In Bangladesh, the railway plays an important role for long-distance freight such as bulk and containers, and inter-city passenger traffic. This is particularly true on the most important arterial corridor between Dhaka and Chittagong and the northwest region of the country which carries most traffic. Indian transit traffic carried by BR continues to increase and the freight demand cannot be fully met by BR. This traffic could increase considerably as a result of more subregional cooperation and the opening of new district strategic corridors between Bangladesh, Bhutan, India and Nepal and more Indian transit traffic between West Bengal and the eastern states of India. Transport intensities are expected to increase substantially over the coming years, as the country continues to move from an inwardoriented to an outward-oriented economy. A higher modal share for railways in the expected increase in heavy freight traffic is highly desirable and would be less costly to the overall economy.