Progress in logistics performance has slowed for the first time since 2007 for the world’s least developed economies, while emerging economies that implement comprehensive initiatives continue to improve their performance, according to a new World Bank Group report released today.
The latest edition of the Logistics Performance Index, which is a part of the bi-annual report, Connecting to Compete 2016: Trade Logistics in the Global Economy, ranks 160 countries on their trade logistics performance. For the third time, Germany is the top performer. Syria ranked lowest.
“Logistics performance both in international trade and domestically is central to countries’ economic growth and competitiveness,” said Anabel Gonzalez, Senior Director for the World Bank Group’s Trade & Competitiveness Global Practice. “Efficient logistics connects people and firms to markets and opportunities, and helps achieve higher levels of productivity and welfare. Unfortunately, the logistics performance gap between rich and poor countries continues and the convergence trend experienced between 2007 and 2014 has reversed for the least performing countries.”
Countries like Kenya, India and China, all improved their previous performance according to the report, which is based on survey data from more than 1,200 logistics professionals. The report ranks countries on a number of dimensions of supply chain performance, including infrastructure, quality of service, shipment reliability, and border clearance efficiency.
Over the past six years, the world’s top-10 performers have remained consistent and include dominant players in the supply chain industry. Low-income economies with the worst performance are often landlocked, small islands, or post-conflict states. However, for the first time in the history of the Connecting to Compete reports, landlocked countries are no longer automatically disadvantaged, as shown by the performances of both Rwanda and Uganda, which benefit from regionally coordinated efforts to improve trade corridors.
“Logistics performance is about achieving reliability of supply chains linking economies to markets. In the most constrained countries the needs focus on infrastructure, or critical improvements in customs and border management,” said Jean-Francois Arvis, from the Trade & Competitiveness Global Practice at the World Bank Group and co-author of the report. “More logistically performing countries have to address complex sets of issues centered on the development and quality of services. And all top performers show strong cooperation between the public and private sectors in developing a comprehensive approach to efficient logistics.”
Among the criteria measuring countries’ logistics performance, the report shows that logistics services are improving, however, logistics professionals are the least satisfied with rail, regardless of the countries’ income levels. On the border management side, customs agencies got better ratings than all other agencies involved in the process, with those responsible for sanitary and phytosanitary regulations lagging behind.
The logistics agenda has shifted in priorities over the last 10 years, especially as slower trade growth puts pressure on the logistics industry to re-organize its networks and innovate. The scope of policies addressing logistics performance is moving from border issues in trade and transport facilitation to domestic performance concerns. Moreover, the logistics industry and the public sector have to address major challenges such as raising skills and competency levels, and adapting to slower trade growth. Managing the footprint and the sustainability of supply chain is also now a high priority.
“This year’s LPI continues to show the complexity of the reforms and the different priorities depending on a country’s logistics performance,” said Daniel Saslavsky, from the Trade & Competitiveness Global Practice at the World Bank Group and co-author of the report. “Logistics policies are now not only limited to transportation or trade facilitation. They are part of a broader agenda that also includes services, development of facilities, infrastructure and spatial planning.”
Since its inception, the LPI and the Connecting to Compete report have been prepared by the World Bank Group’s Trade team with the participation of the Turku School of Economics and the support of the International Association of Freight Forwarders (FIATA).
Source: World Bank