Bangladesh must rethink its supply chains

Nearly one-fifth of the world's oil, around 18 to 19 million barrels a day, passes through the Strait of Hormuz, accounting for about 20 per cent of global petroleum consumption -the same route that carries Bangladesh's imported fuel. The tensions in the Gulf may seem distant from Bangladesh; however, the country's economy is heavily reliant on energy supplies, maritime trade routes, and, most importantly, over five million of our remittance fighters deployed in the Gulf countries.
Over 80 per cent of Bangladesh's crude oil imports, around 6 to 7 million tonnes of petroleum annually, come from the Middle East, rendering the country vulnerable to geopolitical disturbances. Bangladesh had to purchase LNG shipments from the spot market at nearly three times the earlier prices this year, according to Reuters. Price spikes quickly through the economy, and costs escalate for power generation, transport services, and petroleum import businesses. However, energy is merely the first supply chain shock.
The second supply chain shock comes through global logistics and maritime trade routes. Bangladesh's export economy, mainly the readymade garments (RMG) industry, earned over $47 billion in 2023-24, representing for 84 per cent of overall exports. This sector relies on shipping lanes and air cargo networks connecting South Asia to Europe and North America via Gulf logistics hubs like Dubai and Doha.
Geopolitical tensions delay goods transit and raise freight costs at key centres. Due to airlines rerouting flights across the Middle East, hundreds of South Asian air cargo shipments and containers have been suspended. Delays can harm Bangladesh's export-driven economy, where on-time delivery develops buyer trust.
Remittances constitute a third layer of vulnerability in the supply chain system. Every year, Bangladeshi labourers who live and work in Gulf countries send back billions of dollars home. The number of these workers exceeds five million.
Through the year 2025, Bangladesh was the beneficiary of more than $32 billion in remittances, with approximately half of those remittances coming from the economies of the Gulf region. These revenues contribute to the maintenance of domestic demand and the strengthening of foreign exchange reserves.
More than five million Bangladeshi migrant workers are currently employed across GCC countries, with the largest concentration in Saudi Arabia and the United Arab Emirates (UAE), forming one of the largest labour diasporas in the region. Global volatility can impact Gulf labour markets. Poor host nations' economies or tight migration policies may reduce remittances. This would reduce household income and Bangladesh's product and service demand. Therefore, consumer demand could change quickly.
Markets may shrink as consumers avoid spending beyond basic necessities. Bangladesh imports nearly $70 billion annually, of which energy imports constitute the major share. The Bangladeshi taka has depreciated by over 25 per cent against the US dollar since 2022. The country has already experienced the COVID-19 pandemic, the post-COVID period, and the Russia-Ukraine war, and their impacts were significant. Many people lost their jobs, survived on savings, and the cost of doing business rose due to taka depreciation and tight liquidity in the banking sector. Companies could not open letters of credit (LCs) due to foreign currency shortages. All these were experienced recently. Before fully recovering from these shocks, Bangladesh's economy may not be ready for another major disruption.
When taken as a whole, these interrelated dangers demonstrate that Bangladesh's problem is not limited to the management of crises that are temporary in nature. The architecture of its supply chains must be redesigned. In the course of several decades, global supply chains were developed with efficiency in mind. Businesses and nations concentrated their efforts on lowering costs and decreasing inventory. However, pandemics and global battles have proved that efficiency is no longer enough. From now on, resilience must rule.
A strong supply chain needs various features. Strong finances help enterprises and governments weather price shocks. Governments, corporations, and logistical providers can coordinate disaster responses. Even with problems, exports continue due to fast and reliable ports and transportation networks.
Visibility also matters. Real-time product flow, energy, and logistical data speeds decision-making. Continuous advancements provide supply network flexibility. Sustainability decreases dependency on unpredictable fossil fuel markets, while strong employment rules protect logistics workers.
Service excellence, the ability to reliably deliver goods to foreign buyers, is still the ultimate test of supply chain efficiency. Therefore, the current tensions in the Gulf should be regarded as a strategic warning. Global integration has been the foundation upon which Bangladesh's economic prosperity has been built; nevertheless, this integration also creates vulnerability to geopolitical concerns that are further away. In the absence of increased supply chain resilience, future disruptions will continue to have a ripple effect on energy markets, export logistics, and domestic demand.
It is necessary not only to handle the current crisis but also to make preparations for the next disruption. The transformation of Bangladesh's vulnerability into long-term competitiveness can be accomplished by the diversification of energy sources, the development of logistics infrastructure, the improvement of supply chain visibility, and investment in robust systems.A nation's economy may ultimately be determined by the strength of its supply chain, which is becoming increasingly important in a world that is becoming increasingly unstable.
With over $30 billion in annual remittances, $47 billion in garment exports, and more than 80 per cent of its fuel imported through Gulf energy corridors, Bangladesh's economic stability is closely tied to the security of Middle Eastern trade routes.

Dr Ferdoush Saleheen, Head of the Department of Maritime Logistics and Supply Chain Management at Sharjah Maritime Academy, UAE. ferdoushsaleheen@gmail.com. Dr Md Mamun Habib, is a Professor and Head of Department of Management at the School of Business and Entrepreneurship (SBE), Independent University, Bangladesh mamunhabib@iub.edu.bd.