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Bangladesh’s readymade garment (RMG) sector is coming under mounting pressure as the Middle East conflict disrupts supply chains, drives up costs and dampens global demand.

Industry insiders say the impact is being felt across the entire value chain—from raw material sourcing to shipment schedules—raising concerns over a difficult season ahead.

Within days of the conflict, letters of credit (LCs) for raw materials were cancelled under force majeure clauses and later reopened at higher prices, said Sayeed Ahmed Chowdhury. Prices of cotton, yarn, polyester and other fibres have risen by 10–15 per cent, while some suppliers temporarily withheld price quotations, delaying procurement.

At the same time, buyers have started pushing for early shipments, anticipating longer transit times to key markets in Europe and the United States. Orders originally scheduled for May–June are now being requested for delivery as early as April.

Despite this, concerns are building over a potential slowdown ahead. Chowdhury warned of a possible 20–25 per cent shortfall in work orders in the next season due to current disruptions.

The cost pressure is widespread. Mahmud Hasan Khan said prices of most raw materials and accessories have increased by around 10 per cent, while dyes and chemicals have surged by 15–20 per cent, pushing overall production costs up by as much as 12 per cent.

He noted that while early shipment requests could help exporters receive payments sooner, many factories lack the capacity or raw material supply to meet accelerated deadlines.

Energy shortages are adding to the strain. Factories are increasingly relying on generators during power outages, raising operational costs. Around 266 factories in Dhaka and nearby areas now require more than 264,000 litres of diesel daily to cope with four hours of load-shedding, according to industry estimates.

The impact is also spilling into backward linkage industries. Shamim Ahmed said prices of key plastic raw materials, particularly resin, have nearly doubled within a month, driven by global oil price volatility. Resin prices have jumped to $1,500–1,800 per tonne from $900–950 before the conflict.

As a result, packaging costs for garments and other industries have surged, adding further pressure to exporters already grappling with higher input costs.

Shipping and logistics expenses have also climbed sharply. Freight rates from China have risen to $2,600 from $1,600, while local transport costs have increased due to fuel supply delays, said SM Khaled.

Meanwhile, demand-side risks are emerging. Fazlul Hoque said higher global oil prices are squeezing consumer spending in Western markets, leading to reduced order volumes and price negotiations.

“This has created multi-dimensional impacts,” he said, warning that the coming months could be challenging for exporters.

While exports to the Middle East—particularly Dubai—have slowed, the region accounts for a relatively small share of Bangladesh’s garment shipments. However, disruptions in imports of raw materials from major sourcing countries like China, India and Indonesia have had a broader impact.

Although supply chains are gradually normalising, imports are now taking place at higher costs, while buyers are delaying orders or scaling back volumes.

The combined effect of rising costs, supply uncertainty and softening demand is squeezing margins and weakening competitiveness, leaving the country’s top export sector bracing for a turbulent period ahead.