As global energy markets remain volatile amid ongoing geopolitical tensions, Bangladesh’s apparel sector is confronting a difficult mix of rising costs, supply-side uncertainty and cautious buyer behavior. Industry leaders say that while the country continues to benefit from its scale and established sourcing relationships, the pressure to adapt to a rapidly changing environment is intensifying.
Rising energy costs squeeze margins, expose structural gaps
The immediate impact of rising oil and energy prices is being felt across the entire production chain, from spinning to finishing, with manufacturers facing higher costs for fuel, electricity and transportation.
Md. Qamruzzaman, Director of Fun Factory Ltd and Functional Apparel Co. Ltd., Hong Kong, and Country Director of Logonet (Thailand) Co. Ltd. for Bangladesh, India and Pakistan warns that the situation may not ease anytime soon, noting that global oil supply disruptions could keep prices elevated for several years. “This crisis may continue for the next four to five years,” he says, adding that Bangladesh’s heavy reliance on imported energy makes the sector particularly vulnerable.
Echoing the concern, Hasin Arman, First Vice President-BAYLA (Bangladesh Apparel Youth Leaders Alliance), Director-MB Knit Fashion Ltd. points out that energy-intensive processes are already under strain, with rising operational costs directly affecting factory-level profitability. At the same time, buyers remain reluctant to accept price increases, leaving manufacturers to absorb much of the shock.
However, Md. Mohiuddin Rubel, former Director of BGMEA and Additional Managing Director of Denim Expert Ltd. draws attention to a deeper issue. He said, “Historically, we have not been very efficient in energy usage and have struggled to utilize it effectively. Pre-existing challenges such as low gas pressure and frequent load shedding have created a structural gap, which, compounded by rising global energy prices, has further widened the competitiveness gap with countries like Vietnam and India.”
Energy has now emerged as one of the fastest-growing cost components in garment production, particularly in wet processing. Meanwhile, competing countries are accelerating investments in renewable energy and efficiency improvements, enabling them to better absorb global shocks. As a result, Bangladesh’s competitive edge remains largely concentrated in basic, cost-driven segments, with limited flexibility to move up the value chain.
Trade route uncertainty adds pressure on cost and planning
Uncertainty surrounding key global shipping routes—especially around the Strait of Hormuz—is adding another layer of risk to the sector. While Bangladesh’s direct dependence on the route for raw material imports may be limited, its link to global energy supply chains makes the impact unavoidable.
Md. Qamruzzaman explains that even indirect disruptions can drive up fuel prices, freight costs and insurance premiums, while also extending transit times. These factors ultimately translate into higher unit costs and increased pressure on delivery schedules.
Md. Mohiuddin Rubel takes a more measured view on immediate sourcing risks but stresses the importance of preparedness. “It remains essential to develop alternative sourcing strategies,” he says, underscoring the need for contingency planning in an increasingly uncertain trade environment.
From an operational perspective, delays are already becoming a concern. Focusing on the operational reality Hasin Arman says, “Longer lead times and shipment delays are already affecting delivery commitments. In such a situation, manufacturers should focus on keeping a reasonable stock of key raw materials, planning production earlier and ensuring that shipments are prepared on time. Close communication with buyers will also be important to manage expectations regarding delivery schedules.”
At a broader level, global brands are increasingly adopting multi-country sourcing strategies to reduce risk. This shift could gradually reshape order distribution, particularly affecting countries that struggle with lead time consistency.
Buyer caution rises, but Bangladesh retains volume strength
On the demand side, the near-term outlook remains cautious. Buyers are taking a more conservative approach, with some delaying orders or reducing volumes in response to ongoing uncertainty.
Hasin Arman notes that this caution is putting pressure on factory utilization and pricing, especially for export-oriented manufacturers. Md. Qamruzzaman also expects continued volatility, including the risk of order cancellations and a shift toward lower-risk, basic product categories.
Also Read : What Rising Energy Prices Mean for Bangladesh RMG
Despite these challenges, Bangladesh’s position as a large-scale, cost-efficient sourcing destination remains intact. Md. Mohiuddin Rubel emphasizes that long-standing relationships with international buyers continue to support order flow, particularly in high-volume segments where reliability and scale are critical.
However, the transition toward higher value-added or premium products is becoming more difficult under current conditions. Rising costs, operational inefficiencies and supply chain disruptions are complicating efforts to move up the value chain.
While Bangladesh may still capture bulk orders as buyers seek stable and cost-effective sourcing bases, there is a growing risk that time-sensitive and higher-margin orders could shift closer to end markets, where lead times are shorter and logistics more predictable.
Industry discussions suggest that the sector’s resilience in the coming years will depend less on cost advantage alone and more on its ability to improve efficiency, strengthen backward linkages and manage energy risks in a more sustainable way.
