Recharting the Bay of Bengal: How coastal shipping can redefine India–Bangladesh trade corridors

Bangladesh’s maritime transformation is at a defining crossroads. The Matarbari Container Terminal (MCT) the country’s first deep-draft facility capable of handling 8,000-TEU mainline vessels — symbolizes the nation’s entry into the era of direct global connectivity. Yet, deep ports alone do not make a maritime power; what truly matters is deep connectivity. Linking Matarbari to an integrated inland transport ecosystem through multimodal logistics corridors is now the most urgent task. The government’s National Multimodal Transport Plan, guided by Sheikh Moinuddin, Special Assistant to the Chief Adviser for the Ministry of Road Transport and Bridges and Railways, envisions merging road, rail, and waterways under a unified data-driven system. Supported by the Asian Development Bank (ADB) and the World Bank, this plan seeks to cut logistics costs, improve reliability, and ensure greener trade connectivity nationwide.

Within this vision, Pangaon Inland Container Terminal (ICT) near Dhaka must evolve beyond its current limitations into a trimodal logistics hub integrating river, road, and rail access. Extending the Padma rail link directly to Pangaon would complete a vital chain, connecting Matarbari, Chattogram, Mongla, and Payra ports through both inland and coastal corridors. Such connectivity would ensure the continuous movement of containers even during adverse weather, when coastal shipping halts under Signal No. 4. For Bangladesh’s ready-made garment (RMG) exporters, this would offer a predictable, cost-effective supply chain alternative that bypasses Dhaka’s overburdened roads and reduces congestion in traditional logistics nodes.

The Coastal Shipping Agreement: A Foundation for Regional Integration

A major pillar supporting this multimodal future is the India–Bangladesh Coastal Shipping Agreement signed in June 2015, followed by a detailed Standard Operating Procedure (SOP) in November 2015. The agreement allows river-sea vessels to operate directly between the two countries’ ports, substantially cutting both time and cost. Earlier, containers from India to Bangladesh or to India’s northeastern states had to be transshipped through distant ports like Colombo or Singapore, taking up to 30 days. Under this framework, the same cargo can now reach its destination in 6–7 days, at significantly reduced cost.

The agreement’s objectives were multifaceted:

            To reduce transit costs and time for bilateral trade;

            To boost trade volume by introducing a direct maritime link;

            To enhance regional connectivity by allowing India to use Bangladeshi ports for access to its northeastern states; and

            To decongest congested land borders, such as Benapole–Petrapole, by shifting traffic to sea routes.

This was to be achieved through mutual recognition of crew identity documents, simplified customs procedures, and clear mechanisms for dispute resolution, as detailed in the 2015 SOP.

The First Kolkata–Pangaon Service and Its Collapse

The agreement’s most visible milestone came in February 2017, when the first container vessel service between Kolkata and Pangaon was launched. Pangaon ICT built to relieve the overburdened Dhaka–Chattogram highway offered a sustainable inland alternative. However, the service did not continue successfully. Despite early optimism, the route became dominated by one-way traffic: vessels carried full loads of goods from India to Bangladesh but returned empty.

Several interlinked challenges caused the collapse. High operating costs were the primary issue with vessels returning without cargo, operators were forced to increase freight rates, making the service uncompetitive compared to trucking. Exporters were reluctant to use Pangaon because of unpredictable schedules, additional costs, and customs complexities. Businesses often faced procedural delays and even harassment during clearance, deterring further use.

A few incidents aggravated matters notably, when a container fell into the river and customs seized cargo for an extended period, eroding trust. Coupled with demurrage charges, these problems led importers to avoid Pangaon entirely. Furthermore, a lack of coordination among port authorities, customs, and logistics providers produced inefficiencies. The result was a cost-inefficient system where multiple layers of fees from mainline and barge operators to trucking syndicates made the route unattractive for most shippers.

A New Opportunity: RMG Exports to India

The current trade dynamics, however, have opened a new window of opportunity. Global retail giants such as H&M, Marks & Spencer (M&S), and IKEA have established outlets in India and are sourcing apparel directly from Bangladesh. Their supply chains naturally align with the Pangaon–Kolkata corridor, since RMG consignments can be shipped efficiently via coastal vessels instead of congested land routes.

Initially, these consignments moved through the Benapole–Petrapole border, but recently the Indian government redirected traffic through the Chattogram–Colombo–Mumbai Sea route a longer and more expensive path. If India recognizes the Pangaon–Kolkata container movement as a standard maritime trade route under the Coastal Shipping Agreement, it could reignite two-way traffic and unlock a new phase of bilateral logistics growth. This shift would not only restore cost-efficiency but also revive the Kolkata–Pangaon service, with potential extension further to Visakhapatnam (Vizag).

Such an initiative would have multiple benefits:

            It would create balanced two-way container flow, addressing the “empty-return” problem that doomed the 2017 service.

            It would enhance RMG supply chain efficiency, providing Indian retailers with a shorter and greener sourcing route.

            It would revitalize Pangaon ICT as a critical node in the multimodal network connecting inland Bangladesh to regional markets.

            And most importantly, it would strengthen bilateral maritime trust transforming a previously underutilized corridor into a strategic regional asset.

Linking Matarbari and Pangaon through Multimodal Integration

The success of the Matarbari Port Project depends not only on deep-sea access but on seamless inland distribution. If Pangaon becomes the principal consolidation point for cargo moving to and from Matarbari, the two facilities can function as one synchronized logistics system. By connecting Pangaon’s river terminals to Matarbari via inland water transport and complementing that with a direct rail corridor through the Padma link Bangladesh can establish a resilient “ocean-to-market” route immune to weather disruptions.

Moreover, under a Public-Private Partnership (PPP) model, bringing in global terminal operators like MSC or Maersk with Viability Gap Funding would inject international expertise and efficiency. A unified operator managing both Matarbari and Pangaon could synchronize vessel scheduling, digital tracking, and customs clearance through a single integrated IT system ensuring consistency across the entire multimodal chain.

The Way Forward: Shared Prosperity through Maritime Partnership

Bangladesh’s maritime future will not be measured by how deep its harbors are but by how efficiently containers move from ocean to market. If Matarbari and Pangaon evolve together within the multimodal framework and India reopens and standardizes the Pangaon–Kolkata route for RMG exports the result could be transformative. The corridor could emerge as a model of BIMSTEC and BBIN cooperation, anchoring South Asia’s transition from fragmented logistics to integrated regional trade.

Reactivating the coastal shipping link would mark not just the resumption of a failed route but the beginning of a new era of maritime partnership one that aligns strategic infrastructure, private investment, and regional connectivity to power shared prosperity for both India and Bangladesh.