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Opposition Strike Disrupts Bangladeshi Transport, Likely to Blow Lead Times

When it’s deliver-or-die, supply chains become the lifeblood of a company. To that end, the fashion industry has embraced technology to navigate today’s hyper-complicated supply chain, with myriad solutions shaping the first, middle and last mile. Call it Sourcing 2.0.

A general strike, or hartal, is bringing Bangladesh to its knees. According to the Associated Press, schools and most businesses were closed in the capital today and yesterday, as well as port facilities. The opposition RMG party called the strike to protest the disappearance of one their leaders. It follows the enforcement of a three-day strike last week. That strike broke out in violence and twenty-eight people were killed.

Bangladesh has had rapid growth in the last decade, averaging over 7% annually, largely on soaring garment exports. Strikes disrupt transportation in the country, and the Bangladeshi Garments Manufacturers and Exporters Association said that strikes are contributing to difficulties achieving their $20.4 billion export target for 2012.

Business leaders are fed up with the strikes and have called for alternative forms of protest. A World Bank study indicated that Bangladesh lost as much as 5% of its GDP to strikes in the 1990s. The Federation of Bangladesh Chambers of Commerce and Industries released a statement last week saying the hartal was a “destructive event.” The BNP has called 17 days of strikes in the past three years, and support for strikes has fallen as the economy has grown. Strikes are often enforced by thugs paid by political parties and often end in violence and arson, which has contributed to popular opposition to the protest measure.

The Dhaka Chamber of Commerce and Industry has urged opposition parties to end the method altogether, saying it is affecting overseas trade. The disruption of transportation and port operations leaves cargoes and consignments stranded in ports and interrupts shipping schedules. It increases lead times and introduces volatility into the marketplace. It can also contribute to raw materials shortages, as Bangladesh relies on China for trims, synthetics, and some fabric, and looks to India for much of its cotton.

Hartals are a consequence of parliamentary dysfunction and reflect the lack of effective methods for rectifying grievances. Responsible rule and the recognition of comprise positions by the ruling party would go along way toward stabilizing the business environment. That progress is blocked, however, by a “winner takes all” culture that encourages patronage and dogmatism.

An analyst quoted on Voice of America discussed other consequences of the strikes, saying, “It also affects, in a large way, the public expenditure program, which is heavily backloaded towards the end of the fiscal year, and the end is just starting. It also creates a serious disincentive for the foreign direct investors.” The disruptions to the public expenditure program present a real threat to the economy, as Bangladesh lags on provision of essential services and frequently has rolling blackouts for 7-10 hours a day.

Secretary of State Hilary Clinton was in Dhaka on May 5th and urged the ruling and opposition parties to settle their disputes through dialogue. “I am really urging all political parties, not just the government, to do everything necessary to support democracy and find a plan to have free and fair election,” she said at a joint press briefing at the Prime Minister’s Office on Saturday.

Clinton also highlighted the impact of the strikes on the poorest Bangladeshis and the negative impact it has on the investment climate. The garment and apparel sector employs 3.6 million Bangladeshis, and is the largest segment of the economy.

Bangladesh is pushing for duty-free and quota free access to the United States, as well as an extension of the Generalized System of Preference facilities. Clinton expressed hope for further cooperation between the two countries, but clarified that it must be predicated on democracy and rule of law.


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