Border Frictions and Rising Trade Costs: The Impact of Recent Port Access Restrictions Between Bangladesh and India
This article examines the trade and freight cost implications of recent land port restrictions imposed by Bangladesh and India on selected bilateral trade flows. Drawing on Bangladesh Customs data and the UNCTAD Trade and Transport Dataset, the analysis quantifies the volume of trade affected and estimates the additional transport costs arising from forced rerouting of goods via sea or air. India is a major destination for Bangladesh’s apparel exports, where products currently benefit from duty-free market access. However, the imposition of port restrictions, particularly the prohibition of apparel shipments through land routes, effectively undermines this preferential access by raising trade costs to prohibitive levels. Findings show that apparel exporters may face ad valorem freight costs rising from 1 per cent to as much as 25.5 per cent, severely eroding export competitiveness. On India’s side, the restriction on yarn exports via land ports marginally increases freight costs, but the overall impact remains limited given the pre-existing reliance on established seaport routes. The paper calls for urgent policy coordination to restore predictable cross-border trade and cautions against the use of restrictive port access measures that compromise mutual trade gains.