2010lojistik performans endeksi

8/3/2019 2010lojistik performans endeksi

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Connecting

toCompete

2010

Trade Logistics in the

Global Economy

The Logistics Performance Index and Its Indicators


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LPI12.48

LPI2.482.75

LPI2.753.23

LPI3.235

Nodata

1isthelowestscore;5isthe

maximumscore.


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Cectg t Cete 2010Trae Lgstcs the Glbal Ecy

Te Loistis Pefomae Idex ad Its Idiatos

Jea-Faois AvisTe Wold Bak

Moia Alia MustaTe Wold Bak

Laui OjalaTuku Sool of Eoomis

Be SepedTe Wold Bak

Daiel SaslavskTe Wold Bak


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2010 Te International Bank or Reconstruction and Development/Te World Bank1818 H Street NWWashington, DC 20433elephone: 202-473-1000Internet: www.worldbank.orgE-mail: [email protected]

All r ights reserved

Te ndings, interpretations, and conclusions expressed herein are those o the authors and do not

necessarily reect the views o the Executive Directors o the International Bank or Reconstruc-tion and Development/Te World Bank or the governments they represent.

Te World Bank does not guarantee the accuracy o the data included in this work. Te boundar-ies, colors, denominations, and other inormation shown on any map in this work do not imply any

judgment on the part o Te World Bank concerning the legal status o any territory or the endorse-ment or acceptance o such boundaries.

Rights and PermissionsTe material in this publication is copyrighted. Copying and/or transmitting portions or all othis work without permission may be a violation o applicable law. Te International Bank or

Reconstruction and Development/Te World Bank encourages dissemination o its work and wil lnormally grant permission to reproduce portions o the work promptly.For permission to photocopy or reprint any part o this work, please send a request with completeinormation to the Copyright Clearance Center Inc., 222 Rosewood Drive, Danvers, MA 01923,USA; telephone: 978-750-8400; ax: 978-750-4470; Internet: www.copyright.com.

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International rade DepartmentTe World Bank1818 H Street NW, Room MSN G4-176, Washington, DC 20433 USAelephone: 202-473-8922E-mail: [email protected] site: www.worldbank.org, www.worldbank.org/trade, or www.worldbank.org/lpi

Te report was designed, edited, and typeset by Communications Development Incorporated,Washington, DC.


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ConnECTinG To CompETE 2010 TrADE LOgIST IcS In ThE gLOBAL EcOnOMy

Frewr

Tis is the second edition oConnecting to Com-

pete: Trade Logistics in the Global Economy,

which was rst published in November 2007.Te Logistics Perormance Index (LPI and itsindicators are a joint venture o the World Bank,logistics providers, and academic partners. TeLPI is a comprehensive index created to helpcountries identiy the challenges and opportu-

nities they ace in trade logistics perormance.Te World Bank conducts the LPI survey everytwo years.

Logistics encompasses an array o essen-tial activitiesrom transport, warehousing,cargo consolidation, and border clearance to in-country distribution and payment systemsinvolving a variety o public and private agents.A competitive network o global logistics isthe backbone o international trade. Unortu-nately, many developing countries have not yet

beneted rom the productivity gains o logis-tics modernization and internationalizationimplemented over the last 20 years by advancedeconomies.

Improving logistics perormance has be-come an important development policy objec-tive in recent years because logistics have a majorimpact on economic activity. Evidence rom the2007 and 2010 LPIs indicates that, or coun-tries at the same level o per capita income, thosewith the best logistics perormance experienceadditional growth: 1 percent in gross domesticproduct and 2 percent in trade. Tese ndingsare especially relevant today, as developing coun-tries need to invest in better trade logistics toboost recovery rom the current economic crisisand emerge in a stronger and more competitiveposition.

On a hopeul note, the 2010 LPI points tomodest but positive trends in key areas such ascustoms, use o inormation technologies or

trade, and investment in private services. It alsoshows that logistics overperormerscountrieswith a higher LPI score than income would pre

dictare countries that have consistently in-vested in reorms and improvements. Te 2010LPI highlights new areas that need urther at-tention, such as the coordination o agenciesinvolved in border clearance and the quality

o domestic trucking and customs brokerageservices.

Connecting to Compete 2007helped spark dialogue in several countries among various stakeholders in the government and between policy-makers and the private sector about measures toaddress logistics bottlenecks and acilitate international trade and transportation. Te optimistic messages rom Connecting to Compete 2010should encourage countries to do even moreparticularly important or countries whose trade

logistics perormance continues to be low.With the LPI, the World Bank aims to ocusattention on an issue o global importance andprovide a platorm or dialogue among government, business, and civil society. By showinghow countries compare to others in the area otrade logistics and illuminating the costs o poorlogistics perormance, we hope the LPI will con

tinue to serve as a catalyst, helping policymakerand the private sector build the case or domes-tic policy reorm, or investment in trade-relatedinrastructure, and or the regional and multilateral cooperation that is needed or countriesto break out o the vicious circle o logisticsunriendliness.

Otaviano CanutoVice-President and Head o Network

Poverty Reduction and Economic Managemen


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iv ConnECTinG To CompETE 2010 TrADE LOgIST IcS In ThE gLOBAL EcOnOMy

Tis is the second report presenting a new data-set or the Logistics Perormance Index (LPIand indicators. Te survey is conducted everytwo years to improve the reliability o the indi-cators and to build a dataset comparable acrosscountries and over time.

Te LPI survey would not have been possi-ble without the support and participation o the

International Federation o Freight ForwardersAssociations (www.ata.com, the Global Ex-press Association (www.global-express.org, theGlobal Facilitation Partnership or ransporta-tion and rade (www.gptt.org), ten major inter-

national logistics companies, and a large group o

medium-size logistics companies worldwide. Tesurvey was designed and implemented with Fin-lands urku School o Economics (www.tse.,which has worked with the World Bank to de-velop the concept since 2000.

Te authors express their gratitude to thehundreds o employees o reight orwardingand express carrier companies around the world

who took the time to respond to the survey.Teir participation was central to the qualityand credibility o the project, and their continu-ing involvement and eedback will be essentialas we develop and rene the survey and the LPIin uture years.

Ackwlegets


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Tis report was prepared by the World BanksInternational rade Department (PRMR,under the guidance o Bernard Hoekman(director and Mona Haddad (sector manager.he project leaders and main authors wereJean-Franois Arvis and Monica Alina Mustra.Authors also included Proessor Lauri Ojala(urku School o Economics, Ben Shepherd,

and Daniel Saslavsky (consultants.1Gerard McLinden, Marc Juhel, Louis-Paul

ardi (ransport Canada), Aart Kraay, AndreasDietrich Kopp, Lilya Repa, Charles Kunaka,Robin Carruthers, and Giuseppe Iarossi provided

major inputs to the survey concept and the review

o the results. Te authors are also grateul toapio Naula (USAID Regional rade Liberaliza-tion and Customs Project) or providing materia

on Central Asia and to Yann Duval (UNESCAPrade and Investment Division or providingmaterial on East Asia. Te LPI survey website2

was designed and developed by Patrick se andSteen Soulejman Janus o the World Bank Insti

tute. Te 2010 LPI website is produced and supported by Arseny Malov and Adarsh Desai romthe World Bank Institute under close guidanceo the core team. Scott Johnson rom the WorldBank Inormation Solutions Group assisted theteam with monitoring survey responses.

Authrs


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vi ConnECTinG To CompETE 2010 TrADE LOgIST IcS In ThE gLOBAL EcOnOMy

Foreword iii

Acknowledgments iv

Authors v

LPI ranking and scores 2010 viii

Summary and key fndings 1

1. The 2010 Logistics Perormance Index 3

From awareness to implementation 3

Logistics perormance in 2010: whats new? 4New eatures o the LPI survey 5Key ndings rom the 2010 LPI 6

2. Unbundling logistics perormance 14

Inrastructure 14Services 14Border procedures and time 16Supply chain reliability 20

3. Policy priorities in trade acilitation and logistics 23

Inrastructure 24Improving the quality o trade and transport services 24Coordinating border management 24Regional acilitation: making trade corridors work better 25

Reerences 26

Appendix 1. International LPI results 28

Appendix 2. Domestic LPI results, by region and income group 32

Appendix 3. Domestic LPI results, time and cost data 35

Appendix 4. The LPI methodology 41

Appendix 5. Comparing the international LPI with other indicators 45

Notes 49

Boxes

1.1 Measuring logistics perormance using the LPI 41.2 Private sector opinions matter 61.3 How precise are LPI scores and ranks? 111.4 Policy applications o the 2007 LPI at the regional and global levels 122.1 rade logistics and acilitation in landlocked Central Asia 21

Table ctets


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Figures

1.1 Lead time to export 51.2 Cumulative distribution o LPI scores, 2010 71.3 2010 LPI score, average and minimum/maximum range by income group 91.4 Distribution o country perormance across income levels, by LPI quintile 91.5 LPI overperormers and underperormers in 2010, relative to income per capita 10

1.6 Number o countries with a statistically signicant change in the LPI rom 2007 to 2010, by income group 111.7 LPI score as percentage o highest LPI score, by LPI quintile, 2007 and 2010 122.1 Respondents indicating high or very high average quality o services and policy restrictiveness o distribution services 152.2 Median import lead time and average clearance time, by LPI quintile 162.3 Median export lead time, by LPI quintile 172.4 Red tape aecting import and export transactions, by LPI quintile 182.5 Compliance with overseas security requirements compared with 2005, by LPI quintile 192.6 Comparison o UNCAD Liner Shipping Connectivity Index and the LPI measures o the transshipment constraint 202.7 Structure o logistics costs aced by traders 212.8 Respondents indicating shipments are ofen or nearly always cleared and delivered as scheduled, by LPI quintile 222.9 Shipments not meeting company quality criteria, by LPI quintile 22

A5.1 Relation o the share o parts and components in total exports and the LPI score 46A5.2 Relationship o Global Enabling rade Index 2009 and 2010 LPI 47A5.3 Doing Business trade acilitation data and LPI 2010 47A5.4 Doing Business import time versus LPI lead import time (median or port/airport 48

Tables

1.1 op 10 logistics perormers 2010 71.2 Bottom 10 logistics perormers 2010 71.3 op 10 logistics perormers 2010, upper middle-income countries 81.4 op 10 logistics perormers 2010, lower middle-income countries 81.5 op 10 logistics perormers 2010, low-income countries 8

1.6 Respondents indicating an improved or much improved logistics environment since 2005, by LPI quintile 132.1 Respondents indicating high or very high quality o inrastructure in listed areas, by LPI quintile 142.2 Respondents indicating high or very high competence and quality o service in listed sectors, by LPI quintile 152.3 Respondents indicating that listed customs procedures are available and being used, by LPI quintile 172.4 Respondents indicating that listed border agencies are o high or very high competence and quality, by LPI quintile 172.5 Respondents indicating that they ofen or nearly always experience delay actors, by LPI quintile 192.6 Export distance, cost, and time in landlocked countries 203.1 ypology o countries according to impediments to logistics perormance 23A4.1 Methodology or selecting country groups or survey respondents 42A4.2 Results o principal component analysis or the international LPI 43A4.3 Component loadings or the international LPI 43A5.4 Correlation matrix o Doing Business and LPI time data 48


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viii ConnECTinG To CompETE 2010 TrADE LOgIST IcS In ThE gLOBAL EcOnOMy

Economy

2010 LPI

Rank Score

% ohighest

perormer

Germany 1 4.11 100.0

Singapore 2 4.09 99.2

Sweden 3 4.08 98.8

Netherlands 4 4.07 98.5

Luxembourg 5 3.98 95.7

Switzerland 6 3.97 95.5

Japan 7 3.97 95.2

United Kingdom 8 3.95 94.9

Belgium 9 3.94 94.5

Norway 10 3.93 94.2

Ireland 11 3.89 92.9

Finland 12 3.89 92.6

Hong Kong SAR, China 13 3.88 92.4

Canada 14 3.87 92.3

United States 15 3.86 91.7

Denmark 16 3.85 91.4France 17 3.84 91.3

Australia 18 3.84 91.2

Austria 19 3.76 88.7

Taiwan, China 20 3.71 86.9

New Zealand 21 3.65 85.0

Italy 22 3.64 84.9

Korea, Rep. 23 3.64 84.7

United Arab Emirates 24 3.63 84.5

Spain 25 3.63 84.3

Czech Republic 26 3.51 80.5

China 27 3.49 79.9

South Arica 28 3.46 78.9

Malaysia 29 3.44 78.4

Poland 30 3.44 78.2

Israel 31 3.41 77.5

Bahrain 32 3.37 76.2

Lebanon 33 3.34 75.1

Portugal 34 3.34 75.0

Thailand 35 3.29 73.6

Kuwait 36 3.28 73.2

Latvia 37 3.25 72.2

Slovak Republic 38 3.24 71.9

Turkey 39 3.22 71.4

Saudi Arabia 40 3.22 71.3

Brazil 41 3.20 70.6

Iceland 42 3.20 70.5

Estonia 43 3.16 69.3

Philippines 44 3.14 68.8

Lithuania 45 3.13 68.5

Cyprus 46 3.13 68.4

India 47 3.12 67.9

Argentina 48 3.10 67.4

Chile 49 3.09 67.3

Mexico 50 3.05 65.7

Panama 51 3.02 65.0

Hungary 52 2.99 63.8

Economy

2010 LPI

Rank Score

% ohighest

perormer

Vietnam 53 2.96 63.1

Greece 54 2.96 62.8

Qatar 55 2.95 62.6

Costa Rica 56 2.91 61.3

Slovenia 57 2.87 60.2

Senegal 58 2.86 59.8

Romania 59 2.84 59.1

Oman 60 2.84 59.1

Tunisia 61 2.84 58.9

Kazakhstan 62 2.83 58.9

Bulgaria 63 2.83 58.8

Malta 64 2.82 58.6

Dominican Republic 65 2.82 58.5

Uganda 66 2.82 58.4

Peru 67 2.80 57.9

Uzbekistan 68 2.79 57.5Benin 69 2.79 57.4

Honduras 70 2.78 57.1

Ecuador 71 2.77 57.0

Colombia 72 2.77 57.0

Macedonia, FYR 73 2.77 56.9

Croatia 74 2.77 56.8

Indonesia 75 2.76 56.5

Paraguay 76 2.75 56.3

Uruguay 77 2.75 56.3

Bahamas, The 78 2.75 56.1

Bangladesh 79 2.74 56.0

Syrian Arab Republic 80 2.74 55.9

Jordan 81 2.74 55.8

Mauritius 82 2.72 55.3

Serbia 83 2.69 54.1

Venezuela, RB 84 2.68 53.9

Congo, Dem. Rep. 85 2.68 53.8

El Salvador 86 2.67 53.7

Bosnia and Herzegovina 87 2.66 53.4

Madagascar 88 2.66 53.2

Azerbaijan 89 2.64 52.6

Guatemala 90 2.63 52.4

Kyrgyz Republic 91 2.62 52.0

Egypt, Arab Rep. 92 2.61 51.8

Georgia 93 2.61 51.8

Russian Federation 94 2.61 51.6

Tanzania 95 2.60 51.4

Togo 96 2.60 51.4

Guinea 97 2.60 51.2

Haiti 98 2.59 51.1

Kenya 99 2.59 51.0

Nigeria 100 2.59 51.0

Yemen, Rep. 101 2.58 50.8

Ukraine 102 2.57 50.6

Iran, Islamic Rep. 103 2.57 50.5

Moldova 104 2.57 50.5

Economy

2010 LPI

Rank Score

% ohighest

perormer

Cameroon 105 2.55 49.7

Niger 106 2.54 49.4

Nicaragua 107 2.54 49.3

Jamaica 108 2.53 49.2

Cte dIvoire 109 2.53 49.2

Pakistan 110 2.53 49.1

Armenia 111 2.52 48.9

Bolivia 112 2.51 48.5

Gambia, The 113 2.49 48.0

Turkmenistan 114 2.49 47.9

Chad 115 2.49 47.9

Congo, Rep. 116 2.48 47.4

Ghana 117 2.47 47.3

Lao PDR 118 2.46 47.0

Albania 119 2.46 46.8

Comoros 120 2.45 46.5Montenegro 121 2.43 45.9

Gabon 122 2.41 45.4

Ethiopia 123 2.41 45.4

Papua New Guinea 124 2.41 45.3

Maldives 125 2.40 45.1

Djibouti 126 2.39 44.8

Liberia 127 2.38 44.4

Bhutan 128 2.38 44.3

Cambodia 129 2.37 44.0

Algeria 130 2.36 43.7

Tajikistan 131 2.35 43.2

Libya 132 2.33 42.8

Myanmar 133 2.33 42.7

Botswana 134 2.32 42.3

Solomon Islands 135 2.31 42.0

Mozambique 136 2.29 41.5

Sri Lanka 137 2.29 41.4

Zambia 138 2.28 41.2

Mali 139 2.27 40.7

Guyana 140 2.27 40.7

Mongolia 141 2.25 40.2

Angola 142 2.25 40.1

Aghanistan 143 2.24 39.9

Fiji 144 2.24 39.7

Burkina Faso 145 2.23 39.4

Sudan 146 2.21 38.7

Nepal 147 2.20 38.6

Iraq 148 2.11 35.5

Guinea-Bissau 149 2.10 35.4

Cuba 150 2.07 34.3

Rwanda 151 2.04 33.4

Namibia 152 2.02 32.8

Sierra Leone 153 1.97 31.2

Eritrea 154 1.70 22.4

Somalia 155 1.34 10.9

LPI ranking and scores 2010


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Tis report presents the ndings o the second edi-tion oConnecting to Compete, a report on the newdataset or the 2010 Logistics Perormance Index(LPI and its component indicators. Te LPI is amultidimensional assessment o logistics peror-mance, rated on a scale rom one (worst to ive(best. It uses more than 5,000 individual countryassessments made by nearly 1,000 internationalreight orwarders to compare the trade logistics pro-les o 155 countries.

Te 2010 LPI also provides a snapshot o selectedperormance indicators in nearly 130 countries, in-cluding expanded inormation on the time, cost, and

reliability o import and export supply chains, inra-structure quality, perormance o core services, andthe riendliness o trade clearance procedures. Te2010 LPI and its indicators encapsulate the rsthand

knowledge o movers o international trade, collectedamid the economic turmoil o 2009.

Te importance o ecient logistics or tradeand growth is now widely acknowledged. Analysis

based on the 2007 LPI or similar inormation hasshown that better logistics perormance is stronglyassociated with trade expansion, export diversica-tion, ability to attract oreign direct investments,and economic growth. In other words, trade logis-tics matter.

World trade is moved between countries by anetwork o increasingly global logistics operators.But the ease with which traders can use this network to connect with international markets de-pends in large part on country-specic actors suchas trade procedures, transport and telecommunica-tions inrastructure, and the domestic market orsupport services. Te LPI and its component indi-cators provide a unique global point o reerence tobetter understand these key dimensions o logisticsperormance.

Germany and Singapore receive the highest rat-ings in the 2010 LPI with scores over 4.08, whileSomalia ranks last with a score o 1.34. As observedin Connecting to Compete 2007, there is a large

logistics gap between high- and low-income countries. Te LPI scores o advanced economies andsome emerging and transition economies are relatively high due to their well-developed trade acilitation programs. But most countries are still in theprocess o addressing their perormance bottlenecksAlthough small dierences in scores and rankingso individual countries should be interpreted withcaution, especially or countries in the intermediate group o perormers, the countries that have

the worst perormancemostly least developedcountriesare hampered by severe capacity constraints that make sustained progress dicult.

Income is not the only determinant o a countrylogistics environment. Even in low-income countriespolicymakers can do much to boost perormanceLiberalizing logistics services markets, or examplecan encourage local service providers to increasequality and price competitively. Tis is particularlyimportant in sectors such as trucking and customsbrokerage that are essential to ecient service deliv-

ery by international orwarders.Countries with low LPI scores tend to havehigher average times to import or export. But it isimportant to keep these delays in perspective. Leadtimes reported by international orwarders are muchshorter than shipping times. Landlocked developingcountries are at a disadvantage because they cannotcontrol shipping conditions outside their bordersImporting into a landlocked developing country typically takes a week longer than or its coastal neigh-bors, but times can vary widely, especially in Arica

Even more than time and cost, logistics peror-mance depends on the reliability and predictabilityo the supply chain. Te level o logistics service avail

able in the best perorming countries is about doublethat in the lowest perorming countries. In the lowest perorming countries, importers and exporterincur extra costs as a result o the need to mitigatethe eects o unreliable supply chains, or exampleby increasing inventory to hedge against ailed deliveries. Te costs o poor perormance ultimately al

Suary a key fgs


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2 ConnECTinG To CompETE 2010 TrADE LOgIST IcS In ThE gLOBAL EcOnOMy

on end users or consumers. Te relativeandofen even absoluteburden o such costs ishighest in the least developed countries.

Unreliability o logistics can come in manyorms in low perormance countries. Excessive physical inspection or inappropriate reliance

on inspector discretion causes large variationsin clearance times, and multiple inspections arerequent. Increasingly strict saety and securitymeasures impair service provision in all but thetop ranking countries.

he inormation obtained rom logisticsproessionals reected in the 2010 LPI is veryrelevant or helping to identiy priorities orgovernment agencies planning to implementreorm agendas in cooperation with privatestakeholders:

Except in high-income countries, theavailability and quality o trade-relatedinrastructure is a major constraint to perormancebut the specic priori-ties tend to vary across countries. In-ormation technology inrastructureis widely available and widely used ortrade processing, even in low-incomecountries. Countries in the interme-diate range o logistics perormancetend to be relatively more impacted by

the quality and availability o physicalinrastructure (ports or roads. Railservices receive very low scores almosteverywhere.Ecient border management and co-ordination o the various agencies involved in border clearance is increas-ingly important. he perormance oagencies responsible or enorcement osanitary and phytosanitary regulationand to a lesser extent other types oproduct standardsappears to lag wellbehind customs in many countries. LPIsurvey respondents rate the activities osuch agencies as a major actor leadingto additional, sometimes redundant,

paperwork and inspection processes inthe lowest perorming countries.A major challenge or the internationalcommunity is how to help the lowest perorming countries benet rom anincreasingly open global trading system.

Tese countries need to make substan-tial improvements in logistics compe-tence, processes, and business practices,which may be dicult to attain givennumerous other priorities. Te challengeis compounded by the act that many othese countries are landlocked and ofendepend on transit countries that havelow logistics perormance themselves.o escape the resulting multiplicative e-ects on trade costs, enhancing regional

cooperation and implementing ecienttransit systems on trade corridors iscritical.

While Connecting to Compete 2010 high-lights priority areas or increased policy atten-tion, the report oers an optimistic message. Lo-gistics proessionals assess the trends in logisticsand trade acilitation in their country o workto be generally positive. Te use o increasinglystandardized inormation technology solutionsin logistics is widespread worldwide, and cus-

toms reorm has progressed in most countries,irrespective o their level o perormance.In act, the logistics perormance o a sig-

nicant number o countries is gradually con- verging toward the level attained in the topperorming countries. Part o this convergenceis driven by a global trend toward consolidationand homogenization o service provision, espe-cially in container, air reight, express cargo, and

contract logistics. Te current economic situa-tion will urther encourage this trend. But theincreased awareness and proactive policies o agrowing number o countries also play a majorrole in driving better perormance, underpin-ning some o the most encouraging increases inLPI scores compared with the 2007 LPI report.


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trade logisics perormance

is direcly linked wi

imporan economic

oucomes, suc as rade

expansion, diversicaion

o expors, and grow

The 2010 Lgstcs perrace iexSECTion

1

From awareness to implementation

International trade is moved by a network oincreasingly global logistics operators who dealwith a number o unctions in the internationalsupply chains: ocean shipping, air reight, landtransport, warehousing, and third party logis-tics. Globalization has made the demand or

logistics services more sophisticated, pushingor integration and diversication o services tohelp operate uninterrupted supply chains. Keysegments o the logistics industry3 are domi-nated by 25 large corporations, especially in themaritime, port, and air reight segments.4 Butthe industry remains much less concentratedin traditional subsectors that are more localin nature and have low costs o entry, such astrucking or traditional reight orwarding andcustoms brokerage. In global logistics the physi-

cal movement o goods is supported by a chaino service providers who should work togetherseamlessly.

Te ease with which exporters can connect tothis logistics network5 depends on domestic ac-tors such as inrastructure, trade procedures, andthe market or trade-related support services. In-ternational companies trying to implement con-sistent standards worldwide nd that the level oservice they can achieve depends on local oper-ating conditions in each country. A recent tradeacilitation audit in a Mediterranean country6ound that leading express carriers were not per-mitted to operate 24/7, own bonded acilities, oremploy their own brokersall basic prerequisitesor delivering courier or parcel service.

Facilitating trade and transport is essentialor countries to compete in the global market-place: traders need to be able to move goodsand services across borders on time and withlow transaction costs. Extensive recent research

evidence conirms this link. As measured bythe World Banks Logistics Perormance Index(LPI, trade logistics perormance is directlylinked with important economic outcomes, such

as trade expansion, diversication o exports, andgrowth (see appendix 5 or more details.

Countries wishing to improve trade logisticsmay need to reorm and modernize border man

agement institutions, change transport regulation policy, and, in some cases, invest signi-cantly in trade-related inrastructure. Te keyissuehighlighted by the 2007 LPIis that atrade supply chain is only as strong as its weakest link. Determining where the weakest linksare and addressing them through targeted de-velopment interventions has thereore becomea major element o the trade acilitation and logistics agenda.

Until recently, policymakers and private

sector stakeholders have not had the data theyneeded to identiy trade constraints or create con-stituencies or reorm. Te LPI lls that gap. Terst edition (2007) helped intensiy the dialoguebetween policymakers and the private sector inseveral countries about logistics bottlenecks andacilitating international trade and transportation at the country or subregional level.

In the two years since the rst LPI, severacountries have launched programs promotingimprovements in logistics perormance. Ratherthan separately addressing issues such as borderprocedures, port perormance, internationatransit, or investment in services, more countriesare implementing comprehensive programs toaddress the weakest links in their macro-supplychain and stimulate cooperation between publicagencies and private stakeholders.

For example, shortly afer the 2007 LPI report, Indonesia launched an ambitious publiand private dialogue on trade acilitation and


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logistics. It prepared an action plan addressingthe costs o international trade (port acilita-tion, as well as the unique logistics costs o alarge archipelago. Vietnam has embarked on asimilar process.

With the LPI, the World Bank aims to ocus

attention on an issue o global importance andprovide a platorm or dialogue among govern-ment, business, and civil society. By showingcountries how they compare with their competi-tors and illuminating the costs o poor logisticsperormance, the LPI indicators can continueto serve as a catalyst, helping policymakers andthe private sector build the case or reormand helping countries break out o the viciouscircle o logistics unriendliness.

Logistics perormance in 2010:whats new?

Te World Bank conducts the LPI survey everytwo years. Te core approach remains the same as

in 2007: in the rst (international part respon-dents assess six key dimensions o logistics per-ormance in eight important overseas markets; inthe second (domestic) part they provide detailed

data on the logistics environment in their owncountry, including a mix o qualitative and quan-

titative time and cost data (see box 1.1. Tanksto increased private sector involvement in theLPI survey, country coverage or the interna-tional LPI has increased rom 150 to 155.11

Although the LPI represents a useul bench-mark o a countrys logistics perormance, theLPI survey also collects important and detaileddata on domestic logistics and the time and costburdens o import and export transactions.Country coverage or the domestic LPI hasincreased to nearly 130 countries. Tese data

allow practitioners, analysts, and policymakersto examine the determinants o logistics peror-mance in individual countries. Used jointly, theinternational and domestic data can identiysupply chain bottlenecks. Comparison o index

te World Banks Logisics Perormance Index (LPI) summarizes

e perormance o counries in six areas a capure e mos

imporan aspecs o e curren logisics environmen:

Eciency o e cusoms clearance process.

Qualiy o rade and ranspor-relaed inrasrucure.

Ease o arranging compeiively priced sipmens.

Compeence and qualiy o logisics services.

Abiliy o rack and race consignmens.

Frequency wih which shipmens reach he consignee wihin

e sceduled or expeced ime.

these areas range rom radiional issues (cusoms procedures

and inrasrucure qualiy) o new concerns (racking and racing

sipmens, imeliness in reacing a desinaion, and e compe-

ence o he domesic logisics indusry).7 None o hese areas alone

can ensure good logisics perormance. their selecion is based on

he laes heoreical and empirical research8 and on exensive iner-

views wi proessionals involved in inernaional reig logisics.9

te LPI uses sandard saisical ecniques o aggregae e daa

ino a single indicaor10 (see appendix 4 or a deailed descripion

o e way in wic e LPI is calculaed). tis approac makes i

possible o conduc meaningul comparisons across counries, re-

gions, and income groups, as well as o underake counry-specic

diagnosic work.

Because ese vial aspecs o logisics perormance can bes

be assessed by operaors on e ground, e LPI relies on a sruc-

ured online survey o logisics proessionals rom e companies

responsible or moving goods around e world: mulinaional

reig orwarders and e main express carriers. Freig orward-

ers and express carriers are in a privileged posiion o assess ow

counries perorm. And eir views maer, direcly aecing e

choice o shipping roues and gaeways and infuencing rms deci-

sions abou producion locaion, coice o suppliers, and selecion

o arge markes. teir paricipaion is cenral o e qualiy and

credibiliy o e LPI projec, and eir coninuing involvemen and

eedback have been essenial in urher developing and rening he

survey in is second ediion o e LPI. Nearly 1,000 logisics pro-

essionals rom inernaional logisics companies in 130 counries

paricipaed in is ediion o e LPI survey, a 25 percen increase

rom 2007and a esamen o e ineres e LPI as generaed

in e privae secor.

te LPI survey consiss o wo major pars oering wo di-

eren perspecives: inernaional and domesic. te inernaional

LPI provides qualiaive evaluaions o a counry, in e six areasdescribed above, by is rading parnerslogisics proessionals

working ouside o e counry. te domesic LPI provides bo

qualiaive and quaniaive assessmens on he counry by logisics

proessionals working inside i, including more deailed inormaion

on e logisics environmen, core logisics processes, insiuions,

and perormance ime and cos daa. this addiional inormaion on

dieren aspecs o logisics was used o inerpre he LPI as well as

validae and crossceck e inormaion underlying i.

te LPI quesionnaire is available a www.worldbank.org/lpi.

Box 1.1 Measuring logistics perormance using the LPI


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te World Bank aims

o ocus aenion on an

issue o global imporance

and provide a plaorm

or dialogue amonggovernmen, business,

and civil sociey

scores across countries should thereore only bea starting point or using the LPI.

New eatures o the LPI survey

Te LPI survey has been rened in light o eed-

back on the 2007 survey rom users, policy-makers, and logistics proessionals. here is very little change in the rst (internationalsection, in which respondents assess the samesix key dimensions o logistics perormance ineight important overseas markets as they didin 2007thus maintaining a comparable wayor computing the LPI. But the revised survey(conducted in 2009 collects extensive newinormation in the second (domestic) section

such as more detail about the customs clearance

processand increases the quality and scope othe quantitative physical perormance indicatorsthat can help support sound policymaking.

Expanded inormation includes:ime/cost data or import and exporttransactions.Customs administration and procedures.Border security measures (rom an ad-ditional question in the internationalsection.Quality data or inrastructure and ser-

vice providers.Te major innovation o the revised surveyis the import and export time/cost data. Re-spondents sel-identied as having experience inexport pre-carriage (between the sellers actoryand port or airport, excluding international ship-

ping), export carriage (by land, between the sell-ers actory and buyers warehouse, import on-carriage (between port or airport to the buyerswarehouse), or import carriage (by land, betweenthe sellers actory and buyers warehouse.

Tese distinctions enabled the LPI to iden-tiy logistics concerns or specic types o ship-ping, including important dierences betweenmoving goods by land and by sea or by air. Forexample, respondents describing the export oa ull load rom their home country providedseparate time and cost data or the two portionso the supply chain in their home country (g-ure 1.1): export pre-carriage between the sellersactory and port or airport and export carriage

by land between the sellers actory and buyerswarehouse.12

Te revised survey instrument also providesextensive new details on the customs clearanceprocess in the domestic section o the LPI, al-lowing a more nuanced analysis o particular

aspects o customs and the clearance process.In addition to assessing clearance time and rat-ing the eciency o customs as in 2007, respon-dents also assessed customs valuation methods;methods or determining whether or not ship-ments will be physically inspected; use o elec-tronic submission, pre-arrival clearance, andpost-clearance audit procedures; and the trans-parency o customs procedures and administra-tion, including the extent o industry consulta-tion, advance notication o regulatory changes,

and availability o review or appeal procedures.Reecting the important role now played by

border security requirements, a new question oncargo security in the international part o thesurvey is designed to help assess the extent towhich these measures constrain internationalsupply chains. For each o the eight major trad-ing partners o their home country, respondentsindicate whether it has become easier or morecomplicated to comply with cargo security re-quirements, such as screening and provision o

advance inormation. Te base year or compar-ative purposes is 2005.he 2007 LPI ocused on the quality o

two types o inrastructuretransport andtelecommunicationsand the competence o

Source:Authors.

Alongsidevessel

Deliveryto dock

Point of originsellers factory Exporting

country Border

Delivered tobuyers

warehouse

Figure1.1 Lead time to export

Lead time export

EXW

(shipper)

FOB

(free carrier atport of loadingor equivalent)

DDP

(deliveredduty paid)


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having an LPI lower by

one poinsuc as 2.5

raer an 3.5implies

wo o our addiional

days or movingimpors and expors

beween e por and a

companys wareouse

a range o logistics service providers. Te 2010LPI expands coverage in these areas in two ways.First, inrastructure data now separately iden-tiy ports, airports, road, rail, warehousing, and

transloading acilities, and inormation andcommunications (IC) inrastructure. Second,

respondents are now asked to assess both thecompetence and quality o core logistics serviceproviders, such as transport operators, distribu-tors, reight orwarders, customs and borderagencies, and shippers. Focusing on quality oservice in addition to the competence o serviceproviders provides important additional inor-mation on the determinants o overall logisticsperormance (box 1.2.

Key fndings rom the 2010 LPI

As in 2007, the 2010 LPI shows that high-income countries dominate the top logisticsrankings (table 1.1. Te list o countries in theglobal top 10 is very similar to the 2007 top10.14 Most o them can be seen as key players inthe logistics sector, occupying important placesin a variety o global and regional supply chains.Te results mirror the openness o these coun-tries to international trade and investment aspart o their successul economic development

strategy.By contrast, the 10 lowest perorming coun-tries (table 1.2 are almost all rom the low- andlower middle-income groups, geographicallyconcentrated in Arica. In most cases, they

can be regarded as heavily marginalized romregional and global supply chains. ables 1.3through 1.5, which present the top 10 perorm-ers by income group, largely reinorce theseassessments.

How do the LPI scores and rankings relate

to logistics perormance on the ground? Usingadditional country-specic inormation gath-ered in the survey, it is possible to give an idea othe average association between LPI scores andperormance in particular areas. For example,having an LPI lower by one pointsuch as 2.5rather than 3.5implies two to our additionaldays or moving imports and exports betweenthe port and a companys warehouse. It alsoimplies a rate o physical inspection that is 25percentage points higher.15 Tese ndings show

the ways in which the LPI can be used to helpidentiy bottlenecks and supply chain reliabilityproblems in practice.

Figure 1.2 shows the cumulative distribu-tion o LPI scores, with vertical lines indicatingthe quintile boundaries.16 Tis report will ofenpresent the components o the LPI by quintiles(containing equal numbers o countries to a-cilitate reading the results. Te fh (bottomquintile contains the countries with the lowestLPI scores, the rst (top) quintile those with the

highest score.Te distribution o LPI scores suggests ourtypes o country logistics environments, in-troduced in the 2007 edition oConnecting toCompete: logistics unriendly, or severely logis-tics constrained countries, such as least devel-oped countries (bottom quintile; partial per-ormers, such as the low- and middle-incomecountries acing similar constraints (ourth andthird quintiles; consistent perormers, such ascountries achieving better logistics perormancethan their income group (second quintile; andlogistics riendly, high perormers, or the mostpart high-income countries (top quintile. Techallenges aced by these dierent groups willbe discussed in sections 2 and 3.

The logistics gap persists

LPI scores are on average about 45 percenthigher or high-income countries than or low-income countries (gure 1.3. Tis gap is to be

te LPI combines quaniaive and qualiaive assessmens wiin dual inernaional

and domesic perspecives on logisics perormance. Par 1 o he survey (inernaional)

relies on qualiaive indicaorsprivae secor expers raing perormance o heir rad-

ing parners on e basis o eir own opinions and experienceacross a range o in-

dicaors on various dimensions o logisics perormance. In conras, par 2 (domesic)conains boh qualiaive assessmens o he domesic logisics environmen and quan-

iaive daa on perormance o domesic supply cains and core logisics processes

(ime, cos) by inernaional proessionals locaed in e counry evaluaed.

hallward-Driemeier and Aerido sow a rm-level qualiaive daa correlae

srongly wi quaniaive measures o e business environmen, weer aken

rom wiin a survey (suc as in e LPI) or rom ouside sources.13 tis conrms

a qualiaive measures o consrains can capure meaningul variaions across

counries and wiin counries and ereore refec a real assessmen o acual

condiions on e ground and ow imporan ey are o e rm.

Box 1.2 Private sector opinions matter


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Economy

2010 LPI 2007 LPI

LPIrank

LPIscore

% o highestperormer

LPIrank

LPIscore

% o highestperormer

Germany 1 4.11 100.0 3 4.10 97.1

Singapore 2 4.09 99.2 1 4.19 100.0

Sweden 3 4.08 98.8 4 4.08 96.4

Netherlands 4 4.07 98.5 2 4.18 99.6

Luxembourg 5 3.98 95.7 23 3.54 79.5

Switzerland 6 3.97 95.5 7 4.02 94.5

Japan 7 3.97 95.2 6 4.02 94.8

United Kingdom 8 3.95 94.9 9 3.99 93.8

Belgium 9 3.94 94.5 12 3.89 90.7

Norway 10 3.93 94.2 16 3.81 88.1

Source:Logistics Perormance Index, 2007 and 2010.

Table 1.1 Top 10 logistics perormers 2010

Economy

2010 LPI 2007 LPI

LPIrank

LPIscore

% o highestperormer

LPIrank

LPIscore

% o highestperormer

Somalia 155 1.34 10.9 127 2.16 36.3

Eritrea 154 1.70 22.4 124 2.19 37.2

Sierra Leone 153 1.97 31.2 144 1.95 29.9

Namibia 152 2.02 32.8 126 2.16 36.3

Rwanda 151 2.04 33.4 148 1.77 24.3

Cuba 150 2.07 34.3 n/a n/a n/a

Guinea-Bissau 149 2.10 35.4 116 2.28 40.0

Iraq 148 2.11 35.5 n/a n/a n/a

Nepal 147 2.20 38.6 130 2.14 35.7

Sudan 146 2.21 38.7 64 2.71 53.6


Table 1.2 Bottom 10 logistics perormers 2010

1.5 2.0 2.5 3.0 3.5 4.00.0

0.2

0.4

0.6

0.8

1.0

Source:Logistics Performance Index, 2010.

Figure1.2 Cumulative distribution of LPI scores, 2010

Cumulative density

5th quintile 4th

quintile

3rd

quintile

2nd quintile 1st quintile

Logistics unfriendly Logistics friendly

Consistent performers

LPI score

Partial performers


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Economy

2010 LPI 2007 LPI

LPIrank

LPIscore

% o highestperormer

LPIrank

LPIscore

% o highestperormer

China 27 3.49 79.9 30 3.32 72.8

Thailand 35 3.29 73.6 31 3.31 72.5

Philippines 44 3.14 68.8 65 2.69 52.9

India 47 3.12 67.9 39 3.07 64.9

Tunisia 61 2.84 58.9 60 2.76 55.3

Honduras 70 2.78 57.1 80 2.50 47.0

Ecuador 71 2.77 57.0 70 2.60 50.1

Indonesia 75 2.76 56.5 43 3.01 63.0

Paraguay 76 2.75 56.3 71 2.57 49.2

Syrian Arab Republic 80 2.74 55.9 135 2.09 34.1


Table 1.4 Top 10 logistics perormers 2010, lower middle-income countries

Economy

2010 LPI 2007 LPI

LPIrank

LPIscore

% o highestperormer

LPIrank

LPIscore

% o highestperormer

Vietnam 53 2.96 63.1 53 2.89 59.2

Senegal 58 2.86 59.8 101 2.37 42.8

Uganda 66 2.82 58.4 83 2.49 46.7Uzbekistan 68 2.79 57.5 129 2.16 36.3

Benin 69 2.79 57.4 89 2.45 45.3

Bangladesh 79 2.74 56.0 87 2.47 46.1

Congo, Dem. Rep. 85 2.68 53.8 n/a n/a n/a

Madagascar 88 2.66 53.2 120 2.24 39.0

Kyrgyz Republic 91 2.62 52.0 103 2.35 42.3

Tanzania 95 2.60 51.4 137 2.08 34.0


Table 1.5 Top 10 logistics perormers 2010, low-income countries

Economy

2010 LPI 2007 LPI

LPIrank

LPIscore

% o highestperormer

LPIrank

LPIscore

% o highestperormer

South Arica 28 3.46 78.9 24 3.53 79.4

Malaysia 29 3.44 78.4 27 3.48 77.7Poland 30 3.44 78.2 40 3.04 63.9

Lebanon 33 3.34 75.1 98 2.37 42.9

Latvia 37 3.25 72.2 42 3.02 63.2

Turkey 39 3.22 71.4 34 3.15 67.5

Brazil 41 3.20 70.6 61 2.75 54.9

Lithuania 45 3.13 68.5 58 2.78 55.7

Argentina 48 3.10 67.4 45 2.98 62.1

Chile 49 3.09 67.3 32 3.25 70.5


Table 1.3 Top 10 logistics perormers 2010, upper middle-income countries


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Policy as a srong

infuence on logisics

secor perormance

expected. Low-income countries ace severeconstraints on inrastructure quantity and qual-ity, as well as human, technical, and nancialcapacity. Tese actors all negatively aect per-ormance in a sector that is complex on a techni-

cal level and requires a mix o public and privateinputs to unction eciently.

Income alone does not explain

logistics perormanceDespite this logistics gap, country incomealone does not account or the wide varietyo perormance levels across countries. Logis-tics perormance varies considerably withinincome groups (tables 1.31.5 and gure 1.3.Tis assessment is reinorced by g rouping LPIscores into ve equal-sized groups (quintilesand examining the distribution o countriesby quintiles across income groups (gure 1.4.Most high-income countries are in the top 20percent o LPI perormers, but other countryincome groups display considerably more dis-persion. Upper and lower middle-income coun-tries, or example, are distributed across all veo the 2010 LPI quintileswith scores rangingrom the bottom group o logistics perormersto the top. Even low-income countries have LPIscores across our o the ve quintiles. Vietnam,

a low-income country, has an LPI score broadlycomparable with those o some upper middle-

income countries and suciently high to placeit in the second 20 percent o logistics perorm-ers worldwide.

Plotting an average relation between coun-try income and logistics perormance makes itpossible to identiy over- and underperormers

in the logistics sector (igure 1.5. An over-perormer is a country with a higher LPI scorethan would be expected based solely on its in-come level, an underperormer a country witha lower than expected LPI score. Excludinghigh-income countries, the 10 most signicantoverperormers are Bangladesh, China, Demo-cratic Republic o Congo, India, Madagascar,Philippines, South Arica, Tailand, Uganda,and Vietnam. Te 10 most signicant underperormers are Botswana, Croatia, Eritrea,Fiji, Gabon, Greece, Montenegro, Namibia,Russian Federation, and Slovenia. Te existenceo these two groups, as well as the general dis-persion in perormance within income groups,suggests that policy has a strong inuence on lo-gistics sector perormance.

A number o countries stand out (see g-ure 1.5. Algeria, or example, has an LPI scoreo 2.36, ranking it 130 out o 155 countries. Tisis a low level o perormance relative to its upper

1

2

3

4

5

Highincome

Uppermiddle income

Lowermiddle income

Lowincome

LPI 2010

Note:Vertical rules show minimum/maximum range.


Figure1.3 2010 LPI score, average and

minimum/maximum range

by income group

0

25

50

75

100

High incomeOECD

High incomenon-OECD

Uppermiddleincome

Lowermiddleincome

Lowincome

Top quintile, highest performance

Second quintile, high performance

Percent

Third quintile, average performance

Fourth quintile, low performance

Bottom quintile, lowest performance


Figure1.4 Distribution of country

performance across

income levels, by LPI quintile


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te overwelming majoriy

o saisically signican

LPI canges are posiive

middle-income status. Comparatively low logis-

tics perormance is a eature o many oil export-ing countries, possibly representing a signicant

drag on their broader economic integration anddiversication agendas.

China, in contrast, is a lower middle-incomecountry with an LPI score (3.49) ar higher thanwould be expected based solely on its incomelevel, ranking it in the top 20 percent o logis-

tics perormers on par with such high-incomecountries as the Czech Republic. O course, it isimportant not to overinterpret this result. Be-cause LPI survey respondents have much moreexperience with a countrys main internationalgateways than with its smaller or more remoteborder crossings, a high LPI score does not nec-essarily indicate uniormly strong perormancewithin a large and diverse country.

Least developed countries with higherscores, such as Uganda (see section 2 or Mada-gascar,17 also underscore the impact o proac-tive trade and transport acilitation policieseven in poor countries. Both have been rela-tively successul, despite post-conict environ-ments, in improving their customs or tradeinrastructure.18

Logistics perormance is (slowly) improving

Results or the 2010 LPI are close to those orthe 2007 LPI. Te correlation between the two

LPI scores is just over 90 percent, with the rankcorrelation only slightly weaker at 87 percent.

A number o changes at the level o indi-vidual country ranks and scores might appearto be large at rst glance, but the LPI is subjectto sampling error because o its survey method-ology. A vital part o the LPI dataset is the es-timated condence interval or each countrysscore (box 1.3. Only in cases where the con-

dence intervals or 2007 and 2010 do not over-lap can we conclude that a statistically signi-cant change has taken place.

Based on this criterion o nonoverlappingcondence intervals, 26 countries have statisti-cally signicant LPI changes.19 Te overwhelm-ing majority (25 o these changes are positive,indicating that overall logistics perormance hasimproved (gure 1.6. Evident across all devel-oping country income groups, this pattern sug-gests that very little backsliding is occurring.20Te majority o these improvements (15 out o25) are concentrated among lower middle-21 andupper middle-income22 countries. Eight low-income countries show statistically signicantimprovements in their perormance,23 but onlytwo high-income economies do so.24

Among the countries showing statisticallysignicant improvement, Colombia has imple-mented key reorms, such as an interagencysingle window, has approved a national logistics

4 5 6 7 8 9 10 11 121.5

2.0

2.5

3.0

3.5

4.0

4.5

LPI score

Congo, Dem. Rep.

Uganda

Madagascar

Vietnam

India

Bangladesh

Montenegro

Eritrea

Russian Federation

GabonBotswana

Namibia

SloveniaCroatia Greece

Fiji

Note:Fitted values are based on an ordinary least squares regression using data for all countries. Underperformers (black diamonds) are defined as the non-high incomecountries with the 10 smallest residuals. Overperformers (black circles) are defined as the non-high income countries with the 10 largest residuals. Other oil-producing countriesare represented by triangles.

Source:Logistics Performance Index, 2010, and World Bank 2008b.

Figure1.5 LPI overperformers and underperformers in 2010, relative to income per capita

Log of GNI per capita (US$)

PhilippinesThailand

China South Africa


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action plan, and is setting up a logistics observa-tory to assess its perormance at a ne level andmonitor the impact o reorms. Brazil is ollow-ing a similar track to address Custo Brasil.

Other countries are introducing reorms.In 2009 unisia established a national logistics

councilinvolving the lead government agen-cies and the private sector and reporting to the

Prime Ministerto implement a comprehensiveaction plan building on earlier successes, nota-bly in port acilitation. Some key components othe action plan dealing with border procedures,

ports, and logistics services were included in thecompetitiveness program designed with the Eu-

ropean Union, the World Bank, and the Ari-can Development Bank. Morocco has developeda similar program.

It is not a coincidence that overachieversamong emerging economies have ollowed thesame strategy as top high-income countries,which have also outlined or are currently devel-oping advanced national logistics policies to en-hance their competitiveness. Germany, rankedrst in the 2010 LPI, issued a Freight ransportand Logistics Masterplan in 2008. Similar doc-

uments are being drafed in a number o othercountries, such as Sweden and Finland, ranked3 and 12 in the 2010 LPI.

Policymakers clearly recognize the impor-tance o trade acilitation and logistics and aremaking visible eorts to put in place the struc-tures needed to boost perormance. Since itslaunch in 2007, the LPI and its component in-dicators have gained rapid acceptance, used bypolicymakers and proessionals at the national,regional, and global levels (box 1.4.

Another change since the 2007 versionis visible by comparing a relative measure o

2

0

2

4

6

8

10

12

Highincome

Uppermiddle income

Lowermiddle income

Lowincome

Source:Logistics Performance Index, 2007 and 2010.

Figure1.6 Number of countries with a

statistically significant change

in the LPI from 2007 to 2010,

by income group

Significant LPI increase Significant LPI decrease

Number of countries

Alhough represening he mos comprehensive and comparable daa

source currenly available on counry logisics and rade aciliaion

environmens, e LPI and is componens ave eir own domain o

validiy. Firs, e experience o inernaional reig orwarders sur-

veyed may no represen e broader logisics environmen in poor

counries, where hey end o co-exis wih more radiional operaors.

the wo groups ineracions wih governmen agencies, as well as he

service levels ey oer, mig dier signicanly. In mos developingcounries, agens or aliaes o inernaional neworks ends o serve

large companies and operae a dieren levels o per ormance an

radiional rading neworks, including in erms o ime and coss.

Second, in e case o landlocked or island counries, e LPI

may capure access problems ouside he counry being assessed

or example, ransi diculies. the low raing o a landlocked coun-

ry such as Rwanda migh no give ull jusice o is eors o reorm

and aciliae rade because i is dependen upon long inernaional

ransi roues (roug tanzania or Kenya, plus Uganda), e e-

ciency o wic is dependen upon oers.

As an addiional aid o inerpreaion, LPI scores are presened

wi approximae condence inervals (appendix 4). tese ranges

are designed o ake ino accoun e sampling error creaed by LPIs

survey-based daase. tey make i possible o provide upper and

lower bounds or a counrys LPI score and rank.25 Condence inervals

end o be broader or he hird and ourh quinile. I is imporan o payclose aenion o condence inervals beore concluding ha a change

in score or a dierence beween wo scores is signican. As sown in

gure 1.6, only wen e lower bound o a counrys 2010 LPI score is

iger an is 2007 upper bound can i be concluded a ere as

been a saisically signican improvemen in perormance.

For ese reasons, excessive reliance on e exac ranking may

no be as relevan or policymakers as he counrys wider perormance

group or e exisence o saisically signican improvemens.

Box 1.3 How precise are LPI scores and ranks?


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the 2007 and 2010 LPI.34 Te relative score ishigher in 2010 across all quintiles, consistentwith a gradual convergence o logistics peror-mance, because all countries are now perorm-ing better compared with the country with thehighest score (gure 1.7). Logistics perormance

appears to have improved in all groups, exceptor the top 20 percent. Although this develop-ment is potentially signicant rom the point o

view o developing country competitiveness andintegration with the world economy, it is impor-tant not to overstate it. Te gap between the top

perorming countries and the lowest perorm-ing countries remains large and will require sub-stantial time and resources to close.

Te assessment o widespread, i gradual,improvement in the logistics environment is

conirmed by other qualitative assessmentsrom the LPI survey. Consider the percentageo survey respondents in each LPI quintile who

2007 2010

Percent

Source:Logistics Performance Index, 2007 and 2009.

Figure1.7 LPI score as percentage of

highest LPI score, by LPI quintile,

2007 and 2010

30

40

50

60

70

80

90

Topquintile

Secondquintile

Thirdquintile

Fourthquintile

Bottomquintile

A e global level, a number o prominen repors ave made ex-

ensive use o 2007 LPI daa. te World Economic Forums Global

Enabling Trade Report 2009 uses LPI daa in is composie Enabling

trade Index o capure imporan aspecs o supply cain peror-

mance aecing e exen o inernaional economic inegraion.

te World Banks Global Monitoring Report 2008 uses e LPI o

iglig e imporance o rade logisics or developing counry

compeiiveness and e ways in wic e secor can elp coun-

ries reap he benes o globalizaion and gh povery. the Unied

Naions Indusrial Developmen Organizaions Industrial Develop-

ment Report 2009 empasizes e imporan role a logisics can

play in helping poor counries become more compeiive in breaking

ino new secors and markes.

Anoer imporan policy applicaion o e LPI, e Unied

Saes Agency or Inernaional Developmens Estimating the

Global In-Country Supply Chain Costs of Meeting the Millennium

Development Goals by 2015,26 noes ha supply chain perormance

can be an imporan deerminan o a counrys abiliy o mee some

eal-relaed aspecs o e Millennium Developmen Goals, be-

cause ey require e ecien and cos-eecive disribuion o

medicines and medical supplies. Using daa rom he LPI and oher

sources, he auhors analyze logisics coss across 49 Inernaional

Developmen Associaion counries and develop a cosing model

designed o aid praciioners and policymakers in assessing e

invesmens required o suppor achievemen o he Millennium De-

velopmen Goals by 2015.

A variey o regional policy iniiaives have also made exensive

use o e LPI. For example, a recen assessmen o e Greaer

Mekong Subregions Eas-Wes Economic Corridor used e LPI

o iglig imporan cross-counry divergences in per ormance

and e need o pay paricular aenion o reorms in Myanmar

and Laos.27 te Economic Commission or Lain America and e

Caribbean used e LPI as a bencmarking and diagnosic ool

in analyzing e ranspor sysem callenges acing landlocked

counries in Sou America.28 te Asia-Pacic Economic Coop-

eraion Secrearia igliged e impor ance o e LPIs olisic

approach o assessing perormance and is srong links o evolving

commercial pracices in e secor.29 helble and colleagues used

LPI daa in consrucing measures o ransparency in e rading

environmen, wic ey sow can consiue a major source o

rade gains in e Asia-Pacic region.30 And e World Economic

ForumsAfrica Competitiveness Report 2009 used LPI daa and

e Enabling trade Index o iglig ow e logisics secor con-

srains expor perormance in a number o Arican counries.31 the

LPI can also be used o diagnose paricular supply cain con-

srains in e regional conex, as did Raballand and Macci o

sow a e qualiy o ranspor services in Arica is low com-

pared wi oer regions.32

As Daniel Ikenson o he Cao Insiue concluded in 2008, suc-

cessul paricipaion in e global economy will be increasingly de-

ermined by wheher a counry mainains high-qualiy, reliable rade

inrasrucure, weer compeiion is permied o fouris in e

logisics services indusries, and weer e regulaory environ-

men is conducive o e relaively ricionless movemen o goods

and services roug e supply cain.33

Box 1.4 Policy applications o the 2007 LPI at the regional and global levels


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Percent o respondents

Bottom quintile(lowest

perormance)

Fourth quintile(low

perormance)

Third quintile(average

perormance)

Second quintile(high

perormance)

Top quintile(highest

perormance)

Customs 48 54 53 56 66Other border procedures 38 40 33 37 57

Transport inrastructure 46 41 47 46 57

ICT inrastructure 66 56 63 78 77

Private logistics services 63 62 66 78 70

Logistics regulation 53 30 26 29 41

Incidence o corruption 27 29 31 35 36

Source:Logistics perormance survey data, 2009.

Table 1.6 Respondents indicating an improved or much improvedlogistics environment since 2005, by LPI quintile

say that particular elements o the logistics envi-

ronment are improved or much improved since2005. Although progress in some cases is morenoticeable in the higher LPI quintiles, strongevidence o broad gains is visible at all levelso logistics perormance (table 1.6. Te bot-

tom quintilethe most logistics-constrainedgrouphas markedly improved IC inra-structure, private logistics services, and logis-tics regulations. Progress in the same groupseems less widespread or border agencies otherthan customs, transport inrastructure, andcorruption.


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te qualiy o services

secor regulaion can be

an imporan deerminan

o secor perormance

Te Logistics Perormance Index (LPI surveycontains detailed inormation on countrieslogistics environments, core logistics processesand institutions, and perormance time and cost

data. In the domestic LPI, respondents assess thelogistics environment in the country where theywork. Tis inormation can be used to analyzethe major determinants o overall logistics per-

ormance, ocusing on our main groups o ac-tors: inrastructure, services, border proceduresand time, and supply chain reliability. Countryperormance in these areas tends to be a strongdeterminant o overall logistics perormance.

Inrastructure

wo pronounced trends emerge in the percent-age o LPI survey respondents who considerthat inrastructure in their country is o high or

very high quality, averaged across LPI quintiles(table 2.1). First, satisaction with inrastructurequality is much higher among top-perormingcountries than in the other our quintiles.Dierences among the our other groups are

relatively small compared with the dierencebetween them and the top perormers, espe-cially or inrastructure such as logistics acili-ties (warehousing or airports that are depen-dent on management quality or publicprivatepartnerships. Inrastructure quality appears tobe a widespread constraint on logistics peror-mance in developing countries.

Second, satisaction is not constant acrossinrastructure types included in the LPI survey.In all groups, survey participants view the qual-ity o inormation and communication tech-nologies (IC inrastructure as superior tothat o other types o inrastructure, with twoor three times more respondents indicating thatIC inrastructure is high or very high qualitycompared with other inrastructure. In con-trast, rail inrastructure appears to be a prob-lem: rail is rated as being o high or very high

quality by at most hal as many survey respon-dents as in other areasrequently ar ewer.Evident across all perormance groups, this pat-tern suggests systematic dissatisaction with railinrastructure. Road inrastructure appears tobe slightly less o a problem across perormancegroups than other types o inrastructure, butroad quality is o higher concern in the thirdand ourth quintile o perormance.

Services

Te quality and competence o core logisticsservice providers is also an important aspect ooverall country perormance. Te quality andcompetence o reight orwarders35 tends tobe signicantly higher than that o other ser-vice providers in all LPI perormance quintiles(table 2.2). Tere is a higher correlation betweenquality o services and overall level o logisticsperormance than is the case or inrastructure,

Ubulg lgstcs erraceSECTion

2


Ports Airports Roads Rail

Warehousingand

transloading

Inormation andcommunication

technologies(ICTs)

Bottom quintile(lowest perormance) 7 11 21 4 18 39

Fourth quintile(low perormance) 21 17 14 7 11 24

Third quintile(average perormance) 11 14 13 1 16 37

Second quintile(high perormance) 18 21 28 11 28 47

Top quintile(highest perormance) 57 65 58 33 70 82


Table 2.1 Respondents indicating high or very high quality oinrastructure in listed areas, by LPI quintile


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an observation consistent with the indicatorson level o service (see gures 2.7 and 2 .8 laterin the section. Countries in the second quin-tile acknowledge an intermediate level o ser-vice quality, but there is less dierence betweencountries in the three bottom quintiles.

Also important, in the air and maritimetransport sectors survey respondents are signi-cantly more satised with service providers thanwith inrastructure quality (compare tables 2.2and 2.1, suggesting an important ongoing roleor development o air and maritime transportinrastructure. But the low ranking or rail ser-vices is almost the same as or rail inrastructure,highlighting that survey respondents considerthe two components to be very close. Rail qual-ity is assessed as low even in the top-perorm-

ing group, consistent with long-term trends inEurope o shifing rom rail reight to trucking.

Te quality o services sector regulation canbe an important determinant o sector peror-mance. Regulations supporting competitionby lowering entry barriers and reducing the in-cidental costs alling on service providers canencourage quality upgrading and cost eective-ness. Figure 2.1 demonstrates this point, usingdata on trade restrictiveness in the wholesaleand retail distribution sector (measured as the

percentage markup over marginal cost induced

by trade-related regulations as a proxy or thequality o regulation in core logistics sectors.

Regulatory data were collected by an Organisa-tion or Economic Co-operation and Develop-ment survey and aggregated into a single indexusing standard econometric methods.

Te downward sloping tted line in gure 2.1

indicates that more restrictive regulationwhichimposes higher costs on operatorsis associatedwith signicantly lower average quality and com-petence o service providers. Policymakers there-ore have considerable scope to boost the scoresreported in table 2.2 by implementing regulatory

reorm in core logistics services sectors.


Roadtransport

Railtransport

Airtransport

Maritimetransportand ports

Warehousing,transloading,

and distributionFreight

orwarders

Bottom quintile(lowest perormance) 22 4 34 24 11 41

Fourth quintile(low perormance) 11 5 29 37 19 32

Third quintile(average perormance) 19 1 38 28 27 40

Second quintile(high perormance) 32 10 56 49 41 58

Top quintile(highest perormance) 66 31 76 71 67 75


Table 2.2 Respondents indicating high or very high competenceand quality o service in listed sectors, by LPI quintile

0 25 50 75 1000

25

50

75

100

Percent of respondents

Note:Policy restrictiveness is measured in percent ad valorem equivalent terms, the percentage difference between the cost of services at the border and their price within thedomestic market. Measured in this way, the restrictiveness of services policies is expressed in an analogous manner to the ad valorem tariff in goods markets. Distribution is used as

a proxy for the logistics sector because detailed data on logistics policies are not available.Source:Logistics performance survey data, 2009, and Dihel and Shepherd 2007.

Figure2.1 Respondents indicating high or very high average quality of services and

policy restrictiveness of distribution services

Policy restrictiveness in distribution services (% ad valorem equivalent)


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tere is a generally

iger level o saisacion

wi cusoms an wi

oer border agencies

Border procedures and time

Te LPI includes several indicators o borderprocedures and time.

Import and export time

A useul outcome measure o logistics peror-mance is the time taken to complete trade trans-

actions. Te median import lead time, as mea-sured by the LPI survey (lef scale o gure 2.2,shows that lead time or port or airport supplychains is nearly twice as long in low perormancecountries as in high perormance ones. For landsupply chains the contrast is even stronger: leadtime in low perormance countries is more thanve times longer. Tese times are strongly corre-lated with distance in both cases, with a correla-

tion coecient o 0.67 or port and airport sup-ply chains and 0.62 or land supply chains. Tisassociation suggests that geographic hurdles, andpossibly internal transport markets, continue topose substantial diculties in those countries.

O course, geography and speed en route arenot the only actors that can aect import leadtimes. Tere is scope or reducing time acrossall dimensions o the border process (time toclear goods as opposed to lead time, which alsoincludes transport, especially on the import

side. Ongoing eorts at border management re-orm need to ocus on the prevalence o physi-cal inspection, prolieration o procedures, andred tape in low perormance countries. In all

perormance groups, the time taken to cleargoods through customs is a relatively smallraction o total import time, but that time in-creases signicantly when goods are physicallyinspected (see gure 2.2, right scale. Core cus-toms procedures converge strongly across all per-

ormance groups, but physical inspectionandeven multiple inspections o the same shipmentby dierent agenciesare much more commonin low perormance countries (table 2.3.

Export supply chains typically ace ewerprocedural burdens than imports, evidenced bythe shorter lead time to exports than to imports(gure 2.3.

Customs is not the only agency involved inborder management; collaboration among allborder management agenciesincluding stan-

dards, sanitary, phytosanitary, transport, andveterinary agenciesand the introduction omodern approaches to regulatory complianceare especially important. Evidence points tomore streamlined processes by customs agencies,across perormance groups (tables 2.3 and 2.4.

A corollary o the gradual convergence ocustoms procedures worldwide is that otherborder agencies are seen to be an increasinglyserious constraint on supply chain perormancein many countries. Tere is a generally higher

level o satisaction with customs than withother border agencies, such as quality and stan-dards inspection agencies and even more so withhealth or sanitary and phytosanitary agencies

0

2

4

6

8

10

12

14

Top quintile(highest performance)

Second quintile(high performance)

Third quintile(average performance)

Fourth quintile(low performance)

Bottom quintile(lowest performance)

0

1

2

3

4

5

6

7

Median lead time, import (days) Port/airport Land Average clearance time (days)

Clearance time with physical inspection

Clearance time without physical inspection

Source:Logistics performance survey data, 2009.

Figure2.2 Median import lead time and average clearance time, by LPI quintile


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0

2

4

6

8






Lead time, export (days) Port/airport Land


Figure2.3 Median export lead time, by LPI quintile


Bottom quintile(lowest

perormance)

Fourth quintile(low

perormance)

Third quintile(average

perormance)

Second quintile(high

perormance)

Top quintile(highest

perormance)

Online processing 86 85 100 99 99

Pre-arrival clearance 80 91 100 97 94

Post-clearance audits 72 95 100 96 93

Release with guaranteepending nal clearance 89 92 98 100 95

Formal dialogue process 83 85 96 89 92

Availability o review/appeal 88 92 94 94 98

Advance notication o changes 86 93 100 96 96

Physical inspection (percent o shipments) 36 38 32 20 3

Multiple physical inspections 13 10 7 4 2

Valuation using reerence price 91 96 93 88 92

Valuation using invoice value 89 100 100 97 98

Valuation using inspector discretion 97 97 88 83 87

Valuation using other methods 67 85 84 70 70


Table 2.3 Respondents indicating that listed customs proceduresare available and being used, by LPI quintile


Customs agenciesQuality/standards

inspection agencies Health/SPS agencies

Bottom quintile (lowest perormance) 26 24 15

Fourth quintile (low perormance) 25 11 14

Third quintile (average perormance) 18 19 4

Second quintile (high perormance) 35 21 20

Top quintile (highest perormance) 62 62 57


Table 2.4 Respondents indicating that listed border agencies are o

high or very high competence and quality, by LPI quintile


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Operaors in counries

wi ig-qualiy logisics

environmens appear

o be relaively well

placed o adap o newsecuriy requiremens,

bu e same is no rue

o operaors in logisics

consrained environmens

(see table 2.4. Te contrast is particularly strik-ing with health and phytosanitary agencies, sug-

gesting that they may constrain the eciency oimport procedures in a wide variety o countries.Experience on the ground indicates that one rea-son quality and standards inspection agencies

are perceived to be less o a problem than healthand sanitary and phytosanitary agencies is thehigher level o automation these agencies employ,

as well as the act that they are typically not deal-ing with time-sensitive, perishable products, thusrequiring ewer inspection procedures.

Indicators o red tape also illustrate a lack ocoordination at the border and the burden it im-

poses on private logistics operators. Operators inthe highest perorming countries typically dealwith around hal the number o government

agencies as operators in low perormance coun-tries (gure 2.4. Te same is true or documentrequirements: two or three documents are typi-cally required in the countries with the highestLPI scores, versus ve or six in those with thelowest scores. Te question o simpliying doc-umentation has always been high on the tradeacilitation agenda, reected in the many initia-tives to create single trade windows. Some busi-ness environment indicatorssuch as the DoingBusiness indicators rom the World Bank and

the International Finance Corporationgivehigh weight to simplication in this area.

However, simpliying documentation andsingle window initiatives may not be enoughwithout addressing weaknesses in the otherdimensions o border management and, moregenerally, the sof and hard trade-related inra-structure. Tis partly explains why some topperormers in the Doing Business database, suchas Egypt, do not are as well in logistics peror-mance as measured by the LPI.

In the postSeptember 11 environment,cargo security36 also looms large as an impor-tant border management issue in which coordi-nation is key. Although increased attention toborder security is understandable, it is impor-tant to be aware o the costs it imposes on theprivate sector and thus its potential to inhibitinternational trade. It is clearly preerable rom

an economic welare point o view or securityrequirements to be implemented in the most e-cient, timely, and cost-eective way possible.

Results rom the LPI survey suggest thatoperators in countries with high-quality logis-tics environments appear to be relatively wellplaced to adapt to new security requirements,37but the same is not true o operators in logisticsconstrained environments (gure 2.5.38

Delays and governance

Sources o underperormance are not all asendogenous to the supply chain as the quality

0

1

2

3

4

5

6






Import agencies Export agencies Import documents Export documents

Number


Figure2.4 Red tape affecting import and export transactions, by LPI quintile


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o service or the costs and speed o the clearance processes. Other constraints, such as depen-dence on an indirect maritime route, may beout o the countrys control.

Te LPI dataset provides more detailed in-ormation on the possible sources o delays notdirectly related to the perormance o domestic

services and agencies (table 2.5. Te contrast be-tween the lowest and highest perorming coun-tries is striking across all ve delay categories orwhich LPI data are available but particularly largein relation to three actors: compulsory ware-housing, thef, and inormal (corrupt) payments.

Delays and unexpected costs are commonplace inlow perormance countries, with strong potentialto hold back overall supply chain perormance.

Te case o transshipment illuminates how acountrys connectivity to its market through the

hierarchical hub-and-spoke network o interna-tional shipments can aect trade. Lack o con-nectivity primarily aects smaller countries andsouth-south trade. For example, Algerian andunisian respondents complain the most aboutthe impact o transshipment. Tose countriesare dependent on shipping to a European or Mo-roccan hub even to trade over short distances inthe Mediterranean. Te LPI data on transship-ment constraints are consistent with the United

Nations Conerence on rade and Development

Liner Shipping Connectivity Index, which mea-sures how much a country has direct access to itsmarkets by container shipping (gure 2.6.39

Trade corridors

Another case o dependence is that o land-locked countries, which depend on trade corri-dors to access ports or regional trade partners.Evidence rom the LPI survey conrms thatlandlocked developing countries, most o themin Arica or Central Asia (box 2.1), are typically

at a disadvantage, whether in terms o time orcosts (table 2.6). he state o trade corridorinrastructure, rehabilitation needs, and, aboveall, sustainable resources or maintenance arekey concerns, especially or landlocked devel-oping countries. But o increasing concern arethe transit procedures that make the movemento goods possible without payment o duties orexcessive control in the transit country.40

In rare cases acilitation eorts by the land-locked countries may almost eliminate thishandicap. For example, landlocked Uganda is the

third best perorming low-income country in theentire sample (66th place), even doing better thanits transit country Kenya (99th. Ugandas storyis closely related to successul ongoing regionalintegration eorts with neighboring countriesand trade logistics and acilitation projects sup-ported by the World Bank Group and a numbero international donors and development agen-cies. In particular, the Malaba projectlocated

About the same Easier More complicated

Percent of respondents


Figure2.5 Compliance with overseas

security requirements compared

with 2005, by LPI quintile

0

25

50

75

100

Topquintile

Secondquintile

Thirdquintile

Fourthquintile

Bottomquintile


Majordelays romcompulsory

warehousing

Majordelays rompreshipmentinspection

Major delaysrom maritimetransshipment Thet

Inormalpayments

Bottom quintile(lowest perormance)

39 34 30 18 36

Fourth quintile(low perormance)

32 23 29 19 38

Third quintile(average perormance)

32 25 24 13 33

Second quintile(high perormance)

21 28 22 9 18

Top quintile(highest perormance)

2 6 4 2 3


Table 2.5 Respondents indicating that they oten or nearlyalways experience delay actors, by LPI quintile


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at the border o Kenya and Uganda and one othe busiest border posts in the regionis key tounderstanding the improvements in Ugandaslogistics perormance.41

Supply chain reliability

Te reliability o the supply chain is the mostimportant aspect o logistics perormance. Ahigh degree o uncertainty means that opera-tors have to adopt costly hedging strategies, suchas maintaining relatively high inventory levels.Recent research suggests that these induced

costs on the supply chain can be even larger thanthe direct costs o reight.42 raders ace a trade-o between direct reight costs and reliability,depending on their commodity and the logisticsperormance o each country (gure 2.7. Reli-ability and logistics costs directly aect rmcompetitiveness and, or developing countries,the potential to diversiy rom time-insensitivecommodities.

In Malawi, or example, exporters ace di-erent trade-os between direct transportationcosts and costs induced by a long supply chain.For sugaran inexpensive and time-insensitive

Arica Europe

Coastalcountries

Landlockedcountries

Coastalcountries

Landlockedcountries

LPI score 2.46 2.39 3.68 3.58

Port or airport

Export time (days) 4.82 18.10 2.3 2.4

Import time (days) 7.21 6.99 2.2 3.6

Export cost (US$) 1,810 2,867 696 1,227

Import cost (US$) 2,701 3,059 823 1,496

Land

Export time (days) 4.13 4.67 2.3 6.0

Import time (days) 6.93 8.41 2.9 2.9

Export cost (US$) 2,125 4,000 593 1,704

Import cost (US$) 2,581 3,221 670 1,489

Note:Arican coastal countries: Benin, Cameroon, Cte dIvoire, Ghana, Kenya, Mozambique, Namibia, Nigeria, S enegal, Togo, Tanzania, and South Arica. Arican landlocked

countries: Burkina Faso, Central Arican Republic, Chad, Ethiopia, Malawi, Mali, Rwanda, Uganda, and Zambia. European coastal countries: Belgium, Croatia, Germany, Italy,

Netherlands, and Poland. European landlocked countries: Austria, Czech Republic, Hungary, Luxembourg, and Slovak Republic.


Table 2.6 Export distance, cost, and time in landlocked countries

1 2 3 4 50

25

50

75

2010lojistik performans endeksi

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