approximately 80% of Bangladesh’s total exports.
Case study: How Bangladesh’s Flag Vessel Act 2019[1] can impact the garment industry
In 2019, the Bangladesh Flag Vessel Act was introduced, requiring 50% of seaborne cargo to be transported by Bangladesh-flagged vessels. While intended to strengthen the local shipping industry, the policy has arguably unintended consequences for the country’s largest export sector: ready-made garments (RMG).
The RMG sector contributes over $38 billion (2024)[18] annually, accounting for approximately 80% of Bangladesh’s total exports[23]. The industry is highly time-sensitive, relying on reliable and affordable global shipping to meet tight delivery schedules set by international buyers. However, it has been reported there may be some concern the implementation of the flag vessel act has possibly introduced shipping delays in some instances[12] and potentially increased logistics costs[4].
Impacts on the garment sector
Several global shipping lines have already reduced services or re-routed vessels, citing regulatory uncertainty and changed commercial conditions. As a result, exporters can face limited options, inconsistent feeder schedules, and costly last-minute renominations.[24][25]
The impact has begun to ripple through the supply chain. Delays in raw material imports and finished goods exports have led to order cancellations, increased air freight reliance, and growing concern among international buyers over Bangladesh’s logistics reliability. Some major brands are reportedly reconsidering sourcing volumes in light of the disruptions.[24][25]
Some shipping operators and industry groups have begun calling for reforms. Proposals include phased cargo quotas, simplified waiver processes, and increased transparency. There is also a growing desire to see shipping and logistics align more closely with broader infrastructure development plans to help strengthen long-term trade competitiveness.[4][16]
Without adjustments, there are concerns the policy may potentially have some impact on the RMG sector.[25] As the country seeks to maintain its status as a global apparel hub and attract foreign investment under Vision 2041, balancing national maritime interests with efficient, competitive trade logistics is important.
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Bangladesh Vision 2041 is an ambitious national development strategy launched by the Government of Bangladesh to transform the country into a high-income, developed nation by 2041.
Bangladesh’s Vision 2041
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How Bangladesh’s flag vessel shipping law is disrupting the garments industry.
How Bangladesh’s Flag Vessel Act 2019 can impact the garments industry
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Maintaining trade competitiveness in light of Bangladesh Flag Vessel legislation.
Maintaining trade competitiveness in light of Bangladesh’s Flag Vessel Act 2019
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