Shipbuilding Industry in Bangladesh: From River Craft to Global Orders

Bangladesh is a country built by boats. Its rivers carry its food, its fuel and much of its trade, and for centuries its people have built the vessels that move them — first in timber on sloping riverbanks, and today in steel at industrial yards along the Meghna and the Karnaphuli. In 2008 the country crossed a threshold that eluded bigger economies for decades: a Bangladeshi yard delivered an ocean-going ship to a European buyer, and Bangladesh joined the small club of ship-exporting nations. The years since have been a study in contrasts — Hamburg order books and Hamburg-scale disappointments, world-class hulls and bankrupting loans. This is the story of the shipbuilding industry in Bangladesh: an ancient craft that industrialised late, broke into the export market against the odds, nearly drowned in debt, and is now, cautiously, launching again.

A boat-building land

The tradition is genuinely old. Travellers' accounts from the Pala period onwards describe Bengal's sea-going ships trading with South-East Asia, China and Sri Lanka, and the fourteenth-century Moroccan traveller Ibn Battuta noted the region's large fleets and fine vessels. By the sixteenth century, the Venetian traveller Cesare Federici could describe Chittagong as a centre for building large ocean-going ships. Local tradition holds that in the seventeenth century Chittagong's yards built warships for the Ottoman Sultan — in some retellings, his entire fleet — and the Mughal navy certainly drew heavily on vessels built along this coast, at Chittagong and Sandwip. The Ottoman story is best read as proud tradition rather than documented fact, but the underlying reality is not in doubt: Chittagong was one of the great shipbuilding centres of the eastern Indian Ocean.

A similar caution applies to the most famous claim of all — that Bengal-built ships fought at Trafalgar in 1805. The story is repeated in many industry histories and the documentary trail for individual hulls is thin, but Chittagong's yards were verifiably building commercial ships of up to a thousand tonnes in the early nineteenth century, including vessels for the British navy. What is certain is what happened next: as iron hulls, steam engines and industrial yards transformed shipbuilding in Europe, Bengal's timber yards lost the large-vessel trade and contracted to what they had always done at smaller scale — building and repairing the wooden craft of the delta.

The steel age returned slowly. Dockyard and Engineering Works at Narayanganj traces its origins to 1926, and in the Pakistan period the state set up the first modern yards, above all Khulna Shipyard in 1957. The quieter revolution came on the riverbanks: steel-bodied passenger launches from the 1980s, then a flood of cheap plate from the Sitakunda ship-breaking yards in the 1990s that let hundreds of small yards build steel cargo vessels for inland routes. By the late 2000s, roughly two thousand locally built cargo vessels and a thousand passenger vessels were working the inland waterways. The skill base for an export industry was rebuilt, piece by piece, on domestic demand.

The modern yards

The industry today has two tiers. At the base are the hundreds of small and medium yards that build and repair the inland and coastal fleet — by most counts more than 200 shipbuilding companies, with the World Bank's sectoral analysis counting roughly 200 yards in total, of which about 120 to 124 are registered with the industry association. Capacity clusters where the rivers are: around 70 per cent around Dhaka and Narayanganj, roughly a fifth along the Karnaphuli in Chittagong, and the rest in Khulna and Barisal, according to industry studies. Above that base sits a small core of classification-standard yards that can build for export.

The senior member of that core is Khulna Shipyard, commissioned in 1957 with West German technical assistance on 69 acres beside the Rupsha River. For decades it lost money; handed to the Bangladesh Navy in 1999 carrying nearly a billion taka of debt, it cleared its debts by 2008 and has been profitable since, building patrol vessels, tugs, dredgers and tankers — more than 800 vessels built and over 2,500 repaired, by the yard's own count. Alongside it stand Chittagong Dry Dock, the country's principal dry dock, and the Navy-run Dockyard and Engineering Works.

The private exporters are younger. Ananda Shipyard and Slipways, founded in 1983 on the Meghna at Narayanganj and the flagship of the Ananda Group, built the yard that would make Bangladesh an exporter. Western Marine Shipyard, founded in 2000 on 42 acres beside the Karnaphuli and listed on both stock exchanges, grew into the country's highest-volume ship exporter. Karnaphuli Ship Builders, established in 1994, built the Kandari tugboats that Chittagong Port once imported from Denmark. Khan Brothers on the Meghna, Radiant Shipyard — which built Bangladesh's first locally made LPG carrier in 2014 — and FMC Dockyard in Chittagong complete the export-capable group.

The export breakthrough

The breakthrough came in 2008, when Ananda handed over the multipurpose vessel Stella Maris, of around 2,850 deadweight tonnes, to a Danish buyer — the first ocean-going ship exported from Bangladesh. Weeks later, at the SMM shipping fair in Hamburg, Ananda took orders for ten more ships, and Bangladesh's confirmed export order book was reported to have crossed US$400 million. Western Marine followed in November 2010 with its first export delivery, to Germany, and for several years the orders flowed: multipurpose cargo ships for German and Danish owners, vessels for Norway, Mozambique, Kenya and beyond, all built under the supervision of international classification societies.

The totals depend on who is counting. National Board of Revenue data reported in 2024 credit Bangladesh with 45 ships and water vehicles exported since 2006, of which 19 were ocean-going. The companies report more: Western Marine claims 36 ships exported to eleven or twelve countries worth about US$138 million, and Ananda 17 export vessels alongside more than 350 deliveries overall. The Policy Research Institute's Dr Zaidi Sattar put the sector's earnings at US$143 million over the twelve years to 2025 — real money, hard won, but a fraction of what the Hamburg years had promised.

How the industry is organised

Structurally, the industry's strength is the mirror image of its weakness. Its foundation is the enormous domestic fleet: thousands of inland cargo vessels, passenger launches, ferries, tankers and fishing boats that must be built, maintained and replaced in Bangladesh because importing them makes little economic sense. That base keeps hundreds of yards alive and trains the welders, fitters and mistris on whom the export yards draw. Above it, a dozen or so export-oriented yards build to classification-society standards for foreign buyers, while state yards at Khulna and Narayanganj anchor naval and government work.

The cost case is compelling. A Danish benchmark reported in industry literature puts Bangladeshi shipyard labour at about US$1.50 an hour, against roughly US$3 in China and US$8 in South Korea — a decisive gap when labour is a third or more of a small vessel's build cost. Industry associations estimate the sector supports more than 250,000 jobs directly and through its supply chains, though that figure is the industry's own. What the yards cannot match is finance: China's, Korea's and Japan's export credit agencies routinely bundle credit covering most of a ship's price, while a Bangladeshi yard must borrow at commercial rates and ask its buyer to do the same. Again and again, orders Bangladesh could have built have been lost not on price or quality, but on credit.

The hard years

The stall began in the mid-2010s and deepened through the pandemic and the Russia–Ukraine war's cost shocks. Export Promotion Bureau figures tell the bleakest version: Bangladesh earned nothing at all from ship exports in FY2020–21, FY2021–22 and FY2023–24. Western Marine exported no ship between January 2020 and January 2025. Ananda managed a single delivery in that span — a 6,100-tonne vessel to a British buyer in September 2022.

Behind the empty order books sat a debt crisis. Western Marine, the sector's champion, was named in parliament in January 2023 among Chittagong's top loan defaulters, with defaulted loans exceeding Tk 1,500 crore; banks sued it for hundreds of crores more, and in September 2023 one lender put mortgaged yard assets up for auction. The rot was wider than one company: Bangladesh Bank data published in January 2026 put outstanding loans to shipbuilding and ship-breaking together at about Tk 20,506 crore at the end of 2024, of which some Tk 8,031 crore — nearly two-fifths — was classified as defaulted. A Tk 2,000 crore central-bank refinance scheme announced in FY2022–23 was meant to help; industry leaders said in late 2025 that, tangled in procedure, not a single taka of it had reached a yard. Investigative reporting has blamed a mixture of genuine shocks, financial mismanagement and weak lending discipline — a combination that made banks wary of the whole sector, sound yards included.

Policy and prospects

The state has not been idle. The Shipbuilding Industry Development Policy, approved by the cabinet in January 2021, set a target of US$4 billion a year in ship exports by 2025 and banned imports of vessels below 5,500 tonnes to reserve the small-ship segment for local builders. The target was missed by an enormous margin — analysts now speak of US$650 million as a plausible near-term scale — but the policy framework, tax incentives and a 6 per cent cash incentive on ship exports remain in place. In January 2026, Bangladesh Bank went further, allowing genuinely distressed shipbuilders to reschedule classified loans over ten years with a 3 per cent down payment and a two-year grace period.

The strategic bet now is on green shipbuilding. At an industry seminar in August 2025, the Industries Adviser argued that green shipbuilding could become the country's next major export earner after garments, and in July 2026 the European Union's ambassador, with Dutch and Spanish envoys, toured Karnaphuli Ship Builders and Dockyard and Engineering Works to discuss European green finance and technology partnerships. The opportunity is real: the world order book is at record levels, and European owners need yards that can build smaller, cleaner vessels. The risks are real too — among them the scheduled graduation from least-developed-country status in November 2026, which analysts warn could end duty-free imports of shipbuilding steel and squeeze margins further. How the sector develops within the wider business landscape of Bangladesh will depend less on its hands, which are proven, than on its financing.

The industry today

As of November 2026, the recovery is measurable but modest. Ship exports earned US$22.53 million in FY2025–26, up from US$2.94 million the year before. Western Marine has worked through most of an eight-vessel order from the UAE's Marwan Shipping signed in 2023 — the landing craft Rayan in January 2025 ended the country's two-year export drought, tugboats and three more landing craft followed through 2025, and the order's two oil tankers were due in 2026 — alongside a reported Norwegian order for a fishing vessel. Ananda resumed exports in September 2025 with the 5,500-tonne multipurpose vessel Wes Wire, delivered to Turkey's NOPAC Shipping, and reported at least ten export ships under construction. Khulna Shipyard, meanwhile, was running twenty projects at once in late 2025 — landing craft tanks for the Navy, the third launched in October 2026, dredgers for the inland water authority, tugs for Payra Port — reported earnings of about Tk 800 crore in FY2024–25, and in June 2026 laid the keel of an international-standard oceanographic research vessel. Analysts put the sector's confirmed export order book at roughly US$100 million, with perhaps US$200 million more in the pipeline.

That is a long way from the US$4 billion once promised, and well under one per cent of a global market worth some US$200 billion. But it is also unmistakably a working industry again: slipways busy, launches sliding into the Rupsha and the Karnaphuli, buyers returning. Bangladesh learned to build ships for the world once, in wood, and has now learned it again in steel. Whether it can finance what it can build remains the industry's defining question.