The Logistics Tax: Collected Before Any Tariff

Executive Summary. Bangladesh's binding trade constraint is not tariff policy. It is throughput. On the World Bank's Logistics Performance Index, Bangladesh scored 2.6 in 2022, the lowest of the five countries reporting that round, against a peer median of 3.35. Its carriers moved 98.85 million tonne-km of air freight in 2023, the lowest of the six countries and 10.7% of the peer median of 927.9. Its ports moved 3,353,732 TEU in 2024, fifth of six, ahead of only Pakistan, while Vietnam moved 7.28 times as many boxes. Volumes are not stagnant: container throughput is 4.1 times its 2005 level. They are simply small against what the country now needs to move. And the aggregate has been going the wrong way. Trade was 27.95% of GDP in 2025, fifth of six against a peer median of 46.27%, and well below the level the same series reached in 2012. Freight friction is a tax collected in days rather than revenue, it appears in no budget line, and it falls hardest on high-value, time-sensitive goods.

A logistics score is a price, not a grade

The Logistics Performance Index asks freight forwarders to rate the countries they ship through: customs handling, infrastructure, the ease of arranging shipments, tracking, and whether consignments arrive when promised. It is a survey, with all the softness that implies, but it is a survey of the people who set freight rates and quote lead times. What they think a country costs is close to what a country costs.

In the 2022 round Bangladesh scored 2.6. Thailand scored 3.5, India 3.4, Vietnam 3.3, Indonesia 3.0. Pakistan did not report that round, so this is a comparison of five countries, not six, and Bangladesh is last of the five. The peer median is 3.35, putting Bangladesh 0.75 points below it, at 77.6% of the median score.

Source: World Bank World Development Indicators, Logistics performance index: Overall, 1=low to 5=high (LP.LPI.OVRL.XQ), 2022. Pakistan did not report in the 2022 round.

A score gap of this kind is not a reputational problem. It is a working assumption inside every buyer's planning system. A firm sourcing from a country its forwarders rate below its alternatives orders earlier, holds more buffer stock, splits orders across suppliers, and prices the risk of a missed shipping window into the unit cost. None of that shows up as a tariff. All of it shows up in the margin.

The boxes

Container throughput makes the same point in units that cannot be argued with.

Bangladesh's ports handled 3,353,732 TEU in 2024. Vietnam handled 24,423,183, India 23,898,000, Indonesia 14,709,550, Thailand 11,432,626, Pakistan 3,338,000. Bangladesh is fifth of six and clears only Pakistan, and only narrowly. The peer median is Indonesia's 14,709,550 TEU, which leaves Bangladesh 11.4 million TEU short of it, at 22.8% of the median. Vietnam alone moves 7.28 times as many boxes.

The growth record is genuinely good and should be stated as such. Bangladeshi container traffic was 808,924 TEU in 2005. By 2024 it was 3,353,732, a rise of 2,544,808 TEU, or 314.6%, which is 4.1 times the 2005 level. This is not a system that stood still.

Source: World Bank WDI, Container port traffic in TEU (IS.SHP.GOOD.TU), 2024, Bangladesh against comparators.

Both things are true at once, and the second one is what a buyer experiences. Quadrupling from a small base leaves a small number. An exporter does not compare this year's throughput with 2005; it compares the berth it can get against the berth a competitor can get. On that comparison the operative figure is 22.8% of the peer median, not 314.6% since 2005.

The air door barely opens

The sharpest gap in the entire pack is in the air.

Bangladesh moved 98.85 million tonne-km of air freight in 2023, the lowest of the six countries. India moved 1,807, Thailand 1,650, Vietnam 927.9, Indonesia 870.5, Pakistan 309.5. The peer median is 927.9 million tonne-km, so Bangladesh sits 829 million tonne-km below it and carries 10.7% of the median volume.

Both series count what a country's registered carriers move, and the two are not independent. A large share of the world's air cargo travels in the holds of passenger aircraft, so the size of a passenger network and the freight capacity attached to it move together almost by construction. Bangladeshi carriers carried 6,628,497 passengers in 2023, again the lowest of the six. India's carried 180,415,784, Indonesia's 97,045,785, Vietnam's 55,114,832, Thailand's 51,920,692, Pakistan's 7,153,419. The peer median is 55,114,832, leaving Bangladesh 48.5 million passengers short, at 12.0% of the median.

Note what Pakistan does to the size explanation here. Pakistan's container throughput is 3,338,000 TEU, almost identical to Bangladesh's, so the two countries are moving comparable volumes across their quays. Yet Pakistan's air freight is 309.5 million tonne-km against Bangladesh's 98.85, and its air passenger total is 7,153,419 against 6,628,497. Two countries with near-identical sea throughput are not near-identical in the air. Whatever produces the Bangladeshi air gap, it is not simply that Bangladesh is a smaller trading economy than the group's leaders.

This matters more than the tonnage suggests, because of what travels by air. Sea freight suits goods that are cheap per kilogram and tolerant of long lead times. The categories that carry higher value per kilogram, or that decay, or that must respond to a replenishment order in days rather than months, travel by air or they do not travel. A country whose air freight capacity is a tenth of the peer median has an upper bound on how far it can diversify into those categories, and the bound is physical. It cannot be legislated away in a trade policy document.

Rail, and what that comparison cannot carry

Bangladesh had 2,877 route-km of rail in 2019, fourth of the five countries reporting that year. India had 67,414, Pakistan 7,791, Indonesia 5,483, Vietnam 2,481. Thailand does not report for 2019. The peer median is 6,637 km, so Bangladesh runs 3,760 km less track, at 43.3% of the median length.

This is the weakest indicator in the set and should be treated that way. Route length is not normalised for land area or population, and this pack carries neither for the comparators, so nothing here says whether a network is dense or sparse relative to the territory it serves. India's figure mostly measures that India is large. The check against over-reading the set is Vietnam: it runs 2,481 route-km, shorter than Bangladesh's network, and scores 3.3 on the LPI against Bangladesh's 2.6. Track length is not throughput, and one indicator running the other way is a useful discipline against reading the whole pack as a single verdict.

The tax turns up in the aggregate

If moving goods across a border is expensive, the country moves fewer of them relative to what it produces. That is what the trade share shows.

Bangladesh's trade, exports plus imports, was 27.95% of GDP in 2025, fifth of six and above only Pakistan's 27.19%. Vietnam was at 190.3%, Thailand 138.4%, India 46.27%, Indonesia 43.39%. The peer median is 46.27%, so Bangladesh runs 18.32 points below it, at 60.4% of the median share. This is a US$450 billion economy of 173.6 million people that grew 4.2% in 2024 and trades, against its own output, at roughly three fifths of the rate its comparators do.

Source: World Bank WDI, Trade as a share of GDP (NE.TRD.GNFS.ZS), 1990-2025, Bangladesh against comparators.

The long arc is upward but shallow. Trade openness was 18.97% of GDP in 1990 and 27.95% in 2025, a gain of 8.98 points, or 47.4%, which leaves the 2025 share at 1.47 times the 1990 one. Over a shorter and more recent window, container throughput multiplied by more than four from its 2005 base. The country moves far more physical cargo than it used to and has barely raised the share of its economy that crosses a border.

The chart carries the part that matters most, and it is a within-country fact rather than a cross-country one: openness peaked in 2012 and the series has run below that peak ever since. Every objection about country size, domestic market depth or comparator selection applies to the ranking. None of them applies to a country's own series falling away from its own maximum.

Two things this cannot settle. The trade share is a ratio, so it falls when domestic output grows faster than trade does, which is not the same as trade shrinking, and this pack does not carry the export and import levels needed to separate the two. It also moves with import compression and with the exchange rate, neither of which is in the data here. The decline since 2012 is real; its decomposition is not something these six series can deliver.

What would change this conclusion

The claim is that physical and procedural throughput binds, not demand for Bangladeshi goods. Here is the test that would break it. If the trade share climbs back above the 46.27% peer median by 2030 while container throughput and air freight stay near their current levels, then goods found their way out regardless of the freight system, and logistics was never the constraint. If instead the trade share stays near its current level while throughput stays flat, the two are moving together, which is what the argument predicts.

Three moves, each with an owner and a signal.

1. Publish port and airport dwell time as a standing monthly statistic. The LPI is a perception survey taken every few years, which is a poor instrument for managing a system that changes weekly. Owner: Bangladesh Bureau of Statistics, with the port and civil aviation authorities supplying the operational feed. Success signal: a published monthly series with a stated method, so the next LPI round can be checked against measured performance rather than debated.
2. Treat air cargo capacity as trade infrastructure, not as aviation policy. The air gap is the widest in the pack, and it caps diversification into the product categories that pay best per kilogram. Owner: Civil Aviation Authority of Bangladesh with the Ministry of Commerce. Success signal: air freight above 309.5 million tonne-km in the WDI series, which is Pakistan's 2023 level and the lowest of the five peers, and would take Bangladesh off the bottom of the six.
3. Work the procedural components of the index first, because they are cheaper than concrete. Several LPI components describe customs handling, tracking and timeliness rather than physical capacity, and those can improve without a berth being built. Owner: National Board of Revenue with the port authority. Success signal: an overall LPI score above 3.0 in the next round, which would clear Indonesia's 2022 score and move Bangladesh off last place among the reporting countries.

The counterargument

The strongest objection is that four of these six indicators are absolute volumes, and absolute volumes measure how big a country is at least as much as how well it moves things. India will move more boxes and more tonne-km than Bangladesh for reasons that have nothing to do with the quality of either system. This pack carries no peer populations, land areas or GDP levels, so nothing here is scaled per person or per square kilometre. That objection is correct and should be conceded without qualification.

It does not rescue the conclusion, for three reasons. The LPI is already scale-free: it is a quality score between 1 and 5, not a volume, and Bangladesh is last of the five countries reporting at 2.6 against a 3.35 median. Pakistan's near-identical container throughput alongside triple-digit air freight, against Bangladesh's 98.85, shows the air gap is not a pure size artefact. And the trade share has fallen from its own 2012 peak within Bangladesh's own series, where no comparison with a larger country is involved at all.

The second objection is harder, and it is about direction. Thin trade volumes give carriers little reason to add capacity, so weak logistics may be partly the consequence of small trade rather than its cause. That is a real feedback loop and six countries in a single cross-section cannot break it. Nothing here is a causal estimate. What the data supports is an association that is consistent across five separate indicators, with a within-country trend running the same way, which is a reason to act on freight capacity and not a proof that freight capacity alone explains the gap.

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Data sources: World Bank World Development Indicators, retrieved from the BDPolicyLab data lake, 2026-08-10. Comparators are India, Pakistan, Indonesia, Thailand and Vietnam. "Peer median" is the median of the comparators reporting in the stated year, excluding Bangladesh. Years differ by indicator, being the latest with comparable coverage: LPI 2022 (Pakistan not reporting), container traffic 2024, air freight and air passengers 2023, rail route length 2019 (Thailand not reporting), trade share 2025. This is a set of latest-available readings, not a single-year snapshot.

Sources

1. World Bank WDI, Logistics performance index: Overall (1=low to 5=high), LP.LPI.OVRL.XQ: https://data.worldbank.org/indicator/LP.LPI.OVRL.XQ
2. World Bank WDI, Container port traffic (TEU: 20 foot equivalent units), IS.SHP.GOOD.TU: https://data.worldbank.org/indicator/IS.SHP.GOOD.TU
3. World Bank WDI, Air transport, freight (million ton-km), IS.AIR.GOOD.MT.K1: https://data.worldbank.org/indicator/IS.AIR.GOOD.MT.K1
4. World Bank WDI, Air transport, passengers carried, IS.AIR.PSGR: https://data.worldbank.org/indicator/IS.AIR.PSGR
5. World Bank WDI, Rail lines (total route-km), IS.RRS.TOTL.KM: https://data.worldbank.org/indicator/IS.RRS.TOTL.KM
6. World Bank WDI, Trade (% of GDP), NE.TRD.GNFS.ZS: https://data.worldbank.org/indicator/NE.TRD.GNFS.ZS