"Iran war tightens squeeze on Bangladesh’s garment engine", 27 March 2026

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The US-Israel war with Iran has unsettled shipping routes, rattled energy markets and injected a new layer of uncertainty...

The ready-made garment sector...was already navigating a period of stress before the latest tensions erupted...

Rising shipping costs and delays

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Shipping companies have already begun adjusting routes to avoid high-risk areas, adding days or even weeks to delivery schedules.

Freight costs...are climbing again. Industry participants report that war-risk insurance premiums for vessels transiting volatile regions have surged, pushing up overall logistics expenses.

The Dhaka Chamber of Commerce and Industry (DCCI) has warned that a prolonged escalation could significantly increase shipping costs, further eroding competitiveness at a time when global buyers are demanding lower prices...

Energy pressures intensify

Energy has emerged as one of the most immediate vulnerabilities.

Bangladesh depends heavily on imported fuel, including liquefied natural gas (LNG), much of which is tied to global benchmarks shaped by Middle Eastern markets.

As tensions push oil and gas prices higher, manufacturers are facing rising operating costs – particularly for electricity and captive power generation – at a time when passing those costs on to buyers is extremely difficult.

The strain is already visible in industrial hubs around Dhaka and Chattogram, where factory owners report rising fuel and utility expenses.

Small and mid-sized manufacturers appear especially exposed.

Sazzad Amin, owner of a mid-sized garment factory in Gazipur, said his operations have already been scaled back.

“Since this crisis escalated, there is a gas shortage in my factory,” he said. “We’re now running a single shift to cover fuel and utility costs.”

Some businesses are operating on increasingly thin margins, while others are reconsidering expansion plans amid growing uncertainty...

A recent Global Trade Analysis Project (GTAP) assessment suggests a prolonged Middle East conflict could shave up to 3% off Bangladesh’s GDP, largely due to trade disruptions and rising energy costs.

Given the garment sector’s central role in exports and foreign exchange earnings, it would bear the brunt of that impact...

The Red Sea crisis that began in late 2023, due to Houthi attacks, had already disrupted supply chains, forcing nearly 70% of apparel shipments to Europe to reroute around Africa’s Cape of Good Hope. That added 10 to 15 days to transit times and pushed freight costs up by between 40% and 250%.

The current crisis has compounded those challenges.

The closure of the Strait of Hormuz has led major carriers including Maersk, Hapag-Lloyd and CMA CGM to suspend operations in parts of the region.

Hundreds of vessels are reportedly idling in the area, while war-risk insurance premiums have risen by up to 50%...

In the fast-fashion sector, even short delays can dent profit margins. Bangladesh’s garment industry operates on margins of less than 4%, leaving little room to absorb additional costs.

Manufacturers are already seeing shifts in global sourcing patterns.

“The problem is that near-shoring is happening in some cases … If this continues, then there will be a structural shift in global sourcing and Bangladesh will lose orders,” said one manufacturer, who requested anonymity.