When India quietly pulled the plug on Bangladesh's cargo transshipment facility on 8 April, few anticipated the fallout would be this swift or this sharp. But less than a week later, air freight rates out of Dhaka began to surge, threatening to erode the competitiveness of Bangladesh's exports at a time when margins are already razor-thin.

India's decision ends nearly five years of allowing Bangladeshi cargo to transit through its territory to international airports like Kolkata and Delhi. That corridor is now shut – and with it, a vital low-cost logistics option.

The impact?

Dhaka's spot air cargo rate to Europe has surged to $6.30-$6.50 per kg, breaking all previous records, including those during the pandemic. Rates to the US are hovering around $7.50-$8.00 per kg, up from $6.91 in August 2024. By contrast, freight costs stand at just $4/kg out of Kolkata and $3.50/kg from the Maldives.

Exporters also face additional charges, including Tk2.5 per kg for ground handling, Tk2 per kg for scanning, and Tk0.25 per kg per day for warehouse storage.

"This will push up the cost of doing business, increase lead times, and blunt our competitiveness," said Ashikur Rahman Tuhin, managing director of TAD Group.

And the pain doesn't stop there.

Exporters say they're already receiving notices from airlines indicating that rates may rise further next week, citing growing demand and shrinking cargo space. Without urgent intervention, freight costs could double, warned industry insiders.

Tuhin also flagged another recent policy move by Bangladesh – banning yarn imports via land ports – as a compounding factor. "We're paying an extra 60 cents to $1 per kilogram of yarn. Add to that $1 more per kg on air freight. It's a double hit," he said.

Yet, even as costs spiral, capacity constraints at airports remain unresolved.

Md Shahriar, president of Bangladesh Garment Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA), said that although they were still managing to ship to the EU at around $6/kg, forwarders had informed him that from Saturday, rates would be market-driven – and higher.

"Unless the government immediately moves to add cargo services and address airport bottlenecks, we'll be priced out of key markets," he said.

He also pointed to deeper structural issues: Bangladesh's airport charges are among the highest in the region, and jet fuel prices outpace global averages – factors that quietly feed into the cost spiral.

As policy missteps pile up and international logistics grow more volatile, exporters fear they are being left to fend for themselves, once again, with little room to breathe.

How much cargo went through India?

According to freight forwarders and garment exporters, nearly 18% – or around 600 tonnes – of Bangladesh's weekly air cargo was routed through Indian airports.

Between January 2024 and March 2025, over 34,900 tonnes of garment products worth $462 million were shipped via India to more than 36 countries, including the US, Spain, Italy, Germany, France, Japan, and South Korea.

Bangladesh's cargo handling capacity

Hazrat Shahjalal International Airport in Dhaka has limited capacity for handling export-import cargo. In 2024, the airport processed around 200,000 tonnes of export goods and approximately 50,000 tonnes of imports. Major carriers include Emirates Airlines, Qatar, Turkish, Saudia, Ittihad and Biman Bangladesh.

Bangladesh's two other international airports – Osmani International Airport in Sylhet and Shah Amanat International Airport in Chattogram – handled negligible volumes due to limited international flights and lower cargo demand.

Is there a way out?

Kazi Wahidul Alam, former director of Biman Bangladesh Airlines, believes the quickest solution lies in two immediate steps: operationalising the third terminal at Dhaka airport and appointing a short-term third-party operator to equip Chattogram Airport for cargo handling.

He noted that once the third terminal becomes fully functional, HSIA's cargo handling capacity could triple to 547,000 tonnes annually. "The current capacity at Dhaka airport needs urgent enhancement – but that's not happening," he said. "Out of three scanning machines, one is almost always out of order."

Alam, also the founding editor of The Bangladesh Monitor, an aviation and tourism publication, pointed to space constraints and frequent complaints of goods being lost or damaged at the airport.