90419 Connecting 2014 to Compete Trade Logistics in the Global Economy The Logistics Performance Index and Its Indicators LPI score  1.00–2.47  2.48–2.75  2.75–3.27  3.34–5.00   No data 1 is the lowest score; 5 is the highest score. Connecting to Compete 2014 Trade Logistics in the Global Economy The Logistics Performance Index and Its Indicators Jean-François Arvis The World Bank Daniel Saslavsky The World Bank Lauri Ojala Turku School of Economics Ben Shepherd The World Bank Christina Busch The World Bank Anasuya Raj The World Bank © 2014 The International Bank for Reconstruction and Development/The World Bank 1818 H Street NW Washington, DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: feedback@worldbank.org All rights reserved The findings, interpretations, and conclusions expressed herein are those of the authors and do not necessarily reflect the views of the Executive Directors of the International Bank for Reconstruc- tion and Development/The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: pubrights@worldbank.org. If you have any questions or comments about this report, please contact: International Trade Unit The World Bank 1818 H Street NW, Room MC3‑300, Washington, DC 20433 USA Telephone: 202-473-8922 E-mail: tradefacilitation@worldbank.org Web site: www.worldbank.org, www.worldbank.org/trade, or www.worldbank.org/lpi The report was designed, edited, and typeset by Communications Development Incorporated, Washington, DC. Foreword This is the fourth edition of Connecting to Com- in Bali, Indonesia. New challenges of environ- pete: Trade Logistics in the Global Economy. It mental sustainability, spatial planning, and the features the Logistics Performance Index (LPI), regulation and organization of services are re- which the World Bank has produced every two ceiving more attention, and not only in rich and years since 2007. The LPI measures the on-the- emerging countries. ground efficiency of trade supply chains, or The LPI and its components help countries logistics performance. This year’s edition covers understand the challenges that they and their 160 countries. trading partners face in making their national Supply chains are the backbone of inter- logistics perform strongly. The LPI comple- national trade and commerce. Their logistics ments, rather than substitutes for, the in-depth encompasses freight transportation, warehous- country assessments that many countries have ing, border clearance, payment systems, and in- undertaken in recent years, and many of them creasingly many other functions outsourced by with World Bank support. The LPI scores are producers and merchants to dedicated service not to be overemphasized, however—a coun- providers. The importance of good logistics per- try’s actual ranking or score should not be in- formance for economic growth, diversification, terpreted in isolation, but instead whether it and poverty reduction is now firmly established. ranks among the best or worst performers. The Although logistics is performed mainly by LPI allows leaders in government, business, private operators, it has become a public policy and civil society to better assess the competi- concern of national governments and regional tive advantage created by good logistics and to and international organizations. Supply chains understand the relative importance of different are a complex sequence of coordinated activities. interventions. We hope that this fourth edition The performance of the whole depends on such of Connecting to Compete will continue to sup- government interventions as infrastructure, lo- port this broad community of policymakers and gistics services provision, and cross-border trade stakeholders. facilitation. Since the first edition, the LPI has shown Jeffrey D. Lewis that good policies matter to develop efficient Director, Economic Policy, Debt and Trade supply chains but also that many developing Department countries still lag behind. The “logistics gap” ev- Poverty Reduction and Economic Management ident in the first three editions still prevails and Network (PREM) underscores the importance of consistent poli- The World Bank Group cies across sectors (trade, customs, and transpor- tation, for instance). The agenda and priorities Jose Luis Irigoyen are evolving. The imperative of facilitating trade Director for the Transport, Water, Information through more transparent and consistent border and Communications Technologies, and clearance is now universally recognized—and Infrastructure Finance Department set in stone in December 2013’s World Trade Sustainable Development Network (SDN) Organization Agreement on Trade Facilitation The World Bank Group C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y iii Acknowledgments This report was prepared by the World Bank’s (Thammasat University, Thailand) and Tapio Economic Policy, Debt, and Trade Depart- Naula (African Development Bank, Tunis). ment, under the guidance of Jeffrey D. Lewis Daniel Cramer of BlueTundra.com designed, (Director) and Mona Haddad (Sector Man- developed, and maintained the LPI survey and ager). The project leaders and main authors results websites, under the guidance of the core were Jean-François Arvis (jarvis1@­worldbank. team. Scott Johnson from the World Bank In- org) and Daniel Saslavsky (dsaslavsky@­ formation Solutions Group helped the team worldbank.org). Authors included Professor monitor survey responses. Lauri Ojala (Turku School of Economics, Uni- The LPI survey would not have been possi- versity of Turku; lauri.ojala@utu.fi), Ben Shep- ble without the support and participation of the herd (Principal, Developing Trade Consultants International Federation of Freight Forwarders Ltd.; ben@developing-trade.com), Christina Associations (www.fiata.com), national freight Busch (cbusch@worldbank.org), and Anasuya forwarding associations, and a large group of Raj (araj1@worldbank.org). Monica Alina small, medium, and large logistics companies Antoci (Mustra) served as main author in all worldwide. Logistics think tanks in different previous editions of the LPI. Gerard McLin- countries have also provided a valuable contri- den and Julia Burr Oliver provided input to bution to reach out to the freight forwarding this year’s edition. community. The Global Express Association, Cordula Rastogi, Amer Zafar Durrani, too, gave outreach support with its members. Olivier Hartmann, Charles Kunaka, and Rich- The survey was designed and implemented with ard Record provided support to reach freight Finland’s Turku School of Economics, Univer- forwarding associations. Ekaterina Vashak- sity of Turku (www.tse.fi/en), which has worked madze and Cecilia Briceño-Garmendia were with the World Bank to develop the concept peer reviewers for this edition’s project concept since 2000. note. Syed Ejaz Ghani and Gaurav Nayyar also The authors thank the hundreds of employ- contributed to the review process. Amir Fouad ees of freight forwarding and express carrier and Miles McKenna provided valuable inputs companies around the world who responded to for the outreach strategy. the survey. Their participation was central to the The authors are also grateful to external quality and credibility of the project, and their colleagues for their support and contributions continuing feedback will be essential as we de- with the concept and reaching out to forward- velop and refine the survey and the LPI in years ing associations, including Ruth Banomyong to come. iv C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y Table of contents Foreword   iii Acknowledgments   iv LPI ranking and scores, 2014    viii Summary and key findings    1 1. The 2014 Logistics Performance Index    5 Features of the 2014 survey    5 Key findings from the 2014 international LPI    6 Trends over all four LPI editions    13 2. Unbundling logistics performance    19 Infrastructure   19 Services   20 Border procedures and time    20 Supply chain reliability   25 3. The way forward: New challenges in trade facilitation and logistics    29 Areas of reform: No more low-hanging fruit?    29 Fact-based policymaking   30 Differentiated needs by country    30 A trade logistics reform matrix    31 Notes   33 Appendix 1. International LPI results    34 Appendix 2. Domestic LPI results, by region and income group    38 Appendix 3. Domestic LPI results, time and cost data    41 Appendix 4. LPI results across four editions (2007, 2010, 2012, and 2014)    47 Appendix 5. The LPI methodology    51 Appendix 6. Respondent demographics    55 References   59 Boxes 1 The weighted aggregate results of the international LPI, 2007–14    1 1.1 Connectivity, logistics networks, and logistics performance    6 1.2 Using the international LPI    7 1.3 How precise are LPI scores and ranks?    14 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y v 1.4 Benefits of trade facilitation—findings from the World Economic Forum’s 2013 Enabling Trade Report   15 1.5 Improving border management, Cambodia    16 1.6 The LPI scores of landlocked and coastal countries    17 2.1 Rail’s poor performance   21 2.2 WTO Agreement on Trade Facilitation    25 3.1 Logistics inefficiencies are a primary source of trade costs    30 3.2 A shipper’s demand for environmentally friendly supply chain solutions    31 3.3 The impact of outsourcing on trade and competitiveness    32 Figures 1 LPI score as percentage of highest LPI score by LPI quintile, 2007, 2010, 2012, and 2014    2 2 Percentage change in LPI component as measured against the highest performer, 2007–14    2 1.1 Cumulative distribution of 2014 LPI scores    10 1.2 LPI component scores, by LPI quintile    10 1.3 Percentage change in LPI scores, by LPI component and income group, 2007–14    11 1.4 Average scores and minimum/maximum ranges on the 2014 LPI, by income group    12 1.5 Distribution of LPI quintiles across income groups     12 1.6 LPI overperformers and underperformers    13 1.7 LPI score as percentage of highest LPI score by LPI quintile, 2007, 2010, 2012, and 2014    13 1.8 Percentage of the overall LPI score of countries as measured against the highest performer and aggregated data    16 2.1 Respondents rating the quality of trade and transport infrastructure as “improved” or “much improved” since 2012, by LPI quintile   20 2.2 Median import lead time and average clearance time, by LPI quintile    23 2.3 Median export lead time, by LPI quintile    23 2.4 Median export lead time, by income group    24 2.5 Red tape affecting import and export transactions, by LPI quintile    25 2.6 Respondents reporting that shipments are “often” or “nearly always” cleared and delivered as scheduled, by LPI quintile    26 2.7 Respondents reporting that shipments are “often” or “nearly always” cleared and delivered as scheduled, by World Bank developing country region   27 2.8 Shipments not meeting company quality criteria, by LPI quintile    27 A6.1 2014 LPI survey respondents, by World Bank income group    55 A6.2 2014 LPI survey respondents, by World Bank region    56 A6.3 Latin America and Caribbean, ratings of and by other regions    56 Tables 1.1 The top 10 performers on the 2014 LPI—largely unchanged since 2010    8 1.2 The bottom 10 performers on the 2014 LPI—all low-income economies    8 1.3 The top 10 lower middle-income performers on the 2014 LPI    8 1.4 The top 10 upper middle-income performers on the 2014 LPI    9 1.5 The top 10 low-income performers on the 2014 LPI    9 1.6 Deviation of each component from overall LPI score, by LPI quintile    11 1.7 Respondents reporting an improved or much improved logistics environment since 2012, by LPI quintile    12 1.8 Economies with statistically significant changes in LPI score    15 1.9 Range of scores and ranks of 166 countries in the aggregated LPI    17 2.1 Respondents rating the quality of each infrastructure type “high” or “very high,” by LPI quintile    19 2.2 Respondents rating the quality of each infrastructure type “high” or “very high,” by World Bank developing country region   20 2.3 Respondents rating the quality and competence of each service provider type “high” or “very high,” by LPI quintile    21 vi C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 2.4 Difference between respondents rating services “high” or “very high” and those rating infrastructure “high” or “very high,” by World Bank developing country region    22 2.5 Respondents reporting that listed customs procedures are available and being used, by LPI quintile    22 2.6 Respondents rating the quality and competence of three border agencies as “high” or “very high,” by LPI quintile    24 2.7 Respondents reporting that shipments are “often” or “nearly always” delayed, by delay category and LPI quintile    26 3.1 Trade logistics reform matrix    32 A5.1 Methodology for selecting country groups for survey respondents    52 A5.2 Results of principal component analysis for the international LPI    53 A5.3 Component loadings for the international LPI    53 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y vii LPI ranking and scores, 2014 2014 LPI 2014 LPI 2014 LPI % of % of % of highest highest highest Economy Rank Score performer Economy Rank Score performer Economy Rank Score performer Germany 1 4.12 100.0 Croatia 55 3.05 65.8 Benin 109 2.56 50.0 Netherlands 2 4.05 97.6 Kuwait 56 3.01 64.4 Tunisia 110 2.55 49.7 Belgium 3 4.04 97.5 Philippines 57 3.00 64.2 Fiji 111 2.55 49.5 United Kingdom 4 4.01 96.6 Cyprus 58 3.00 64.1 Angola 112 2.54 49.4 Singapore 5 4.00 96.2 Oman 59 3.00 63.9 Chad 113 2.53 49.0 Sweden 6 3.96 94.9 Argentina 60 2.99 63.6 Tajikistan 114 2.53 48.9 Norway 7 3.96 94.8 Ukraine 61 2.98 63.3 Mauritius 115 2.51 48.5 Luxembourg 8 3.95 94.4 Egypt, Arab Rep. 62 2.97 63.0 Georgia 116 2.51 48.3 United States 9 3.92 93.5 Serbia 63 2.96 62.9 Macedonia, FYR 117 2.50 48.0 Japan 10 3.91 93.4 El Salvador 64 2.96 62.8 Libya 118 2.50 47.9 Ireland 11 3.87 91.9 Brazil 65 2.94 62.3 Mali 119 2.50 47.9 Canada 12 3.86 91.5 Bahamas, The 66 2.91 61.2 Botswana 120 2.49 47.8 France 13 3.85 91.2 Montenegro 67 2.88 60.1 Bolivia 121 2.48 47.4 Switzerland 14 3.84 91.1 Jordan 68 2.87 60.0 Guinea 122 2.46 46.9 Hong Kong SAR, China 15 3.83 90.5 Dominican Republic 69 2.86 59.6 Zambia 123 2.46 46.9 Australia 16 3.81 90.0 Jamaica 70 2.84 59.0 Guyana 124 2.46 46.7 Denmark 17 3.78 89.1 Peru 71 2.84 59.0 Azerbaijan 125 2.45 46.4 Spain 18 3.72 87.1 Pakistan 72 2.83 58.5 Papua New Guinea 126 2.43 45.8 Taiwan, China 19 3.72 87.0 Malawi 73 2.81 58.1 Guinea-Bissau 127 2.43 45.7 Italy 20 3.69 86.2 Kenya 74 2.81 58.0 Comoros 128 2.40 44.9 Korea, Rep. 21 3.67 85.4 Nigeria 75 2.81 57.9 Uzbekistan 129 2.39 44.7 Austria 22 3.65 84.8 Venezuela, RB 76 2.81 57.9 Niger 130 2.39 44.6 New Zealand 23 3.64 84.7 Guatemala 77 2.80 57.6 Lao PDR 131 2.39 44.5 Finland 24 3.62 84.0 Paraguay 78 2.78 57.0 Madagascar 132 2.38 44.3 Malaysia 25 3.59 83.0 Côte d’Ivoire 79 2.76 56.4 Lesotho 133 2.37 44.0 Portugal 26 3.56 82.0 Rwanda 80 2.76 56.3 Central African Republic 134 2.36 43.6 United Arab Emirates 27 3.54 81.3 Bosnia and Herzegovina 81 2.75 56.0 Mongolia 135 2.36 43.4 China 28 3.53 81.1 Maldives 82 2.75 56.0 Equatorial Guinea 136 2.35 43.4 Qatar 29 3.52 80.6 Cambodia 83 2.74 55.8 Zimbabwe 137 2.34 42.9 Turkey 30 3.50 80.1 São Tomé and Príncipe 84 2.73 55.5 Tanzania 138 2.33 42.6 Poland 31 3.49 79.9 Lebanon 85 2.73 55.3 Togo 139 2.32 42.2 Czech Republic 32 3.49 79.8 Ecuador 86 2.71 54.8 Turkmenistan 140 2.30 41.8 Hungary 33 3.46 78.9 Costa Rica 87 2.70 54.5 Iraq 141 2.30 41.6 South Africa 34 3.43 77.9 Kazakhstan 88 2.70 54.4 Cameroon 142 2.30 41.5 Thailand 35 3.43 77.8 Sri Lanka 89 2.70 54.3 Bhutan 143 2.29 41.3 Latvia 36 3.40 77.0 Russian Federation 90 2.69 54.3 Haiti 144 2.27 40.7 Iceland 37 3.39 76.6 Uruguay 91 2.68 53.8 Myanmar 145 2.25 40.0 Slovenia 38 3.38 76.3 Armenia 92 2.67 53.6 Gambia, The 146 2.25 40.0 Estonia 39 3.35 75.1 Namibia 93 2.66 53.1 Mozambique 147 2.23 39.4 Romania 40 3.26 72.4 Moldova 94 2.65 53.0 Mauritania 148 2.23 39.4 Israel 41 3.26 72.4 Nicaragua 95 2.65 53.0 Kyrgyz Republic 149 2.21 38.7 Chile 42 3.26 72.3 Algeria 96 2.65 52.8 Gabon 150 2.20 38.5 Slovak Republic 43 3.25 72.2 Colombia 97 2.64 52.5 Yemen, Rep. 151 2.18 37.9 Greece 44 3.20 70.5 Burkina Faso 98 2.64 52.5 Cuba 152 2.18 37.8 Panama 45 3.19 70.3 Belarus 99 2.64 52.5 Sudan 153 2.16 37.2 Lithuania 46 3.18 69.8 Ghana 100 2.63 52.1 Djibouti 154 2.15 36.8 Bulgaria 47 3.16 69.1 Senegal 101 2.62 52.0 Syrian Arab Republic 155 2.09 34.9 Vietnam 48 3.15 69.0 Liberia 102 2.62 51.9 Eritrea 156 2.08 34.7 Saudi Arabia 49 3.15 68.8 Honduras 103 2.61 51.5 Congo, Rep. 157 2.08 34.5 Mexico 50 3.13 68.2 Ethiopia 104 2.59 51.0 Afghanistan 158 2.07 34.3 Malta 51 3.11 67.5 Nepal 105 2.59 50.9 Congo, Dem. Rep. 159 1.88 28.2 Bahrain 52 3.08 66.7 Solomon Islands 106 2.59 50.8 Somalia 160 1.77 24.8 Indonesia 53 3.08 66.7 Burundi 107 2.57 50.2 India 54 3.08 66.6 Bangladesh 108 2.56 50.1 viii C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y Summary and key findings Improving logistics performance is at the core worst with 1.77 (on a scale of 1 to 5). (Germany of the economic growth and competitiveness was also the best performer over 2007–14— agenda. Policymakers globally recognize the box 1.) A slightly converging trend from previ- logistics sector as one of their key pillars for ous LPI surveys in 2007, 2010, and 2012 is also development. Trade powerhouses in Europe like found in 2014, with lower performing countries the Netherlands1 or in developing countries like improving their overall LPI scores more than Vietnam or Indonesia2 see seamless and sustain- higher performing countries (figure 1). able logistics as an engine of growth and of inte- The modest convergence since 2007 is ex- gration with global value chains. plained by a perceived improvement in trade- Indeed, inefficient logistics raises the costs supporting infrastructure in low- and middle- of trading and reduces the potential for global income countries—and to a lesser extent in integration. This is a hefty burden for develop- their logistics services and customs and border ing countries trying to compete in the global management (figure 2). This perceived improve- marketplace. Since 2007, the Logistics Perfor- ment attests to the success of developing coun- mance Index (LPI) has been informing the de- tries in closing the transport infrastructure gap bate on the role of logistics for growth and the with high-income countries. policies to support it in such areas as infrastruc- ture, service provision, and cross-border trade If service delivery is poor, good facilitation. physical connectivity is not enough Logistics performance continues Infrastructure development has assured basic to converge—slowly connectivity and access to gateways for most developing countries, a fact consistent with The results of Connecting to Compete 2014 point trends in the LPI since 2007. Yet countries to Germany as the best performing country have been more successful in delivering qual- with an LPI score of 4.12, and Somalia as the ity for some types of infrastructure. Quality Box 1 The weighted aggregate results of the international LPI, 2007–14 Variation of countries’ scores from one LPI survey to another could be significantly reduced by ag- gregating the scores of the six components across the four LPI surveys. Scores in the 2014 LPI were given a weight 53.3 percent, followed by 26.7 percent for 2012, 13.3 percent for 2010, and 6.7 percent for 2007. This also enabled the comparison of 166 countries. In the aggregated 2007–14 LPI, Germany ranked highest at 4.10, followed by Singapore (4.06) and the Netherlands (4.05); 15 of 28 European Union (EU) member states and 23 of 34 Organisation for Economic Co-operation and Development (OECD) members were among the top 30 countries. The non-OECD economies in this group were Singapore (2nd), Hong Kong SAR, China (8th), Taiwan, China (20th), United Arab Emirates (24th), Malaysia (26th), China (27th), and South Africa (28th). All EU member states and OECD countries were in the top third. Somalia (score 1.63) was ranked 166th at 20.2 percent of the top score. C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 1 Efficient border Figure 1 LPI score as percentage of Infrastructure services are delivered by lo- management is highest LPI score by LPI quintile, gistics providers that operate under very differ- 2007, 2010, 2012, and 2014 ent environments globally. Usually, the quality critical for eliminating of the services they provide is perceived better Percent 2007 2010 2012 2014 avoidable delays and 90 than the quality of the corresponding infra- enhancing predictability structure they operate. This “divide” between 80 services and infrastructure quality is wider in in border clearance air and maritime transport. Railroads, again, 70 have low ratings almost everywhere. And low- income countries still score poorly on road 60 freight services, despite having given them more 50 policy attention recently. Acceptable services in infrastructure can be achieved in less-than-ideal 40 circumstances, but differences in service quality can be substantial for similar levels of perceived 30 infrastructure quality, for operational excel- Bottom Fourth Third Second Top quintile quintile quintile quintile quintile lence cannot be replaced or necessarily equated Source: Logistics Performance Index 2007, 2010, 2012, and 2014. with good physical “hardware.” Trade facilitation and border Figure 2 Percentage change in LPI management reforms matter component as measured against the highest performer, 2007–14 Supply chain reliability is a major concern for traders and logistics providers alike. In a global Percentage change Customs Infrastructure Quality of logistics services environment, consignees require more certainty 12 about when and how deliveries will take place. This increases the demand for quality in logis- 10 tics services, posing challenges for private agents and for governments, all of which face pressure 8 to facilitate trade while safeguarding the pub- 6 lic against criminal activity, health concerns, or terrorism threats. 4 Efficient border management is critical for eliminating avoidable delays and enhancing pre- 2 dictability in border clearance. Coordination among government control agencies will remain 0 Low Lower Upper essential in trade facilitation efforts—as will in- income middle income middle income troducing best practices in automation and risk Source: Logistics Performance Index 2007 and 2014. management in non-customs control agencies, which have generally been less open to reform. of information and communications technol- Accordingly, customs agencies have obtained ogy infrastructure is regarded not only as the higher LPI ratings than all other agencies in highest across all respondents, but also where border management, particularly sanitary and the gap between lowest and highest performers phytosanitary control agencies, and less so those has narrowed the most, partly due to automa- enforcing standards. tion in border management. Conversely, rail The World Trade Organization Ministerial infrastructure inspires general dissatisfaction. Conference Agreement on Trade Facilitation, Ratings for other types of infrastructure vary in December 2013 in Bali, marked the impor- by region. tance of the facilitation agenda for expanding 2 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y trade. After more than a decade of negotiations, The LPI shows that the quality of services is The LPI shows that the Bali Ministerial Declaration renewed the driving logistics performance in emerging and the quality of services impetus to reform trade facilitation. It also cre- richer economies, too (see figure 2). Yet develop- is driving logistics ated some urgency for the donor community to ing services like third-party logistics, trucking, support developing countries in this endeavor. and forwarding may be the most complex policy performance in emerging agenda ahead, with few success stories so far. In and richer economies Increased complexity, no “logistics friendly” countries, manufacturers more low-hanging fruit and traders already outsource logistics to third- party providers, and focus on their core business Previous editions proposed a typology of while managing more complex supply chains. four broad groups of countries, based on how Supply chain sustainability concerns are friendly their logistics environments are. The stronger in this edition. About 37 percent of most in need of attention from the international respondents shipping to countries in the Or- community and their neighbors are those with ganisation for Economic Co-operation and governance challenges—such as postconflict Development recognized a demand for envi- countries and fragile states—as well as those ronmentally friendly logistics solutions, com- challenged by their economic size or geography pared with just 10  percent for low-income in their connectivity to global markets—such destinations. Governments will need to make as landlocked developing countries and small long-term policy changes that improve and island states. Long-standing, but still mainly maintain the competitiveness of these services, unresolved, implementation challenges in these consistent with fast-changing industry prac- countries, such as regional transit regimes, tices. So developing countries will have to not remain key for future progress as many now only consider the environmental footprint of have the basic connective infrastructure in their logistics, especially in trading with devel- place. oped countries, but also revisit governance and Despite least developed countries’ efforts to operational models for environmentally friendly improve their logistics, there is a growing need infrastructure and related transport modes, es- for consistent action plans where complexity pecially railways, that seem to perform poorly is higher, as in most middle-income countries. relative to those in the top performers. The notion that there may be low-hanging fruit that countries can pick easily is less and less true. Conclusion Further, reforms with many stakeholders can be slow to implement, or even reversed by gover- Logistics performance is strongly associated nance weaknesses, as in Tunisia. More detailed, with the reliability of supply chains and the accurate data for policymaking and information predictability of service delivery for produc- sharing is needed. For instance, the trade facili- ers and exporters. Supply chains—only as tation concept of “single windows for trade” re- strong as their weakest links—are becoming quires alignment of several government control more and more complex, often spanning many agencies, which takes time, but can be imple- countries while remaining critical to national mented in least developed countries, as in the competitiveness. Lao People’s Democratic Republic. Countries Comprehensive reforms and long-term that introduce far-reaching changes have com- commitments from policymakers and private bined regulatory reform with investment plan- stakeholders will be essential. Here, the LPI pro- ning, interagency coordination, and incentives vides a unique reference to better understand for operators. key trade logistics impediments worldwide. C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 3 1 SECTION The 2014 Logistics Performance Index Logistics lies at the heart of Europe’s single market objective. Improving logistics enhances the and is central to daily lives of companies and citi- competitiveness of logistics-intensive sectors, zens. European logistics policy supports an envi- such as component manufacturing, which join ronment where transport companies and opera- multinational value chains.3 Other countries tors can run their business efficiently, so they can may want to develop logistics as an activity tied continue growing and innovating in order to keep to their transport connectivity and geographic Europe globally competitive. advantage. —Siim Kallas, Vice-President of Take Greece, a country just starting to the European Commission and come out of a painful crisis, which is seeing European Commissioner for Transport its LPI pick up. The government and private sector decided to reform the logistics sector As reflected in the statement by Commissioner boldly to exploit the country’s location as an Kallas, the importance of efficient logistics is entry point into Europe from the east and now widely accepted by policymakers world- south: Piraeus (the port of Athens) is the first wide. Trade and commerce are moved within deep-sea European port from Asia through the and across borders by private operators. The Suez Canal. The port has been overhauled and efficiency of those supply chains—logistics has seen a boost in throughput via a public- ­ performance—is what the Logistics Perfor- private partnership with COSCO, the largest mance Index (LPI) and its components mea- integrated shipping company in China. The sure. This performance depends heavily on the government has taken steps to align service policy environment: measures by individual regulation with Western Europe and increase countries or regional economic groups in infra- the efficiency of the railway corridor to Austria structure provision, regulation and develop- and Germany. ment of services, or facilitation of trade through more friendly procedures at the border contrib- Features of the 2014 survey ute substantially to logistics performance. Unlike in 2007 when the World Bank The 2014 LPI survey is similar to the three started performance monitoring, the problem before: a standardized questionnaire with two today is not poor awareness among public and parts—international and domestic. For the private sector leaders, but the design and im- international part (“international LPI”), respon- plementation of policies that enable countries dents assess six key areas of logistics perfor- to connect to logistics networks and compete mance in eight of their main overseas markets globally (box 1.1). The December 2013 Trade (box 1.2). For the domestic part, respondents Facilitation Agreement of the World Trade provide qualitative and quantitative data on the Organization (WTO), signed in Bali, Indone- logistics environment in the country where they sia, is a testimony to this consensus, providing work—such as information on time and costs in some guidance on crucial policies (see box 2.2). a typical supply chain. The survey also collects But countries that constantly improve their lo- data on domestic logistics and on the time and gistics performance can develop reforms and cost burdens of import and export transactions. investment consistently in a broader economic In 2014 there were more than 6,000 assessments C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 5 Box 1.1 Connectivity, logistics networks, and logistics performance What is connectivity? between connectivity and economic outcomes such as participa- Since the first edition of Connecting to Compete in late 2007, many tion in global value chains, as measured by trade in manufactured policy packages promoting gains to logistics, trade facilitation, and components (see figure). transport have been labeled “connectivity.” The Asia-Pacific Eco- nomic Cooperation, for example, has a supply chain connectivity Better air connectivity increases initiative, while Indonesia has set up a connectivity program, as has participation in global value chains a group of countries in Central America and the Caribbean. Yet despite the relevance and coherence of the policies, the Parts and components in total exports (%) 25 concept remains intuitive and often loosely defined, such that “con- nectivity” may become a catchword with too blurry a relation to such practicalities as “trade facilitation” and “logistics.” 20 Some clarification and formalization of the concept has been proposed.1 Trade logistics is supported by companies that operate 15 in networks. International transportation, shipping, or air transport takes place in complex networks structured in hubs and spokes. The connectivity of a country, or perhaps one of its ports or airports, 10 is defined as how “central” this country is to those networks. Con- nectivity partly reflects geography and the global structure of trans- 5 portation and logistics networks. Country-specific trade transaction costs coming from supply chain inefficiencies increase economic 0 distance and reduce connectivity. Hence policies that increase lo- 0 0.05 0.10 0.15 0.20 0.25 gistics performance improve connectivity, notwithstanding network Air Connectivity Index geography. Source: Arvis and Shepherd 2013. As one might expect, the LPI is tied to connectivity indica- tors such as the United Nations Conference on Trade and De- velopment’s liner shipping connectivity index 2—one of only a Notes few connectivity indicators. The World Bank has proposed an Air 1. Arvis and Shepherd 2011. Connectivity Index, 3 a full version of which will be made avail- 2. Hoffmann and Ojala 2010. able soon. These data confirm that there is a strong correlation 3. Arvis and Shepherd 2011. made by logistics professionals, in line with the dominant role in global or regional supply last edition. The domestic LPI covers nearly 120 chains. countries. All 10 economies in the bottom of the rank- Feedback from users, policymakers, practi- ing are low-income countries, and 6 are in Af- tioners, and logistics professionals was consid- rica (table 1.2). Countries where armed conflict ered. Minor changes were made to the interna- and civil unrest disrupt supply chains and the tional part. A new question on “green logistics” business environment in general seem to be par- that was introduced in 2012 was repeated in ticularly affected. Disadvantageous geographic 2014 (see box 3.2).4 factors and natural disasters add to a country’s challenges to access markets. Key findings from the It is no surprise that the lower and upper 2014 international LPI middle-income groups comprise some of the fastest growing economies of the last two de- As in the first three editions, high-income cades. Moreover, some of them have become countries dominate the top 10 rankings (table trade powerhouses in their own right, with a 1.1). In fact, the composition of the 10 has high degree of integration with global value remained relatively unchanged since 2010. As chains (tables 1.3 and 1.4). Within the low- expected, most of these countries are major income group, Malawi and Kenya are the lead and well-established logistics players with a performers (table 1.5). 6 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y Box 1.2 Using the international LPI The international LPI analyzes countries in six components: • The ef ficiency of customs and border clearance Input and outcome LPI indicators (“Customs”). • The quality of trade and transpor t infrastructure Customs Timeliness (“Infrastructure”). • The ease of arranging competitively priced shipments (“Ease of arranging shipments”). Supply chain Inter- Infra- • The competence and quality of logistics services—trucking, national structure service shipments forwarding, and customs brokerage (“Quality of logistics delivery services”). • The ability to track and trace consignments (“Tracking and Services Tracking tracing”). quality and tracing • The frequency with which shipments reach consignees Areas Service within scheduled or expected delivery times (“Timeliness”). delivery for The components were chosen based on recent theoretical and policy performance regulations outcomes empirical research and on the practical experience of logistics pro- Time, cost, (inputs) fessionals involved in international freight forwarding. reliability Earlier methodologies developed in 1993 used a survey format, Source: Authors’ analysis. a two-point scale, and open-ended questions to measure the per- ceived importance and influence of different component attributes affecting the “logistics friendliness” of countries.1 In a follow-up responsible for moving goods around the world: multinational study, only the characteristics identified as best encapsulating lo- freight forwarders and the main express carriers—those best able gistics performance were included for evaluation. 2 The method- to assess how countries perform. And their views matter, directly ology was refined with contributions from interviews conducted for affecting the choice of shipping routes and gateways and influenc- the Trade and Transport Facilitation Audits performed by the World ing firms’ decisions on production location, choice of suppliers, and Bank and others over more than a decade.3 selection of target markets. Their participation is central to the LPI’s The figure maps the six LPI indicators to two main categories: quality and credibility, and their involvement and feedback have • Areas for policy regulations, indicating main inputs to the been essential in continually developing and refining the survey. supply chain (customs, infrastructure, and quality of logis- Nearly 1,000 logistics professionals based in 125 countries took tics services). part in the 2013 survey for the 2014 LPI, and 5 additional countries • Service delivery performance outcomes (timeliness, inter- were covered in the international LPI scores and ranking. national shipments, and tracking and tracing). See the 2014 LPI questionnaire at www.worldbank.org/lpi. The LPI uses standard statistical techniques to aggregate the data into a single indicator.4 (See appendix 5 for a detailed descrip- Notes tion of how the LPI is calculated.) This single indicator can be used 1. Murphy, Daley, and Dalenberg 1993. to compare countries, regions, and income groups. It can also be 2. Ojala and Queiroz 2000, 2004. used for country-level work. 3. Raven 2001. Because operators on the ground can best assess these 4. In the three previous editions of the LPI (2007, 2010, and 2012), statistical vital aspects of logistics performance, the LPI relies on a struc- aggregation has produced an overall index that is close to the simple tured online survey of logistics professionals from the companies average of country scores across the six LPI components. Figure 1.1 shows the cumulative distribu- and top quintiles, but in the third and fourth tion of LPI scores. The vertical lines mark the quintiles together the range of scores is similar. boundaries of LPI quintiles—five groups con- In other words, country scores are much “closer” taining equal numbers of countries rated in the in the third and fourth quintiles. LPI. The bottom quintile comprises countries The distribution of LPI scores is broken with the lowest LPI scores and the top quintile down into four categories, used in all editions those with the highest. We can see that the same of Connecting to Compete: number of countries are spread across a roughly • Logistics unfriendly—includes countries similar range of scores in the bottom, second, with severe logistics constraints, such as C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 7 The distribution of LPI Table 1.1 The top 10 performers on the 2014 LPI—largely unchanged since 2010 scores is broken down 2014 LPI 2012 LPI 2010 LPI into four categories: % of % of % of highest highest highest Economy Rank Score performer Rank Score performer Rank Score performer Germany 1 4.12 100.0 4 4.03 97.0 1 4.11 100.0 Netherlands 2 4.05 97.6 5 4.02 96.7 4 4.07 98.5 Belgium 3 4.04 97.5 7 3.98 95.3 9 3.94 94.5 United Kingdom 4 4.01 96.6 10 3.90 92.7 8 3.95 94.9 Singapore 5 4.00 96.2 1 4.13 100.0 2 4.09 99.2 Sweden 6 3.96 94.9 13 3.85 91.2 3 4.08 98.8 Norway 7 3.96 94.8 22 3.68 85.9 10 3.93 94.2 Luxembourg 8 3.95 94.4 15 3.82 90.3 5 3.98 95.7 United States 9 3.92 93.5 9 3.93 93.7 15 3.86 91.7 Japan 10 3.91 93.4 8 3.93 93.8 7 3.97 95.2 Source: Logistics Performance Index 2010, 2012, and 2014. Table 1.2 The bottom 10 performers on the 2014 LPI—all low-income economies 2014 LPI 2012 LPI 2010 LPI % of % of % of highest highest highest Economy Rank Score performer Rank Score performer Rank Score performer Yemen, Rep. 151 2.18 37.9 63 2.89 60.3 101 2.58 50.8 Cuba 152 2.18 37.8 144 2.20 38.3 150 2.07 34.3 Sudan 153 2.16 37.2 148 2.10 35.3 146 2.21 38.7 Djibouti 154 2.15 36.8 154 1.80 25.5 126 2.39 44.8 Syrian Arab Rep. 155 2.09 34.9 92 2.60 51.3 80 2.74 55.9 Eritrea 156 2.08 34.7 147 2.11 35.5 154 1.70 22.4 Congo, Rep. 157 2.08 34.5 149 2.08 34.7 116 2.48 47.4 Afghanistan 158 2.07 34.3 135 2.30 41.5 143 2.24 39.9 Congo, Dem. Rep. 159 1.88 28.2 143 2.21 38.6 85 2.68 53.8 Somalia 160 1.77 24.8 na na na 155 1.34 10.9 na is not applicable. Source: Logistics Performance Index 2010, 2012, and 2014. Table 1.3 The top 10 lower middle-income performers on the 2014 LPI 2014 LPI 2012 LPI 2010 LPI % of % of % of highest highest highest Economy Rank Score performer Rank Score performer Rank Score performer Vietnam 48 3.15 69.0 53 3.00 64.1 53 2.96 63.1 Indonesia 53 3.08 66.7 59 2.94 62.2 75 2.76 56.5 India 54 3.08 66.6 46 3.08 66.4 47 3.12 67.9 Philippines 57 3.00 64.2 52 3.02 64.8 44 3.14 68.8 Ukraine 61 2.98 63.3 66 2.85 59.3 102 2.57 50.6 Egypt, Arab Rep. 62 2.97 63.0 57 2.98 63.3 92 2.61 51.8 El Salvador 64 2.96 62.8 93 2.60 51.2 86 2.67 53.7 Pakistan 72 2.83 58.5 71 2.83 58.4 110 2.53 49.1 Nigeria 75 2.81 57.9 121 2.45 46.3 100 2.59 51.0 Guatemala 77 2.80 57.6 74 2.80 57.7 90 2.63 52.4 Source: Logistics Performance Index 2010, 2012, and 2014. 8 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y Table 1.4 The top 10 upper middle-income performers on the 2014 LPI Logistics unfriendly, 2014 LPI 2012 LPI 2010 LPI partial performers, % of % of % of consistent performers, highest highest highest Economy Rank Score performer Rank Score performer Rank Score performer and logistics friendly Malaysia 25 3.59 83.0 29 3.49 79.8 29 3.44 78.4 China 28 3.53 81.1 26 3.52 80.5 27 3.49 79.9 Turkey 30 3.50 80.1 27 3.51 80.3 39 3.22 71.4 Hungary 33 3.46 78.9 40 3.17 69.5 52 2.99 63.8 South Africa 34 3.43 77.9 23 3.67 85.5 28 3.46 78.9 Thailand 35 3.43 77.8 38 3.18 69.6 35 3.29 73.6 Romania 40 3.26 72.4 54 3.00 63.8 59 2.84 59.1 Panama 45 3.19 70.3 61 2.93 61.6 51 3.02 65.0 Bulgaria 47 3.16 69.1 36 3.21 70.7 63 2.83 58.8 Mexico 50 3.13 68.2 47 3.06 66.0 50 3.05 65.7 Source: Logistics Performance Index 2010, 2012, and 2014. Table 1.5 The top 10 low-income performers on the 2014 LPI 2014 LPI 2012 LPI 2010 LPI % of % of % of highest highest highest Economy Rank Score performer Rank Score performer Rank Score performer Malawi 73 2.81 58.1 73 2.81 57.8 na na na Kenya 74 2.81 58.0 122 2.43 45.9 99 2.59 51.0 Rwanda 80 2.76 56.3 139 2.27 40.5 151 2.04 33.4 Cambodia 83 2.74 55.8 101 2.56 50.0 129 2.37 44.0 Burkina Faso 98 2.64 52.5 134 2.32 42.3 145 2.23 39.4 Liberia 102 2.62 51.9 119 2.45 46.3 127 2.38 44.4 Ethiopia 104 2.59 51.0 141 2.24 39.6 123 2.41 45.4 Nepal 105 2.59 50.9 151 2.04 33.1 147 2.20 38.6 Burundi 107 2.57 50.2 155 1.61 19.5 na na na Bangladesh 108 2.56 50.1 na na na 79 2.74 56.0 na is not applicable. Source: Logistics Performance Index 2010, 2012, and 2014. the least developed countries (bottom Logistics performance still improving LPI quintile). Few measures hold the same potential for stim- • Partial performers—includes countries ulating economic development as trade facili- with a level of logistics constraints most tation. Trade facilitation fosters logistics per- often seen in low- and middle-income formance, and better logistics spurs growth, countries (third and fourth LPI quintiles). competitiveness, and investment. Customs and • Consistent performers—includes coun- border management or the improvement of tries rated for logistics performance transit regimes are a few areas where trade facil- more highly than most others in their itation can help improve logistics. income group (second LPI quintile). Such sustained improvement calls for • Logistics friendly—includes high per- policymakers and private stakeholders to adopt formers, mostly high-income countries comprehensive reforms. To move products to (top LPI quintile). market efficiently and reliably, countries must C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 9 To move products to market Figure 1.1 Cumulative distribution of 2014 LPI scores efficiently and reliably, Cumulative density countries must reduce 1.0 Bottom quintile Fourth Third Second quintile Top quintile quintile quintile trading costs and adopt Partial performers policies to support trade 0.8 Logistics unfriendly Logistics friendly 0.6 0.4 Consistent performers 0.2 0.0 1.75 2.00 2.50 3.00 3.50 4.00 4.25 LPI score Source: Logistics Performance Index 2014. reduce trading costs and adopt policies to sup- Conversely, timeliness and the ease of ar- port trade. Reforming trade facilitation espe- ranging shipments outperform the rest in the cially can help bolster trade competitiveness.5 two lowest quintiles. And tracking and tracing The international LPI shows marked dif- fares better than the quality of logistics services ferences by component and quintile, espe- and infrastructure. cially the two lowest quintiles (figure 1.2). In As a preliminary indication of areas of these groups, the two lagging components are relative strength and weakness in each perfor- customs and infrastructure. Unlike in 2012, mance group, we examined which of the six quality of logistics services surpasses that of components of the international LPI are above infrastructure. the overall index and which below (table 1.6). A Figure 1.2 LPI component scores, by LPI quintile LPI score Customs Infrastructure Ease of Quality of logistics Tracking and Timeliness arranging shipments services tracing 4.5 4.0 3.5 3.0 2.5 2.0 Bottom quintile Fourth quintile Third quintile Second quintile Top quintile Source: Logistics Performance Index 2014. 10 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y positive entry indicates that a component score Table 1.6 Deviation of each component from overall LPI score, by LPI quintile is higher than a group’s overall international Percent LPI score—vice versa for a negative entry. Ease of Quality of Two issues stand out. In all performance arranging logistics Tracking groups, the timeliness dimension is notably LPI quintile Customs Infrastructure shipments services and tracing Timeliness stronger than the others, though that the LPI Bottom quintile –0.16 –0.18 0.00 –0.06 0.00 0.40 is based on a survey among freight forwarders Fourth quintile –0.17 –0.19 0.04 –0.07 –0.01 0.40 (rather than shippers) might skew this slightly Third quintile –0.25 –0.20 0.05 –0.05 0.00 0.42 Second quintile –0.25 –0.12 –0.05 –0.07 0.05 0.43 toward the positive. But as timeliness is the Top quintile –0.15 0.05 –0.22 0.00 0.02 0.32 highest ranked component across all quintiles, this is testimony that logistics services have Note: All calculations are based on the weighted average score for the LPI and its components over 2007–14. Source: Logistics Performance Index 2014. much built-in flexibility. The main point of negative performance for all but the top-performing countries is in- middle-income countries have seemingly im- frastructure. In the top performers, the ease of proved faster in the quality of logistics services. arranging shipments tends to lower overall LPI This supports the idea that middle-income scores, possibly because macroeconomic factors countries have increasingly shifted their focus generally make services more expensive there, toward soft infrastructure enhancements based which may make it hard to arrange shipments on regulatory reform, and less on basic hard in- perceived as competitively priced elsewhere. frastructure investments. Otherwise, scores on the LPI components Changes in the logistics environment can are relatively close to the overall score. be measured in many dimensions, including by As overall logistics performance im- income group and LPI quintile. When compar- proves, some factors move faster than oth- ing the percentage of LPI survey respondents ers. Low- and lower middle-­ i ncome countries who express improvements in 2014 over 2012 have progressed the fastest in customs and in every component (table 1.7), it is clear that infrastructure (figure 1.3). Streamlining bor- progress is—still—perceived as greater in the der clearance procedures and ensuring physi- upper LPI quintiles on every component of the cal access to markets remain necessary for domestic LPI. Across components, informa- low-income economies. For their part, upper tion and communications technology (ICT) Figure 1.3 Percentage change in LPI scores, by LPI component and income group, 2007–14 Percentage change Customs Infrastructure Quality of logistics services 15 10 5 0 Low Lower middle Upper middle High income High income income income income non-OECD OECD Source: Logistics Performance Index 2007 and 2014. C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 11 Table 1.7 Respondents reporting an improved or much improved performing countries, 23 are Organisation for logistics environment since 2012, by LPI quintile Economic Co-operation and Development Percent of respondents (OECD) countries. Component Bottom quintile Fourth quintile Third quintile Second quintile Top quintile Customs 43 49 45 51 63 Countries can still outperform their Other border procedures 24 41 32 30 50 income group peers Transport infrastructure 44 48 37 42 53 Despite the persistent logistics gap, income ICT infrastructure 83 61 65 63 65 alone cannot explain why performance var- Private logistics services 66 67 57 69 66 ies widely among countries in certain income Logistics regulation 26 35 37 24 39 groups—particularly in the low- and middle- Incidence of corruption 24 40 23 30 44 income groups. As shown in previous edi- tions, high-income countries are heavily con- ICT is information and communications technology. Source: Logistics Performance Index 2014. centrated in the top LPI quintile, but other income groups are more dispersed. More infrastructure is the only one improving much important, upper middle-income and lower faster in the bottom quintile. Even so, the rate of middle-income countries range from the bot- change is accelerating for the bottom quintiles tom LPI quintile to the top. Even low-income and slowing in the two upper quintiles, when countries range across all but the top quintile compared with the changes perceived in every (figure 1.5). domestic LPI component between 2010 and Compared with other countries in their 2012. income group, some of the overperform- ing non-high-income economies are Malay- An unbridged logistics gap sia, South Africa, China, Thailand, Vietnam, LPI scores remain on average much better for and India (figure 1.6). Conversely, the most high-income countries (figure 1.4). High- underperforming non-high-income countries income countries outperform low-income coun- are—as expected—some resource-rich econo- tries by 53 percent, lower middle-income coun- mies including Iraq, Turkmenistan, Azerbai- tries by 42 percent, and upper middle-income jan, Gabon, and Kazakhstan. Again, dispersion countries by 30 percent. Among the top 30 best Figure 1.5 Distribution of LPI quintiles across income groups Figure 1.4 Average scores and minimum/ maximum ranges on the 2014 LPI, by income group Top quintile Third quintile Bottom quintile Second quintile Fourth quintile LPI score Percent 5 100 4 75 3 50 2 25 1 0 Low Lower middle Upper middle High Low Lower Upper High income High income income income income income income middle middle non-OECD OECD income income Note: Vertical rules show minimum/maximum range. Source: Logistics Performance Index 2014. Source: Logistics Performance Index 2014. 12 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y Figure 1.6 LPI overperformers and underperformers Since the World Bank launched the LPI and its LPI score 4.5 component indicators in 2007, performance- 4.0 Malaysia boosting structures have China 3.5 Vietnam Thailand rapidly gained acceptance South Africa India 3.0 among policymakers and Malawi Rwanda Liberia Burundi Kazakhstan professionals—nationally, 2.5 Mauritius Mongolia Azerbaijan Botswana Linear regression Iraq Syrian Arab Rep. Turkmenistan Gabon regionally, and globally 2.0 Congo, Rep. 1.5 5 6 7 8 9 10 11 12 Log of GDP per capita (US$) Note: Fitted values are based on an ordinary least squares regression using data for all countries. Underperformers (black diamonds) are the non-high-income countries with the 10 smallest residuals. Overperformers (black circles) are the non-high-income countries with the 10 largest residuals. Source: Logistics Performance Index 2014. within income groups suggests that policy, as Figure 1.7 LPI score as percentage of well as income, affects logistics performance. highest LPI score by LPI quintile, Despite the marked variation within in- 2007, 2010, 2012, and 2014 come groups, one should be cautious when Percent 2007 2010 2012 2014 interpreting LPI scores to identify over- and 90 underperformers (see box 1.3 overleaf). For ex- ample, in a large, economically diverse country, 80 a high LPI score might not indicate uniform strong performance. 70 Still, recognizing the importance of trade 60 facilitation and logistics, policymakers are aim- ing to set up or improve performance-boost- 50 ing structures (see box 1.4 overleaf). Since the World Bank launched the LPI and its compo- 40 nent indicators in 2007, these structures have rapidly gained acceptance among policymakers 30 Bottom Fourth Third Second Top and professionals—nationally, regionally, and quintile quintile quintile quintile quintile globally. Source: Logistics Performance Index 2007, 2010, 2012, and 2014. Trends over all four LPI editions the highest performer’s (Germany), but the Distribution of scores and ranks good news is that this is actually higher than The gap between relative LPI scores—LPI scores the corresponding relative scores from previ- expressed as a percentage of the leading coun- ous years: 19  percent in 2012, 11  percent in try’s score—is only a bit smaller than in 2010 2010, and 7  percent in 2007. Among better and 2012. 6 In fact, the average relative score performing countries, relative scores become performance by quintile has been following a tighter between the second quintile and the top very similar line for the last three editions (fig- quintile. ure 1.7). The relative lowest performer in 2014 The correlation between the 2012 and 2014 is Somalia, with a score equal to 25 percent of LPI scores is 0.91, and 0.86 between ranks. C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 13 Box 1.3 How precise are LPI scores and ranks? Although the LPI and its components now offer the most compre- Because of the LPI’s limited domain of validity and the need for hensive and comparable data on country logistics and trade facilita- confidence intervals to account for sampling error, a country’s exact tion environments, they have a limited domain of validity. ranking might be less relevant to policymakers than its proximity First, the experience of international freight forwarders might not to others in a wider performance group or its statistically signifi- represent the broader logistics environment in poor countries, which cant improvements. Still, a close examination of the distribution of often rely on traditional operators. International and traditional opera- changes in ranking indicates that these behave similarly across all tors might differ in their interactions with government agencies, and in four editions of the index. their service levels. Most agents and affiliates of international networks One should thus interpret especially the ranks and changes in developing countries serve large companies and perform at different in ranks from one LPI edition to another with caution. In the ag- levels, including on time and cost, than traditional trading networks. gregate data in all four LPI surveys (see more in “Trends over all Second, for landlocked countries and small island states, the four LPI editions”), 41 countries scored 70 percent or more of the LPI might reflect access problems outside the country assessed, top performer. For these, the average difference per rank posi- such as transit difficulties. The rating of a landlocked country, such tion was 0.023 score points. For the next 65 countries scoring as Lao PDR, might not adequately reflect its trade facilitation reform 50–69 percent of the top performer, the average difference per efforts, as they still depend on international transit routes mainly rank was only 0.009 score points. In the 40–49 percent range with through Thailand and Vietnam. 49 countries, the average difference per rank was a mere 0.006 To account for the sampling error created by the LPI’s survey- score points. This means that countries at similar performance lev- based dataset, LPI scores are presented with approximate 80 per- els may have substantially different ranks, especially in the middle cent confidence intervals (see appendix 5). These intervals yield and lower range. upper and lower bounds for a country’s LPI score and rank.1 Confi- dence intervals must be examined carefully to determine whether a Note change in score or a difference between two scores is statistically 1. Upper bounds for LPI ranks are calculated by increasing a country’s significant. An improvement in a country’s performance should be LPI score to its upper bound while maintaining all other country scores considered statistically significant only if the lower bound of its 2014 constant and then recalculating LPI ranks. An analogous procedure is LPI score exceeds the upper bound of its 2012 score. adopted for lower bounds. One should keep in mind, as in previous edi- that the European countries made more prog- tions, that because the data are survey-based, ress, as the profile of logistics-related issues has sampling error necessarily occurs. Statistically been raised in the European Union (EU) re- significant changes can be concluded only if cently. Hong Kong SAR, China; Singapore; and the confidence intervals for the 2012 and 2014 United Arab Emirates all have very narrow con- scores do not overlap, which is only the case for fidence intervals (less than 0.07 score points in 12 economies (table 1.8), with negative changes 2012 and 0.06 in 2014). So even a small change mainly in high-income economies (Hong Kong in score becomes statistically significant (see SAR, China; Singapore; and United Arab table 1.8). Emirates), and middle-income but politically unstable countries (Syrian Arab Republic and Aggregated LPI scores and ranks Tunisia). As a new feature in this 2014 report, the scores The reasons for these changes differ. Syria of the six components across the four LPI sur- is obvious: armed conflict has cut its former veys were used to generate a “big picture” to trade corridors. In Tunisia the agency in charge better indicate country performance. This of customs and logistics has suffered due to the approach reduces random variation from one high turnover of key personnel as a result of LPI survey to another and enables the compari- government policies in 2012–13. In contrast, son of 166 countries. the equivalent agencies in the Arab Republic of Each year’s scores in each component were Egypt have been relatively protected. given weights: 6.7 percent for 2007, 13.3 percent For high-income Asian countries like Sin- for 2010, 26.7 percent for 2012, and 53.3 per- gapore, the interpretation is not that logistics cent for 2014—the most recent data carrying performance regressed in absolute terms but the most weight. 14 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y Box 1.4 Benefits of trade facilitation—findings from the World Economic Forum’s 2013 Enabling Trade Report Improving only two key components of trade facilitation—border administration and transport and communications i ­nfrastructure— GDP effect of reducing supply chain would lead to an increase of some $2.6 trillion (4.7 percent) in global barriers is much higher than for tariffs GDP and $1.6 trillion (14.5 percent) in global trade.1 A complete US$ trillions GDP Trade worldwide tariff elimination would only add a further $400 billion 3 (0.7 percent) to global GDP, or $1.1 trillion (10.1 percent) to global trade. 4.7% The figure illustrates that reducing supply chain barriers has a larger effect than removing tariffs. This holds even in the scenario 2 of a more modest improvement in trade facilitation, in which all countries raised their performance halfway to regional best prac- 14.5% tice (as opposed to halfway to international best practice—that is, 2.6% Singapore in the first scenario). 1 10.1% What lies at the heart of the large increases in GDP after trade 9.4% facilitation reforms? Reductions in supply chain trade barriers im- prove the efficiency of the movement of goods, thus recovering 0.7% resources otherwise wasted. By contrast, most tariff reductions 0 reallocate resources, capturing only the more modest inefficiency Ambitious scenario Modest scenario Tariffs Countries improve Countries improve All tariffs created by the tax. trade facilitation trade facilitation removed globally halfway to global halfway to regional Gains in GDP associated with trade facilitation would occur best practice best practice in all regions of the globe, though concentrated in those with the Note: Based on 2007 baseline. Source: World Economic Forum 2013, p. 13. greatest improvements. In the more ambitious scenario, these in- clude Sub-Saharan Africa, South Asia, and parts of Central and Note West Asia. Gains from tariff elimination would accrue dispro- 1. Simulated results for trade exclude oil and gas. Estimated changes in portionately to the Russian Federation, China, and a few other GDP and trade are expressed at constant prices. countries. Source: World Economic Forum 2013. In this aggregated 2007–14 LPI, Germany Table 1.8 Economies with statistically significant changes in LPI score ranked highest at 4.10, followed by Singapore (4.06), and the Netherlands (4.05); 15 of 28 EU Statistically significant Lower middle Upper middle change in LPI score, 2012–14 Low income income income High income member states and 23 of 34 OECD members Positive change Burundi El Salvador Thailand Latvia were among the top 30 countries. The non- Nepal Ireland OECD economies in this group were Singapore United Kingdom No change 148 countries (2nd); Hong Kong SAR, China (8th); Taiwan, Negative change Syrian Arab Tunisia Hong Kong SAR, China China (20th); United Arab Emirates (24th); Republic Singapore Malaysia (26th); China (27th); and South Af- United Arab Emirates rica (28th). Source: Logistics Performance Index 2012 and 2014. All OECD countries were in the top third, Mexico—the lowest among them—ranked LPI, the “logistics gap” between high- and low- 49th at 3.08 (67.3 percent of Germany’s score); income countries remains wide. As in previ- also in the top third are all EU member states, ous LPI surveys, the countries with the weak- the lowest being Croatia ranking 55th at 3.02 est performance in 2014 were least developed (65.3  percent of the top score). Cambodia, a ­ countries—landlocked countries, small island country showing steady improvements in the states, and postconflict countries (box 1.6). rank since 2007, now stands 96th (box 1.5). The convergence of performance especially Meanwhile, Somalia at 1.63 ranked 166th at in the “middle ground”—broadly the range 20.2 percent of the top score (figure 1.8). from rank 40 to 120—makes this space more Despite the gradual convergence of coun- and more crowded (see figure 1.8). This trend is tries’ logistics performance since the 2007 bound to continue as most countries’ business C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 15 Box 1.5 Improving border management, Cambodia In recent years Cambodia has made real progress in reforming and other border management agencies, because advances made by modernizing its import, export, and transit operations, including by customs are not being made elsewhere: 2014 LPI data rate the per- streamlining and harmonizing customs procedures to international formance of quality/standards inspections and health/SPS agencies standards. lower than customs. More than 120 laws, royal decrees, subde- These reforms have contributed to Cambodia improving its LPI crees, and regulations containing formal nontariff measures have ranking from 129th in 2010 to 101st in 2012 and to 83rd in 2014. With been identified in a World Bank project, including various import- or the introduction of automated customs procedures and much of export-related permits, licenses, and approvals needed to trade. the hard infrastructure now in place at the Port of Sihanoukville and Thus with World Bank support, the government is automating at border posts around the country, clearance times with physical application and issuance of certificates of origin, as well as im- inspection of cargo have fallen from 5.9 days in 2010 to 1.4 days proving transparency through a trade information website where in 2014. Likewise, the share of consignments selected for physi- all rules, regulations, fees, and procedures will be available. Other cal inspection has fallen from 29 percent in 2010 to 17 percent in areas of collaboration include developing a blueprint to guide imple- 2014, suggesting that customs’ risk management capabilities are mentation of a national single window through which traders can improving. conduct all their regulatory requirements. This will mean that data Further gains in trade facilitation will require extending the re- are submitted only once, and that processing, risk assessment, and form program of the General Directorate of Customs and Excise to inspection are well coordinated. Figure 1.8 Percentage of the overall LPI score of countries as measured against the highest performer and aggregated data Percent Weighted average, 2007–14 2010 2012 2014 100 75 50 25 0 165 150 125 100 75 50 25 1 LPI rank Source: Logistics Performance Index 2007, 2010, 2012, and 2014. environment and policies are set to improve. to deteriorate: a score in the 2010 LPI yielding Thus, countries in the middle range may wit- a rank between 60 and 90 was equal to rank- ness a large change in their rank, even if the ing between 70 and 100 in the 2014 LPI (with underlying score changes only little. Should scores ranging roughly from 2.56 to 2.80; see the score remain the same, the rank is likely table 1.9). 16 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y Box 1.6 The LPI scores of landlocked and coastal countries In development economics generally, and in trade and trans- The trade logistics handicap is illustrated by the average overall port facilitation particularly, much attention has been paid to LPI scores for 2007–14 of landlocked and coastal countries across the disadvantaged position of low- and middle-income land- World Bank regions. This comparison shows a rather consistent pat- locked countries. Lack of access to the sea poses persistent tern, where coastal countries score better than their landlocked peers challenges to the growth and development of landlocked de- at similar incomes. In the upper middle-income group, this difference veloping countries and hinders their ability to better integrate in Europe and Central Asia was 0.29 score points. The difference with the global trading system. The transit of export and import was even larger for lower middle-income and low-income countries, goods through the territory of at least one neighboring state in East Asia and the Pacific at 0.44 and South Asia at 0.42. The larg- and frequent change of transport mode lead to high transaction est regional gap (0.49) within an income level between coastal and costs and reduced international competitiveness. The issue of landlocked was among low-income countries in South Asia. But in landlocked developing countries has also generated much policy Sub-­ Saharan Africa, coastal and landlocked countries performed at work such as the 2003 Almaty Programme of Action under the par within the low-income group. Also with high-income OECD coun- United Nations, which is undergoing a review after more than 10 tries, the difference between landlocked (3.63) and coastal countries years in existence. (3.68) was almost insignificant (0.05 score points) (see figure). Overall LPI score averages in 2007–14 of coastal and landlocked countries, by World Bank region and income group Score Coastal Landlocked 4 3 2 1 0 High income Europe & Sub-Saharan South Asia East Asia & Europe & South Asia Sub-Saharan OECD Central Asia Africa lower middle Pacific Central Asia low income Africa upper middle upper middle income lower middle lower middle low income income income income income Source: Logistics Performance Index 2007, 2010, 2012, and 2014. Source: Almaty Declaration 2003; Arvis and others 2011; UNCTAD website; World Bank 2013. Table 1.9 Range of scores and ranks of 166 countries in the aggregated LPI Percentage of Maximum Minimum Interval of Number of top performer at score in score in scores in Rank countries in lower boundary the range the range the range range the range 90 4.096 3.785 0.311 1–17 17 80 3.782 3.503 0.279 18–29 12 70 3.443 3.170 0.273 30–41 12 60 3.165 2.856 0.309 42–65 24 50 2.836 2.551 0.285 66–106 41 40 2.543 2.244 0.299 107–155 49 20 2.222 1.625 0.597 156–166 11 Note: Each year’s scores are weighted as follows: 6.7 percent for 2007, 13.3 percent for 2010, 26.7 percent for 2012, and 53.3 percent for 2014. Source: Logistics Performance Index 2007, 2010, 2012, and 2014. C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 17 2 SECTION Unbundling logistics performance The international LPI provides some prelimi- improving. Since the previous LPI survey, there nary information on the drivers of overall is a general perception that infrastructure has logistics performance. To unbundle the survey improved in all performance quintiles (figure results further, however, it is necessary to refer 2.1), but more so in the top-performing coun- to the domestic LPI. This section is based on the tries. If this perception reflects a faster rate of domestic LPI, where surveyed logistics profes- infrastructure improvement from an already sionals assess the logistics environments in the strong base in those countries, it might indicate countries where they work. The domestic part persistence of the “logistics gap” identified in thus contains more detailed information on previous editions. countries’ logistics environments, core logistics Satisfaction with infrastructure qual- processes and institutions, and performance ity varies by infrastructure type. As in previ- time and cost. This approach looks at the logis- ous years, respondents in all LPI quintiles are tics constraints within countries, not just at the most satisfied with ICT infrastructure. Par- gateways, such as ports or borders. It analyzes ticularly in the lower performance quintiles, country performance in four major determi- the infrastructure gap has narrowed in 2014 nants of overall logistics performance: infra- from previous years, perhaps an indication of structure, services, border procedures and time, some catch up in other infrastructure sectors. and supply chain reliability. By contrast, rail infrastructure inspires general dissatisfaction: the number of respondents rat- Infrastructure ing rail infrastructure “high” or “very high” is at most only half as high as for any other type. Survey respondents in top quintile countries In the bottom quintile, infrastructure gener- rated their infrastructure far more highly than ally fails to satisfy—an exception to the pat- others (table 2.1). Differences among the other tern of variation. four quintiles are less striking, especially for Similar patterns emerge when the domestic roads and rail. Infrastructure, though still a LPI data on infrastructure are disaggregated constraint in developing countries, seems to be by World Bank region, excluding high-income countries (table 2.2). The highest ratings in all regions except East Asia and the Pacific are for Table 2.1 Respondents rating the quality of each infrastructure type “high” or “very high,” by LPI quintile ICT. In the 2012 report, the ICT rating in Sub-­ Saharan Africa lagged behind other regions, but Percent of respondents in this edition there is evidence of more wide- Warehousing and LPI quintile Ports Airports Roads Rail transloading ICT spread satisfaction. Ratings for other types of Bottom quintile 11 13 11 0 4 17 infrastructure vary more widely by region, but Fourth quintile 22 25 11 6 18 37 two features stand out. First, satisfaction with Third quintile 25 23 13 2 18 35 road infrastructure is especially low in Latin Second quintile 30 29 21 12 39 55 America and the Caribbean. Second, satisfac- Top quintile 61 66 57 29 68 81 tion with rail infrastructure is again low in all regions, as was the case for the analysis by LPI ICT is information and communications technology. Source: Logistics Performance Index 2014. quintile. C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 19 Respondents in all LPI Figure 2.1 Respondents rating the quality of quality and competence. Rail transport aside, quintiles are most satisfied trade and transport infrastructure service providers in all categories are rated as as “improved” or “much improved” being of high quality and competence in the with ICT infrastructure since 2012, by LPI quintile top-performing countries. Percent of respondents Respondents in all LPI quintiles are nearly always more satisfied with service providers 60 than with infrastructure quality (compare table 50 2.1 with table 2.3). But the difference is gener- ally smaller in the top-performing countries. 40 Even so, in some quintiles including the top one, there is a notable difference in satisfaction be- 30 tween road transport service providers and road transport infrastructure. 20 The performance gap between services and infrastructure appears generally across World 10 Bank regions (table 2.4). It is particularly stark 0 for air transport in the Middle East and North Bottom Fourth Third Second Top quintile quintile quintile quintile quintile Africa, and for maritime transport in South Source: Logistics Performance Index 2014. Asia. More generally, the difference in satisfac- tion with services and with infrastructure is especially strong in air and maritime transport Services and, in some regions, road and rail transport. These data suggest a need to develop transport- The quality and competence of core logistics related infrastructure, so that positive reforms service providers is another important part of to service markets can bring maximum possible overall country performance. For countries in benefits to end users. all LPI quintiles, freight forwarders are rated highly, typically at or close to the strongest Border procedures and time scores in this category (table 2.3).7 Ratings for the other provider types vary more widely across The LPI includes several indicators of border all quintiles—though rail transport service procedures and time. Breakdown of these data provision, like rail infrastructure, consistently by region and income group is in appendix 2 receives low ratings (box 2.1). And as with infra- and for time and cost by country in appendix 3. structure, countries in the top quintile receive by far the highest ratings for service provider Import and export time A useful outcome measure of logistics per- formance is the time taken to complete trade Table 2.2 Respondents rating the quality of each infrastructure type “high” or “very high,” by World Bank developing country region transactions. The median import lead time8 for port and airport supply chains, as measured for Percent of respondents the LPI, is generally lower in higher performing Warehousing and Region Ports Airports Roads Rail transloading ICT groups (figure 2.2): it takes around over twice East Asia and Pacific 24 29 16 6 20 23 as long to import in the bottom quintile as in Europe and Central Asia 10 27 10 4 22 32 the top quintile. Yet this still-substantial gap is Latin America and Caribbean 20 20 7 1 7 24 narrower than in 2012 (3.5 times), and could Middle East and North Africa 33 18 11 7 17 36 indicate gains in logistics and trade facilitation. South Asia 28 28 27 7 24 58 Importing in the two lowest and the high- Sub-Saharan Africa 23 20 19 3 22 34 est quintiles takes longer by land than by air or sea. The correlation between land distance and ICT is information and communications technology. Source: Logistics Performance Index 2014. import lead time (around 0.6) suggests that 20 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y Table 2.3 Respondents rating the quality and competence of each service provider type “high” or “very high,” by LPI quintile Percent of respondents Maritime Warehousing, Trade and Road Rail Air transport transloading, Freight Customs transport Cosignees or LPI quintile transport transport transport and ports and distribution forwarders brokers associations shippers Bottom quintile 14 10 14 16 12 16 24 14 9 Fourth quintile 17 3 38 45 34 50 50 28 31 Third quintile 19 5 31 32 25 44 30 18 24 Second quintile 33 17 49 54 52 57 45 36 36 Top quintile 69 31 71 67 71 71 71 58 47 Source: Logistics Performance Index 2014. Box 2.1 Rail’s poor performance Rail freight offers several advantages over road transport, includ- the European Union and China through Kazakhstan (the “New Silk ing a smaller environmental footprint and potentially lower costs for Road”) as an alternative to shipping by sea. shippers, at least over long or very long distances. But the nature of One finding that persists across LPI editions is the strong corre- rail operations makes rail less flexible and potentially less reliable lation between quality of services and infrastructure in rail, but even than trucking. In many countries, lower reliability offsets the cost then efficient operators can manage operations where the state of benefits of rail freight, except for high-volume bulk traffic. In the infrastructure is less than ideal. More often than not, management domestic LPI, the quality of rail freight services was rated poorer and operational challenges (especially pervasive in the developing than other transport modes, and even more so in low- and middle- world) contribute the most to diluting potential gains from use of rail. income countries. In less sophisticated environments, delays and complex procedures An exception to this dismal performance is in high-income add time and cost to operations, often for landlocked developing countries, which are rated far higher than their developing peers, countries, where imbalanced freight flows may create added costs though they still show wide variation in ratings. Germany, for in- due to the wait for a return load. stance, outperforms many of its peers in Europe, while some op- In some regions like Africa, railways have only a marginal role erators in the United States, Canada, and Europe have managed in most transit freight corridors. Among many constraints, the poor to establish reliable scheduled container services that represent a quality of infrastructure, the way the infrastructure costs have been viable alternative to road freight, and can even compete with mari- shared between railway agencies (representing the governments) time-based logistics solutions. Operational excellence is accessible and concessionaires, and the nature of companies that have won to other countries too, if there is enough freight volume. the concessions—sometimes largely disconnected from ports, Innovations in this sector are emerging, catering to the needs of inland container depots, or container terminal operations—have shippers as they adjust their supply chain strategies. For example, harmed their competitiveness relative to road transport. several large multinational companies have partnered with forward- ing firms and railway operators in Europe, the Russian Federation, Source: Based on Arvis, Raballand, and Marteau (2010) and Arvis and oth- and Central Asia, and have established regular routes between ers (2011). geographic hurdles, in addition to infrastruc- goods on arrival (see figure 2.2). Countries with ture, service provision, and other logistics issues, low logistics performance need to reform their are important in determining a country’s abil- border management so that they can cut red ity to connect with world markets. In fact, dis- tape, excessive and opaque procedural require- tances for both types of supply chains are much ments, and physical inspections. Although the longer in the bottom quintile than in the top time to clear goods through customs is a fairly quintile (four times for ports and airports, and small fraction of total import time for all LPI nearly three times for land transport). quintiles, it rises sharply if goods are physically Besides geography and speed en route, an- inspected, even in high-performing countries. other factor in import lead times is the efficiency Core customs procedures are similar across of border processes. Time can be reduced at all quintiles. But low-performing countries have stages of this process, but especially in clearing a far higher prevalence of physical inspection, C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 21 Table 2.4 Difference between respondents rating services “high” or export competitiveness and ability to trade “very high” and those rating infrastructure “high” or “very high,” internationally. by World Bank developing country region Unlike lead times, which vary considerably Percentage points worldwide, customs procedures are becoming Maritime Warehousing, more similar (see table 2.5). The largest perfor- transport Air Road Rail transloading, Region and ports transport transport transport and distribution mance gap here is between the bottom quintile East Asia and Pacific 9 0 4 5 9 and all other quintiles; the middle quintiles are Europe and Central Asia 22 3 14 5 14 more similar. Even the gap between the bot- Latin America and Caribbean 7 12 2 0 18 tom and other quintiles is much smaller for Middle East and North Africa 13 30 10 –1 12 some procedures (such as the requirement that South Asia 23 9 0 3 1 a licensed customs broker be used for clearance) Sub-Saharan Africa 20 12 –4 1 9 than for others (such as online processing or Source: Logistics Performance Index 2014. the use of physical inspection). Yet the bottom quintile still seems quite far from implement- even subjecting the same shipment to repeated ing key facilitation measures like processing inspections by multiple agencies (table 2.5). supporting documentation online (such as cer- Export supply chains typically have a much tificates of origin or health certificates) as in the lighter procedural burden than import supply better performing countries. The valuation of chains, so lead times are shorter for exports goods still varies, with reference prices or other than imports (figure 2.3). But export lead arbitrary uplifts often applied in countries out- times display the familiar logistics gap—they side the top quintile. are twice as long for low-income countries as Even as customs procedures become grad- for high-income countries (figure 2.4). More- ually more similar, many countries still find over, export times for land supply chains dif- their supply chain performance constrained fer much more between low-income countries by other border agencies, as customs is not the and the rest than between middle- and high- only agency in border management. Coop- income countries. Many low-income coun- eration among all such agencies—standards, tries have long export lead times, hurting their transport, veterinary, and health/sanitary and Table 2.5 Respondents reporting that listed customs procedures are available and being used, by LPI quintile Percent of respondents unless otherwise indicated Customs procedure Bottom quintile Fourth quintile Third quintile Second quintile Top quintile Online processing of supporting documentation 17 38 31 47 75 Online processing of customs declaration 50 64 72 89 99 Online publication of procedures and requirements for export/import 50 64 73 83 94 Physical inspection of import shipments (percent of shipments) 50 23 36 16 6 Availability of review/appeal 42 61 62 61 77 Choice of location of final clearance 48 58 56 76 81 Valuation using reference price or other arbitrary uplift 75 76 84 68 44 Pre-arrival processing 43 46 56 45 71 Formal dialogue process 49 59 53 62 72 Requirement that a licensed customs broker be used for clearance 79 79 79 78 66 Multiple physical inspections of import shipments 14 11 13 5 5 Release with guarantee pending final clearance 64 58 67 60 62 Source: Logistics Performance Index 2014. 22 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y Figure 2.2 Median import lead time and average clearance time, by LPI quintile Many low-income countries have long export Days Import lead time (ports and airports) Import lead time (land) 10 lead times, hurting their export competitiveness 8 Average clearance time without physical inspection and ability to trade Average clearance time with physical inspection internationally 6 4 2 0 Bottom quintile Fourth quintile Third quintile Second quintile Top quintile Source: Logistics Performance Index 2014. Figure 2.3 Median export lead time, by LPI quintile Days Ports and airports Land 12 10 8 6 4 2 0 Bottom quintile Fourth quintile Third quintile Second quintile Top quintile Source: Logistics Performance Index 2014. phytosanitary (SPS)—is critical to reform. So is A glance at table 2.6 with its equivalent for introducing modern approaches to regulatory the 2012 LPI (Connecting to Compete 2012, compliance. table 2.6) shows that matters may not be im- Data for the 2014 LPI show that the perfor- proving over time in the lowest performing mance gap between customs and other border countries. In the bottom quintile, the rate of agencies appears to be narrowing for quality and satisfaction with all three border agencies has standards inspection agencies. But it persists for declined (customs from 18 percent to 19 per- health and SPS agencies (table 2.6), which in cent, which is insignificant; quality and stan- many countries may be impeding more efficient dards inspection agencies from 17 percent to import procedures. One reason for this difference 9 percent; and health/SPS agencies from 11 per- between agencies is that fewer inspection proce- cent to 9 percent). By contrast, numbers for the dures are required for products that are not per- top quintile are more stable, though some nega- ishable or time sensitive. Another is that health tive changes are also apparent outside the cus- and SPS agencies have been slow to automate. toms context. C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 23 Countries in the top quintile Figure 2.4 Median export lead time, by income group typically require two Days Ports and airports Land supporting documents for 10 trade transactions; those 8 in the bottom, four—a persistent logistics gap 6 4 2 0 Low Lower Upper High income middle income middle income income Source: Logistics Performance Index 2014. Table 2.6 Respondents rating the quality and competence of three border agencies as “high” or “very high,” by LPI quintile Percent of respondents Customs Quality/standards Health/sanitary and LPI quintile agencies inspection agencies phytosanitary agencies Bottom quintile 18 9 9 Fourth quintile 35 27 25 Third quintile 19 22 11 Second quintile 40 30 26 Top quintile 68 53 50 Source: Logistics Performance Index 2014. Red tape indicators place great weight on such simplifica- Indicators for red tape show the same lack of tion. Still, also needed are steps in other aspects border coordination, with a resultant burden of border management and, more generally, soft on private logistics operators. In countries in the and hard trade-related infrastructure. bottom quintile, operators typically deal with The reduction of procedural impediments around 1.5 times as many government agencies is at the heart of the WTO’s recent Trade Fa- as those in countries in the top quintile (fig- cilitation Agreement (box 2.2). It has a catalytic ure 2.5)—a gap, though, that narrowed slightly role in two areas. First, its standards are subject between 2012 and 2014. For forms, countries in to the WTO’s binding trade disciplines, unlike the top quintile typically require two support- previous conventions. Second, it strengthens ing documents for trade transactions; those the delivery of technical assistance and capac- in the bottom, four—a persistent logistics gap ity-building support for developing and least between the previous and current LPIs. developed countries. Indeed, global experience Simplifying documentation for imports suggests that many of the facilitation measures, and exports has long been high on the trade fa- such as introducing national single-window sys- cilitation agenda, prompting initiatives to bring tems, are quite complex and require sustained border agencies together and to create a single efforts. To take in account differences in imple- window for trade. The World Bank and Inter- mentation capacity across countries, the Trade national Finance Corporation’s Doing Business Facilitation Agreement has many caveats for 24 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y Figure 2.5 Red tape affecting import and export transactions, by LPI quintile Delays and unexpected costs are common in Number Import agencies Export agencies Import documents Export documents 5 bottom quintile countries, undermining overall supply 4 chain performance 3 2 1 0 Bottom quintile Fourth quintile Third quintile Second quintile Top quintile Source: Logistics Performance Index 2014. developing and least developed countries, al- respondents report that shipments are often or lowing much flexibility on implementation nearly always delayed by compulsory warehous- modalities. ing, preshipment inspection, or informal pay- ments. The first two numbers are sharply lower Supply chain reliability than in 2012, but roughly in line with those from the 2010 LPI. The informal payments Some causes of underperformance are endog- number has remained steady across editions. enous to a country’s supply chain: the quality The general pattern suggests that supply chain of service, and the costs and speed of clearance processes are examples. But other causes, such as dependence on indirect maritime routes, lie Box 2.2 WTO Agreement on Trade Facilitation outside the domestic supply chain and are not After more than nine years of negotiations, WTO members reached consensus on under a country’s control. a Trade Facilitation Agreement at the Ministerial Conference held in Bali, Indonesia, The LPI details possible causes of delay that on December 7, 2013. The final agreement builds on the now 50-year-old trade rules are not directly related to how domestic services covered by Articles V, VIII, and X of the General Agreement on Tariffs and Trade and and agencies perform (table 2.7). There is, again, contains provisions for faster and more efficient customs and border management a striking contrast between the top and bottom procedures. LPI quintile countries. Of the five LPI delay cat- The key measures include commitments on publishing and making available egories, this contrast is especially large in three: information for traders, as well as adopting modern approaches to customs and informal (corrupt) payments, compulsory ware- border management. Principles include: • Operational standards by customs agencies in terms of risk management housing, and maritime transshipment. These for clearance post-audit. areas are the same three identified in the 2012 • Transparency measures such as transparency of new legislation, appeals LPI, so from a policy viewpoint low-performing against administrative decisions, and advance rulings. countries need to pay more attention to these • Improved cooperation between government agencies, such as in implement- factors if they are to start catching up with the ing national single-window systems. leading countries. • Guidelines for streamlining international transit procedures. Delays and unexpected costs are common in In effect, the new agreement brings under the formal auspices of WTO many bottom quintile countries, undermining overall of the standards and best practices enshrined in other international instruments. In many respects the Bali agreement spells out minimum common standards; the full supply chain performance. Worse, the incidence benefits of trade facilitation will be fully realized only if countries are prepared to go of delays is increasing across LPI quintiles— beyond it, for instance, with regionally integrated facilitation frameworks similar to especially in the lower reaches. In the bot- the European Union’s. tom quintile around 40 percent of 2014 LPI C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 25 Predictable, reliable supply Table 2.7 Respondents reporting that shipments are “often” or “nearly always” delayed, by delay category and LPI quintile chains are central to good Percent of respondents logistics performance Compulsory Preshipment Maritime Informal LPI quintile warehousing inspection transshipment Theft payments Bottom quintile 44 37 31 17 44 Fourth quintile 26 34 40 12 19 Third quintile 24 33 36 19 33 Second quintile 14 20 19 12 30 Top quintile 6 10 7 2 4 Source: Logistics Performance Index 2014. predictability is an acute commercial problem, imperative for countries that want their firms to particularly in the lowest performing coun- join, and move up in, global and regional value tries. The gap between the bottom and fourth chains. quintiles is notable, suggesting that it may be An additional reason for policymakers to possible to improve performance with relatively focus greater attention on supply chain reliabil- modest policy interventions. ity and predictability is the emerging networked Predictable, reliable supply chains are cen- structure of global and regional trade, which is tral to good logistics performance. Indeed, linked in part to the rise of value chains. In a highly variable lead times can disrupt pro- network, small disruptions at one point can duction and exporting, forcing firms to adopt spread rapidly and sometimes unpredictably costly strategies such as express shipments or to other points. The efficiency gains associated sharply higher inventories, which with global with networked production models thus come and regional value chains that use just-in-time with increased systemic risk, in the sense that production can sharply erode competitiveness. the structure itself can be vulnerable to small Although firms can adopt other strategies, such shocks to crucial links. The upshot is that coun- as building in redundancies to deal with disrup- tries that cannot provide the conditions for de- tions affecting one supplier, global market forces veloping predictable and reliable supply chains are such that providing the conditions for pre- will become increasingly disconnected from dictable, reliable supply chains have become world markets where networked production Figure 2.6 Respondents reporting that shipments are “often” or “nearly always” cleared and delivered as scheduled, by LPI quintile Percent of respondents Imports Exports 100 75 50 25 0 Bottom quintile Fourth quintile Third quintile Second quintile Top quintile Source: Logistics Performance Index 2014. 26 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y models are common. Low-performing countries separates countries at the bottom and top of the Addressing the causes need greater policy attention to improve their LPI ranking. In the top quintile, most respon- of unexpected delays connectivity and to stem any further marginal- dents report that import and export shipments should be an important ization from the global trading system. schedule— “often” or “nearly always” arrive on ­ Supply chain reliability and predictabil- in the bottom quintile, only around half as part of logistics reform in ity are further reflected in a key performance many. Performance in both cases is very similar low-performing countries metric from the domestic LPI—timeliness of to the 2012 LPI, which again highlights the im- clearance and delivery (figure 2.6). Given that portance of steps to improve predictability and the frequency of delays rises sharply with de- reliability of supply chains in low-performing clining logistics performance, it is unsurprising countries. that the timeliness of clearance and delivery suf- The bottom two LPI quintiles have the fer as one moves down the LPI quintiles. Thus largest difference between on-schedule arrival a stark difference in on-schedule arrival rates rates for exports and those for imports (see Figure 2.7 Respondents reporting that shipments are “often” or “nearly always” cleared and delivered as scheduled, by World Bank developing country region Percent of respondents Imports Exports 100 75 50 25 0 East Asia Europe and Latin America Middle East and South Sub-Saharan and Pacific Central Asia and Caribbean North Africa Asia Africa Source: Logistics Performance Index 2014. Figure 2.8 Shipments not meeting company quality criteria, by LPI quintile Percent 40 30 20 10 0 Bottom quintile Fourth quintile Third quintile Second quintile Top quintile Source: Logistics Performance Index 2014. C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 27 figure 2.6). The much lower percentage of high 2012 LPI, where South Asia and the Middle ratings for imports suggests that supply chain East and North Africa performed much worse unreliability discriminates in practice (if not in than other regions. law) against foreign goods. As traditional trade Supply chain predictability is not just a mat- barriers continue to fall around the world, poli- consideration— ter of time and cost. A further ­ cies contributing to such de facto discrimina- for private sector operators and their clients—is tion become ever larger determinants of per- shipment quality, which varied widely in the formance and trade outcomes. Addressing 2014 LPI (figure 2.8). In the top LPI quintile, the causes of unexpected delays—including just 13 percent of shipments fail to meet com- unpredictability in clearance, inland transit pany quality criteria—a proportion more than delays, and low service reliability—should thus doubling in the fourth quintile to 31 percent. be an important part of logistics reform in low- The most important quality criterion in performing countries. freight forwarding is delivery within the prom- The patterns highlighted above are more ised time window. Almost just as important is striking in some World Bank regions than the absence of errors in cargo composition or others (figure 2.7). Beyond the export–import documentation. The acceptable quality win- performance gap, these data show a geographic dow is much narrower (and errors much less predictability gap, with implications for com- tolerated) in high-performing countries than petitiveness and the spread of regional supply in low-performing countries. The shipment chains and production networks. However, the quality gap only partly reflects these differing data in figure 2.7 vary greatly from those in the expectations. 28 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 3 The way forward: New challenges SECTION in trade facilitation and logistics “Our program is focused on how to enhance our Areas of reform: No more global competitiveness, especially in logistics.” . . . low-hanging fruit? “The LPI is our reference to improve logistics per- formance.” . . . “The LPI helps us to formulate our The areas of reform were highlighted in the policy in logistics, pointing which sector or fac- two previous sections. This section describes tor we have to improve in order to increase our the main policy implications coming not only competitiveness.” from LPI trends, but also from many streams of —Edy Putra Irawady, Deputy Minister at the analytical and practical knowledge, and current Coordinating Ministry of Economic Affairs, projects, as seen by World Bank staff. Government of the Republic of Indonesia First, this report confirms the need for con- sistent action plans in view of the higher com- Improving logistics performance is at the core plexity found in middle-income countries. The of policies to bolster competitiveness and to low-hanging fruit that countries can pick off boost trade integration. Recent trade research earlier is less and less easily found. Incremen- shows that improving logistics is where devel- tal reforms may not address the weakest link oping countries have the most potential to and they can be easily neutralized or reversed reduce trade costs (box 3.1). The recent WTO by change in the governance environment agreement in Bali, focusing on core trade facil- when the incentives of the people resisting itation standards, is also an example of this changes (private or public) are not addressed awareness and thrust toward implementation at a broad level. Most successful countries are (see box 2.2). introducing far-reaching changes, combining Logistics is not limited to transportation or legislative changes with investment planning trade facilitation—but part of a broader agenda and incentives for operators. Large countries that also includes services, development of fa- like Brazil and Indonesia have created high- cilities, infrastructure, and spatial planning. level interagency bodies to help manage these Sustainability and environmental footprints are complexities. increasingly a concern, especially when connect- While there is no change in the needs for ing to OECD countries (box 3.2). Some coun- basic infrastructure in developing countries, tries’ needs, like those of landlocked countries, some infrastructure and service provision is- have to be accommodated (see box 1.6). “Hu- sues require more attention. The most obvious manitarian logistics” for countries in crisis is is the lack of reliable rail services across coun- also receiving more attention. try income levels. While green transport poli- Countries are facing more complex reforms cies emphasize the importance of a modal shift to push through. Design and implementation from roads to rail, influencing the demand for ultimately occur nationally or regionally, within rail beyond captive bulk markets will require a country groupings. Further, because the robust- transformational change in performance that is ness of a supply chain depends on its weakest just not happening, except in a few high-income link, the benefits of progress in addressing per- countries. formance bottlenecks in one area may not be felt Further, in line with the emergence of until progress is made in other areas. outsourcing in logistically friendly countries, C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 29 Fact-based policymaking Box 3.1 Logistics inefficiencies are a primary source of trade costs Bilateral trade costs capture an ad valorem equivalent of all factors that drive a wedge Policymakers are increasingly looking for the between the price of goods at the factory or farm gate in the exporting country and data on which to base their decisions. General the price paid by a consumer in the importing country. They thus coincide with the cross-country benchmarks like the LPI are traditional definition of “iceberg” trade costs in standard models of international useful, and are complemented by connectivity trade, and include factors such as distance, supply chain inefficiencies, and tariff indicators for specific modes, such as shipping and nontariff barriers. International trade costs indicate how much more it costs to and air. They provide international compara- sell goods internationally than domestically. The lower the trade costs, the more bility but remain coarse-grained benchmarks. competitive, as well as globally and regionally integrated, a country is. More detailed and greater specificity is needed The UNESCAP–World Bank bilateral trade costs database gives trade costs by country pair for manufacturing and agriculture.1 Arvis and others (2013) provide an to assess the impact of decisions on ports, cor- estimate of the sources of trade costs. As expected, distance is a major source of ridors, border crossings, trucking reforms, and trade costs, but logistics performance and connectivity are at least as important, the like. These needs fall into two categories: and more so than tariffs. • Measures of performance outcomes And as developing countries face much higher trade costs, partly due to the on cost, time, and reliability of specific importance of policy in addressing their sources, policy measures can do much chains—corridors or ports, for instance. to reduce them while boosting trade integration, especially through measures that • Impact of cutting logistics costs on the improve connectivity and logistics. economy. Note With automation frequent in most supply 1. http://data.worldbank.org/data-catalog/trade-costs-dataset. chains, raw performance data are often avail- able. There is now an extensive body of expe- rience in measuring, for instance, corridor developing economies are looking increasingly performance, both in developing economies to promote sectors from different angles, such as (“Transport corridor observatories” by the Sub-­ regulations of warehousing or spatial planning Saharan Africa Transport Policy Program)9 or of logistics clusters. Service reform, as in road in high-income countries (the 2012 report pre- freight, is still their priority. sented the experience of internal freight corri- Trade facilitation remains a core agenda dor monitoring in Canada).10 item, which recently came under the global Assessing the footprint of logistics in the spotlight due to the Bali agreement (see economy is more complex. Several governments box 2.2). Implementation challenges have also or national logistics associations have monitored received more attention from governments and it through specific firm surveys, including those the global development community. The press- in Germany, France, Brazil, the Nordic coun- ing needs are moving toward more complicated tries, Thailand, and Malaysia. These surveys try projects with many stakeholders, and where to estimate logistics spending in manufacturing progress is bound to be slower than in automat- and commerce—and to break down the operat- ing customs, for instance. One such area is in- ing costs of service providers. The Finnish sur- tegrating processes of border agencies as part of vey model has been replicated in several coun- trade clearance. These agencies are deemed more tries, including Greece and Kazakhstan.11 problematic than customs, based on the results obtained in the domestic LPI (see box 1.5) in- Differentiated needs by country cluding standards, transport, veterinary, and health/SPS bodies. The four-category breakdown (described in As noted in Connecting to Compete 2012, “Key findings from the 2014 LPI”) remains progress is also comparatively slow for regional relevant, though changes over time point to integration of trade and transport procedures, “churning” between the second and third cat- such as transit regimes, which would generate egories (partial performers and consistent per- major gains in, for instance, corridor perfor- formers). The single most important characteris- mance for landlocked countries. tic of logistics friendly countries is their services’ 30 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y Box 3.2 A shipper’s demand for environmentally friendly supply chain solutions The survey for the 2014 LPI included (as in the previous edition) a question on shippers’ environmental preferences: “How often do ship- Respondents reporting that shippers pers ask for environmentally friendly options (e.g., in view of emission have “often” or “almost always” asked levels, choice of routes, vehicles, schedules) when shipping to . . .?” for environmentally friendly options when shipping to particular regions, by Consistent with previous findings, the responses show that income group about a third of shippers are concerned about sustainability and the environmental footprint of their international supply chain when Percent of respondents 2012 2014 shipping to OECD countries. For shippers to low-income countries, 40 the share is only a tenth. Compared with the previous edition, the percentage of shippers who are seemingly more environmentally conscious has increased or remained the same across every in- 30 come group. OECD countries show the highest absolute change, augmenting the “sustainability gap” across income groups. Anticipating this trend in shipper demand, large logistics ser- 20 vice providers, notably the main express carriers (DHL, FedEx, UPS, and TNT) have developed global products and programs to meet it. These changes will likely help expand the green logistics movement 10 from rich, already environmentally sensitive economies to develop- ing countries. Logistics performance and sustainability are thus increasingly being seen as complementary objectives. 0 Low income Middle High income High income income non-OECD OECD Note: Responses of 2012 LPI were reallocated based on income groups in 2014, to avoid composition effects in the sample. Source: Logistics Performance Index 2012 and 2014. sophistication, which allows their manufactur- third-party logistics functions, including those ers to outsource logistics to third-party pro- in the service sectors. To ensure that services viders, increasing their competitiveness while are efficient and competitive, governments focusing on their core activities. Outsourcing is will need to make long-term policy changes much less common or even nonexistent in the that improve and maintain competitiveness of other categories (box 3.3). services, including logistics services that allow Countries in the logistics unfriendly cat- their countries to join global supply chains. A egory are in most need of support from the in- country’s competitiveness based on low labor ternational development community and neigh- costs or abundant natural resources, for ex- bors. They include countries with governance ample, can be easily lost through inefficient challenges (such as postconflict countries and logistics. fragile states), and countries challenged by their small economic size or geographic connectivity A trade logistics reform matrix (such as landlocked developing countries and small island states—see box 1.6). Addressing Based on the results of section 2 and World some of the implementation challenges above, Bank project experience, the matrix of policy such as regional transit regimes,12 will be key for priorities by group of performance, presented in future progress. earlier editions, has been updated. In most cases If countries want to be more competitive, they remain complex, and will be implemented they should encourage the development of as part of a coherent package (table 3.1). C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 31 Box 3.3 The impact of outsourcing on trade and competitiveness Manufacturing and wholesale/retail companies (shippers) often outsource functions of product delivery to providers of “third-party logistics” (3PL is a bundle of trans- port, warehousing, and related logistics and information technology services). The partnership allows greater specialization: shippers focus on their core business in manufacturing or commerce, while the 3PL providers develop better ways to pro- vide other services in the supply chain, including freight forwarding, warehousing, and transport. Outsourcing in logistics is a sign of strong logistics performance and of a mature logistics market, and is often a direct marker of logistics sophistication. In developed logistics markets, shippers and other 3PL users generally outsource some 60 per- cent of their freight forwarding, 70 percent of their warehousing, and 80 percent of their transport services. The remainder is provided in house. Outsourcing and spread of 3PL is rarer in even high-income countries that have not yet developed a mature logistics market. In peripheral European countries or emerging economies, outsourcing is typically 30 percent or less. In low-income economies as in Africa, outsourcing is negligible. While inherent demand for ad- vanced logistics services may be low in these countries, provision of these services is also hampered by regulatory and other constraints. In 2012, 3PL had an estimated global market of about $677 billion. Its growth has been especially rapid in the Asia-Pacific region—the largest regional market at $236 billion in 2012, followed by the United States ($170 billion) and Europe ($156 billion). Source: Langley and Capgemini Consulting 2014; Pasadilla and Findlay 2014. Table 3.1 Trade logistics reform matrix Bottom Third and Second Top LPI component quintile fourth quintiles quintile quintile Transport infrastructure ✔ ✔ ✔✔ ✔ ICT ✔ ✔ Logistics facilities ✔ ✔✔ Customs ✔✔✔ ✔✔ ✔ Integration of border management ✔ ✔✔✔ ✔✔✔ ✔ Services reforms ✔✔ ✔✔✔ ✔✔✔ Regional facilitation and corridors ✔✔✔ ✔✔ ✔✔ National data tools ✔ ✔ ✔✔✔ ✔✔✔ Green logistics ✔✔ ✔✔✔ ✔✔✔ is very important; ✔✔ is important; ✔ is fairly important. ICT is information and communications technology. Source: Authors. 32 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y Notes 1 Logistics has been selected as one of the key nine sectors procedures serving trade corridors (seen as a whole). for development in the Netherlands: www.hollandtrade. Every transit system must have six components: com. • The political commitment to allow transit trade— 2 Indonesia has described its Vision for 2025 under the formalized in bilateral, regional, or multilateral treaties. “Blueprint for National Logistics System Development” • The physical infrastructure for transit, including as “Locally Integrated, Globally Connected for National border checking facilities. Competitiveness and Social Welfare.” • Public and private institutions and people with certain 3 Saslavsky and Shepherd 2013. capacities and competencies related to the movement 4 The responses from this question were used not to of goods along a trade corridor. These institutions and compute the LPI but as a floating question to capture people comprise: trends that might be relevant. • Public agencies in the transit country supervising 5 Reis and Farole 2012. the flow—mainly customs and other agencies 6 The relative LPI score is obtained by normalizing involved in controlling international trade and the LPI score: Percentage of highest performer = transportation. 100 × [LPI – 1] / [LPI highest – 1]. Thus, the best • Transportation services, including the trucking performer has the maximum relative LPI score of 100 industry, customs brokers, and freight forwarders. percent. building mechanisms, partnerships, and • Trust-­ 7 Although the respondents in the LPI survey are freight cooperative initiatives that bring together the many forwarders and express carriers, the quality and participants in the transit and corridor operations. competence of service providers are assessed by their • An enabling environment for movements of vehicles peers. and people—including vehicle registrations, the 8 Lead time to import is the median time (the value for provision of trade in freight services across countries, 50 percent of shipments) from port of discharge to arrival allocation visas for drivers, mutual insurance at the consignee. recognition, a financial sector integrated across 9 Raballand and others 2008. countries, and law enforcement. 10 www.tc.gc.ca/eng/policy/anre-menu-3023.htm. • The provisions and procedures applicable to shipments in transit and to the carriers or traders of the goods. 11 For example, the national logistics surveys of Estonia (Kiisler and Solakivi 2014), Finland (Solakivi and others The sixth and last component listed, transit provisions 2012), and Greece (World Bank 2014). and procedures, is the transit regime. The transit regime is the heart of the transit system as it governs and makes 12 Definition of transit system and transit regime by Arvis possible the movements of goods from their origin (often a (McLinden and others 2011): Transit systems mean seaport) to their destination (such as a clearance center in the infrastructure, legal framework, institutions, and the destination country). C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 33 APPENDIX 1 International LPI results Logistics International quality and Tracking and LPI rank LPI score Customs Infrastructure shipments competence tracing Timeliness % of Lower Upper Lower Upper highest Economy Rank bound bound Score bound bound performer Rank Score Rank Score Rank Score Rank Score Rank Score Rank Score Germany 1 1 1 4.12 4.07 4.17 100.0 2 4.10 1 4.32 4 3.74 3 4.12 1 4.17 4 4.36 Netherlands 2 2 5 4.05 3.97 4.12 97.6 4 3.96 3 4.23 11 3.64 2 4.13 6 4.07 6 4.34 Belgium 3 1 6 4.04 3.96 4.13 97.5 11 3.80 8 4.10 2 3.80 4 4.11 4 4.11 2 4.39 United Kingdom 4 2 5 4.01 3.96 4.07 96.6 5 3.94 6 4.16 12 3.63 5 4.03 5 4.08 7 4.33 Singapore 5 2 7 4.00 3.95 4.06 96.2 3 4.01 2 4.28 6 3.70 8 3.97 11 3.90 9 4.25 Sweden 6 1 20 3.96 3.68 4.24 94.9 15 3.75 9 4.09 3 3.76 6 3.98 7 3.98 8 4.26 Norway 7 1 19 3.96 3.69 4.22 94.8 1 4.21 4 4.19 30 3.42 1 4.19 31 3.50 5 4.36 Luxembourg 8 1 21 3.95 3.65 4.24 94.4 10 3.82 15 3.91 1 3.82 14 3.78 22 3.68 1 4.71 United States 9 6 10 3.92 3.87 3.97 93.5 16 3.73 5 4.18 26 3.45 7 3.97 2 4.14 14 4.14 Japan 10 6 12 3.91 3.85 3.97 93.4 14 3.78 7 4.16 19 3.52 11 3.93 9 3.95 10 4.24 Ireland 11 5 17 3.87 3.73 4.01 91.9 12 3.80 16 3.84 27 3.44 9 3.94 3 4.13 16 4.13 Canada 12 9 17 3.86 3.77 3.95 91.5 20 3.61 10 4.05 23 3.46 10 3.94 8 3.97 11 4.18 France 13 9 17 3.85 3.77 3.92 91.2 18 3.65 13 3.98 7 3.68 15 3.75 12 3.89 13 4.17 Switzerland 14 11 17 3.84 3.78 3.91 91.1 7 3.92 11 4.04 15 3.58 16 3.75 18 3.79 21 4.06 Hong Kong SAR, China 15 11 17 3.83 3.77 3.89 90.5 17 3.72 14 3.97 14 3.58 13 3.81 13 3.87 18 4.06 Australia 16 11 17 3.81 3.74 3.88 90.0 9 3.85 12 4.00 18 3.52 17 3.75 16 3.81 26 4.00 Denmark 17 2 28 3.78 3.52 4.05 89.1 13 3.79 17 3.82 9 3.65 18 3.74 36 3.36 3 4.39 Spain 18 17 23 3.72 3.63 3.80 87.1 19 3.63 20 3.77 21 3.51 12 3.83 26 3.54 17 4.07 Taiwan, China 19 16 23 3.72 3.62 3.81 87.0 21 3.55 24 3.64 5 3.71 25 3.60 17 3.79 25 4.02 Italy 20 18 23 3.69 3.64 3.74 86.2 29 3.36 19 3.78 17 3.54 23 3.62 14 3.84 22 4.05 Korea, Rep. 21 18 25 3.67 3.58 3.75 85.4 24 3.47 18 3.79 28 3.44 21 3.66 21 3.69 28 4.00 Austria 22 11 35 3.65 3.41 3.89 84.8 23 3.53 25 3.64 40 3.26 26 3.56 10 3.93 23 4.04 New Zealand 23 5 39 3.64 3.28 4.01 84.7 6 3.92 22 3.67 8 3.67 27 3.56 38 3.33 40 3.72 Finland 24 9 39 3.62 3.32 3.93 84.0 8 3.89 28 3.52 20 3.52 19 3.72 39 3.31 38 3.80 Malaysia 25 22 28 3.59 3.52 3.66 83.0 27 3.37 26 3.56 10 3.64 32 3.47 23 3.58 31 3.92 Portugal 26 18 39 3.56 3.34 3.78 82.0 31 3.26 31 3.37 29 3.43 20 3.71 20 3.71 35 3.87 United Arab Emirates 27 25 32 3.54 3.48 3.60 81.3 25 3.42 21 3.70 43 3.20 31 3.50 24 3.57 32 3.92 China 28 26 32 3.53 3.48 3.59 81.1 38 3.21 23 3.67 22 3.50 35 3.46 29 3.50 36 3.87 Qatar 29 20 39 3.52 3.34 3.70 80.6 37 3.21 29 3.44 16 3.55 28 3.55 32 3.47 34 3.87 Turkey 30 26 35 3.50 3.43 3.57 80.1 34 3.23 27 3.53 48 3.18 22 3.64 19 3.77 41 3.68 Poland 31 24 38 3.49 3.35 3.64 79.9 32 3.26 46 3.08 24 3.46 33 3.47 27 3.54 15 4.13 Czech Republic 32 21 39 3.49 3.31 3.67 79.8 33 3.24 36 3.29 13 3.59 29 3.51 25 3.56 39 3.73 Hungary 33 25 39 3.46 3.32 3.61 78.9 48 2.97 40 3.18 32 3.40 37 3.33 15 3.82 20 4.06 South Africa 34 24 43 3.43 3.23 3.64 77.9 42 3.11 38 3.20 25 3.45 24 3.62 41 3.30 33 3.88 Thailand 35 29 39 3.43 3.33 3.53 77.8 36 3.21 30 3.40 39 3.30 38 3.29 33 3.45 29 3.96 Latvia 36 25 44 3.40 3.20 3.61 77.0 35 3.22 51 3.03 33 3.38 42 3.21 30 3.50 19 4.06 Iceland 37 22 49 3.39 3.13 3.65 76.6 22 3.54 33 3.34 49 3.15 34 3.46 35 3.38 53 3.51 Slovenia 38 26 43 3.38 3.20 3.56 76.3 41 3.11 32 3.35 57 3.05 30 3.51 28 3.51 37 3.82 Estonia 39 20 58 3.35 3.00 3.69 75.1 26 3.40 35 3.34 34 3.34 39 3.27 47 3.20 49 3.55 Romania 40 34 54 3.26 3.08 3.44 72.4 59 2.83 64 2.77 36 3.32 43 3.20 34 3.39 27 4.00 Israel 41 36 50 3.26 3.11 3.41 72.4 43 3.10 45 3.11 96 2.71 36 3.35 46 3.20 12 4.18 Chile 42 38 50 3.26 3.12 3.39 72.3 39 3.17 41 3.17 53 3.12 44 3.19 40 3.30 44 3.59 34 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y Appendix 1  International LPI results Logistics International quality and Tracking and LPI rank LPI score Customs Infrastructure shipments competence tracing Timeliness % of Lower Upper Lower Upper highest Economy Rank bound bound Score bound bound performer Rank Score Rank Score Rank Score Rank Score Rank Score Rank Score Slovak Republic 43 33 55 3.25 3.03 3.48 72.2 52 2.89 37 3.22 38 3.30 46 3.16 63 3.02 30 3.94 Greece 44 40 52 3.20 3.08 3.32 70.5 28 3.36 42 3.17 62 2.97 40 3.23 61 3.03 54 3.50 Panama 45 38 57 3.19 3.00 3.38 70.3 40 3.15 52 3.00 47 3.18 68 2.87 37 3.34 42 3.63 Lithuania 46 33 66 3.18 2.88 3.47 69.8 44 3.04 39 3.18 55 3.10 57 2.99 49 3.17 43 3.60 Bulgaria 47 40 57 3.16 3.00 3.31 69.1 64 2.75 53 2.94 37 3.31 55 3.00 76 2.88 24 4.04 Vietnam 48 40 59 3.15 2.99 3.32 69.0 61 2.81 44 3.11 42 3.22 49 3.09 48 3.19 56 3.49 Saudi Arabia 49 45 51 3.15 3.10 3.20 68.8 56 2.86 34 3.34 70 2.93 48 3.11 54 3.15 47 3.55 Mexico 50 44 55 3.13 3.03 3.23 68.2 70 2.69 50 3.04 46 3.19 47 3.12 55 3.14 46 3.57 Malta 51 39 69 3.11 2.85 3.36 67.5 46 3.00 47 3.08 41 3.23 54 3.00 52 3.15 81 3.15 Bahrain 52 20 124 3.08 2.45 3.71 66.7 30 3.29 49 3.04 58 3.04 51 3.04 42 3.29 119 2.80 Indonesia 53 40 66 3.08 2.89 3.27 66.7 55 2.87 56 2.92 74 2.87 41 3.21 58 3.11 50 3.53 India 54 49 56 3.08 3.01 3.15 66.6 65 2.72 58 2.88 44 3.20 52 3.03 57 3.11 51 3.51 Croatia 55 40 76 3.05 2.80 3.30 65.8 50 2.95 55 2.92 61 2.98 56 3.00 59 3.11 62 3.37 Kuwait 56 44 77 3.01 2.79 3.23 64.4 68 2.69 43 3.16 89 2.76 59 2.96 50 3.16 60 3.39 Philippines 57 44 78 3.00 2.78 3.23 64.2 47 3.00 75 2.60 35 3.33 61 2.93 64 3.00 90 3.07 Cyprus 58 40 92 3.00 2.67 3.33 64.1 53 2.88 59 2.87 60 3.01 63 2.92 65 3.00 65 3.31 Oman 59 50 69 3.00 2.85 3.14 63.9 74 2.63 57 2.88 31 3.41 73 2.84 80 2.84 67 3.29 Argentina 60 52 68 2.99 2.87 3.10 63.6 85 2.55 63 2.83 64 2.96 62 2.93 53 3.15 55 3.49 Ukraine 61 51 71 2.98 2.84 3.11 63.3 69 2.69 71 2.65 67 2.95 72 2.84 45 3.20 52 3.51 Egypt, Arab Rep. 62 40 99 2.97 2.63 3.30 63.0 57 2.85 60 2.86 77 2.87 58 2.99 43 3.23 99 2.99 Serbia 63 47 80 2.96 2.75 3.17 62.9 113 2.37 66 2.73 54 3.12 53 3.02 69 2.94 48 3.55 El Salvador 64 51 74 2.96 2.81 3.11 62.8 51 2.93 72 2.63 45 3.20 45 3.16 66 3.00 128 2.75 Brazil 65 56 70 2.94 2.84 3.05 62.3 94 2.48 54 2.93 81 2.80 50 3.05 62 3.03 61 3.39 Bahamas, The 66 51 86 2.91 2.70 3.12 61.2 45 3.00 65 2.74 63 2.96 64 2.92 99 2.64 72 3.19 Montenegro 67 47 104 2.88 2.59 3.16 60.1 60 2.83 62 2.84 51 3.15 117 2.45 84 2.76 73 3.19 Jordan 68 56 86 2.87 2.70 3.05 60.0 78 2.60 76 2.59 65 2.96 60 2.94 96 2.67 58 3.46 Dominican Republic 69 51 102 2.86 2.61 3.11 59.6 80 2.58 73 2.61 71 2.93 65 2.91 72 2.91 76 3.18 Jamaica 70 44 125 2.84 2.45 3.24 59.0 54 2.88 61 2.84 86 2.79 84 2.72 89 2.72 83 3.14 Peru 71 60 90 2.84 2.69 2.99 59.0 96 2.47 67 2.72 69 2.94 76 2.78 83 2.81 66 3.30 Pakistan 72 55 106 2.83 2.59 3.06 58.5 58 2.84 69 2.67 56 3.08 75 2.79 86 2.73 123 2.79 Malawi 73 56 104 2.81 2.59 3.03 58.1 62 2.79 48 3.04 108 2.63 70 2.86 100 2.63 100 2.99 Kenya 74 50 120 2.81 2.48 3.14 58.0 151 1.96 102 2.40 50 3.15 90 2.65 60 3.03 45 3.58 Nigeria 75 59 100 2.81 2.62 3.00 57.9 117 2.35 83 2.56 107 2.63 85 2.70 51 3.16 57 3.46 Venezuela, RB 76 60 99 2.81 2.63 2.99 57.9 109 2.39 74 2.61 68 2.94 77 2.76 70 2.92 74 3.18 Guatemala 77 66 92 2.80 2.66 2.93 57.6 63 2.75 88 2.54 76 2.87 87 2.68 93 2.68 68 3.24 Paraguay 78 66 96 2.78 2.64 2.92 57.0 90 2.49 97 2.46 79 2.83 78 2.76 74 2.89 70 3.22 Côte d'Ivoire 79 60 112 2.76 2.53 2.99 56.4 120 2.33 101 2.41 75 2.87 95 2.62 67 2.97 64 3.31 Rwanda 80 56 120 2.76 2.49 3.03 56.3 89 2.50 113 2.32 88 2.78 92 2.64 68 2.94 63 3.34 Bosnia and Herzegovina 81 62 114 2.75 2.52 2.97 56.0 105 2.41 84 2.55 87 2.78 81 2.73 107 2.55 59 3.44 Maldives 82 56 124 2.75 2.45 3.04 56.0 49 2.95 82 2.56 72 2.92 74 2.79 92 2.70 148 2.51 Cambodia 83 56 125 2.74 2.44 3.04 55.8 71 2.67 79 2.58 78 2.83 89 2.67 71 2.92 129 2.75 São Tomé and Príncipe 84 56 124 2.73 2.46 3.01 55.5 103 2.42 78 2.59 66 2.95 109 2.50 56 3.13 125 2.77 Lebanon 85 52 135 2.73 2.36 3.10 55.3 124 2.29 89 2.53 118 2.53 67 2.89 44 3.22 108 2.89 Ecuador 86 67 112 2.71 2.53 2.89 54.8 92 2.49 94 2.50 83 2.79 97 2.61 95 2.67 77 3.18 Costa Rica 87 69 112 2.70 2.53 2.87 54.5 110 2.39 99 2.43 106 2.63 69 2.86 82 2.83 95 3.04 Kazakhstan 88 66 121 2.70 2.47 2.93 54.4 121 2.33 106 2.38 100 2.68 83 2.72 81 2.83 69 3.24 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 35 Appendix 1  International LPI results Logistics International quality and Tracking and LPI rank LPI score Customs Infrastructure shipments competence tracing Timeliness % of Lower Upper Lower Upper highest Economy Rank bound bound Score bound bound performer Rank Score Rank Score Rank Score Rank Score Rank Score Rank Score Sri Lanka 89 67 120 2.70 2.48 2.91 54.3 84 2.56 126 2.23 115 2.56 66 2.91 85 2.76 85 3.12 Russian Federation 90 78 103 2.69 2.60 2.79 54.3 133 2.20 77 2.59 102 2.64 80 2.74 79 2.85 84 3.14 Uruguay 91 70 115 2.68 2.51 2.85 53.8 111 2.39 90 2.51 103 2.64 100 2.58 75 2.89 91 3.06 Armenia 92 60 136 2.67 2.35 2.99 53.6 75 2.63 107 2.38 90 2.75 79 2.75 114 2.50 98 3.00 Namibia 93 64 136 2.66 2.35 2.96 53.1 125 2.27 81 2.57 97 2.70 86 2.69 106 2.56 82 3.15 Moldova 94 67 127 2.65 2.42 2.89 53.0 98 2.46 85 2.55 52 3.14 118 2.44 131 2.35 109 2.89 Nicaragua 95 67 127 2.65 2.42 2.88 53.0 72 2.66 130 2.20 98 2.69 98 2.58 104 2.58 79 3.17 Algeria 96 67 127 2.65 2.40 2.90 52.8 66 2.71 87 2.54 117 2.54 102 2.54 109 2.54 94 3.04 Colombia 97 72 125 2.64 2.45 2.83 52.5 79 2.59 98 2.44 95 2.72 91 2.64 108 2.55 111 2.87 Burkina Faso 98 60 143 2.64 2.29 2.99 52.5 88 2.50 111 2.35 105 2.63 94 2.63 115 2.49 71 3.21 Belarus 99 70 127 2.64 2.42 2.85 52.5 87 2.50 86 2.55 91 2.74 116 2.46 113 2.51 93 3.05 Ghana 100 66 138 2.63 2.33 2.93 52.1 130 2.22 70 2.67 93 2.73 121 2.37 73 2.90 113 2.86 Senegal 101 58 146 2.62 2.24 3.00 52.0 76 2.61 116 2.30 59 3.03 103 2.53 98 2.65 146 2.53 Liberia 102 67 134 2.62 2.36 2.88 51.9 83 2.57 80 2.57 114 2.57 71 2.86 105 2.57 144 2.57 Honduras 103 78 127 2.61 2.42 2.79 51.5 67 2.70 124 2.24 85 2.79 112 2.47 101 2.61 121 2.79 Ethiopia 104 49 158 2.59 2.04 3.15 51.0 102 2.42 134 2.17 121 2.50 96 2.62 97 2.67 78 3.17 Nepal 105 77 132 2.59 2.38 2.80 50.9 123 2.31 122 2.26 104 2.64 107 2.50 87 2.72 92 3.06 Solomon Islands 106 72 137 2.59 2.34 2.84 50.8 91 2.49 96 2.46 146 2.22 82 2.72 88 2.72 102 2.96 Burundi 107 61 154 2.57 2.15 2.99 50.2 77 2.60 104 2.40 111 2.60 106 2.51 112 2.51 126 2.76 Bangladesh 108 81 133 2.56 2.37 2.76 50.1 138 2.09 138 2.11 80 2.82 93 2.64 122 2.45 75 3.18 Benin 109 64 153 2.56 2.16 2.96 50.0 73 2.64 109 2.35 99 2.69 123 2.35 123 2.45 115 2.85 Tunisia 110 72 144 2.55 2.27 2.83 49.7 146 2.02 118 2.30 73 2.91 120 2.42 124 2.42 80 3.16 Fiji 111 52 158 2.55 1.99 3.10 49.5 106 2.40 95 2.47 94 2.72 139 2.22 118 2.47 101 2.97 Angola 112 77 143 2.54 2.29 2.80 49.4 114 2.37 140 2.11 84 2.79 128 2.31 103 2.59 96 3.02 Chad 113 66 154 2.53 2.14 2.92 49.0 97 2.46 112 2.33 136 2.33 125 2.34 90 2.71 97 3.02 Tajikistan 114 85 138 2.53 2.32 2.73 48.9 115 2.35 108 2.36 92 2.73 113 2.47 119 2.47 133 2.74 Mauritius 115 73 148 2.51 2.22 2.81 48.5 128 2.25 91 2.50 109 2.63 110 2.48 133 2.34 110 2.88 Georgia 116 91 138 2.51 2.33 2.69 48.3 131 2.21 100 2.42 138 2.32 119 2.44 102 2.59 87 3.09 Macedonia, FYR 117 86 143 2.50 2.28 2.71 48.0 116 2.35 92 2.50 132 2.38 105 2.51 121 2.46 118 2.81 Libya 118 86 143 2.50 2.28 2.72 47.9 104 2.41 119 2.29 140 2.29 131 2.29 78 2.85 114 2.85 Mali 119 79 148 2.50 2.22 2.77 47.9 141 2.08 129 2.20 82 2.80 142 2.20 91 2.70 106 2.90 Botswana 120 70 154 2.49 2.14 2.84 47.8 112 2.38 125 2.23 129 2.42 99 2.58 127 2.40 103 2.94 Bolivia 121 78 152 2.48 2.16 2.80 47.4 108 2.40 133 2.17 135 2.35 88 2.68 94 2.68 141 2.60 Guinea 122 91 146 2.46 2.24 2.69 46.9 119 2.34 141 2.10 125 2.47 124 2.35 126 2.41 86 3.10 Zambia 123 73 154 2.46 2.10 2.82 46.9 86 2.54 115 2.31 152 2.13 114 2.47 120 2.47 105 2.91 Guyana 124 93 144 2.46 2.26 2.66 46.7 99 2.46 105 2.40 128 2.43 133 2.27 117 2.47 131 2.74 Azerbaijan 125 81 154 2.45 2.15 2.75 46.4 82 2.57 68 2.71 113 2.57 149 2.14 148 2.14 143 2.57 Papua New Guinea 126 86 154 2.43 2.15 2.71 45.8 107 2.40 127 2.23 126 2.47 115 2.47 141 2.27 135 2.73 Guinea-Bissau 127 77 158 2.43 2.05 2.81 45.7 101 2.43 121 2.29 141 2.29 101 2.57 139 2.29 136 2.71 Comoros 128 96 153 2.40 2.15 2.65 44.9 81 2.58 117 2.30 119 2.51 134 2.26 128 2.37 154 2.37 Uzbekistan 129 94 154 2.39 2.13 2.66 44.7 157 1.80 148 2.01 145 2.23 122 2.37 77 2.87 88 3.08 Niger 130 89 155 2.39 2.09 2.70 44.6 93 2.49 143 2.08 130 2.38 132 2.28 129 2.36 127 2.76 Lao PDR 131 92 154 2.39 2.10 2.68 44.5 100 2.45 128 2.21 120 2.50 129 2.31 146 2.20 137 2.65 Madagascar 132 98 154 2.38 2.13 2.64 44.3 144 2.06 136 2.15 133 2.38 127 2.33 138 2.29 89 3.07 Lesotho 133 87 158 2.37 2.04 2.71 44.0 129 2.22 110 2.35 122 2.48 137 2.23 132 2.35 139 2.60 Central African Republic 134 72 158 2.36 1.89 2.84 43.6 95 2.47 93 2.50 149 2.16 130 2.31 137 2.31 150 2.47 36 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y Appendix 1  International LPI results Logistics International quality and Tracking and LPI rank LPI score Customs Infrastructure shipments competence tracing Timeliness % of Lower Upper Lower Upper highest Economy Rank bound bound Score bound bound performer Rank Score Rank Score Rank Score Rank Score Rank Score Rank Score Mongolia 135 102 155 2.36 2.09 2.62 43.4 132 2.20 120 2.29 110 2.62 126 2.33 149 2.13 147 2.51 Equatorial Guinea 136 85 158 2.35 1.98 2.73 43.4 118 2.35 139 2.11 153 2.11 143 2.20 110 2.53 112 2.86 Zimbabwe 137 87 158 2.34 1.98 2.70 42.9 154 1.89 123 2.25 143 2.25 108 2.50 143 2.22 104 2.93 Tanzania 138 108 154 2.33 2.10 2.56 42.6 135 2.19 114 2.32 137 2.32 145 2.18 150 2.11 107 2.89 Togo 139 105 158 2.32 2.04 2.59 42.2 139 2.09 145 2.07 124 2.47 150 2.14 116 2.49 140 2.60 Turkmenistan 140 107 158 2.30 2.04 2.57 41.8 122 2.31 146 2.06 116 2.56 155 2.07 134 2.32 153 2.45 Iraq 141 111 158 2.30 2.05 2.55 41.6 149 1.98 131 2.18 139 2.31 147 2.15 136 2.31 116 2.85 Cameroon 142 110 158 2.30 2.04 2.55 41.5 156 1.86 154 1.85 147 2.20 104 2.52 111 2.52 120 2.80 Bhutan 143 104 158 2.29 1.99 2.59 41.3 140 2.09 132 2.18 131 2.38 111 2.48 140 2.28 158 2.28 Haiti 144 124 156 2.27 2.08 2.46 40.7 127 2.25 151 2.00 142 2.27 148 2.14 135 2.32 138 2.63 Myanmar 145 122 158 2.25 2.02 2.48 40.0 150 1.97 137 2.14 151 2.14 156 2.07 130 2.36 117 2.83 Gambia, The 146 122 158 2.25 2.03 2.47 40.0 143 2.06 149 2.00 101 2.67 138 2.22 154 2.00 151 2.46 Mozambique 147 103 159 2.23 1.85 2.61 39.4 126 2.26 135 2.15 154 2.08 153 2.10 152 2.08 134 2.74 Mauritania 148 104 159 2.23 1.86 2.60 39.4 152 1.93 103 2.40 155 2.07 157 2.06 142 2.23 130 2.75 Kyrgyz Republic 149 122 158 2.21 1.95 2.47 38.7 145 2.03 147 2.05 127 2.43 151 2.13 145 2.20 155 2.36 Gabon 150 125 158 2.20 1.95 2.45 38.5 148 2.00 142 2.08 112 2.58 135 2.25 157 1.92 157 2.31 Yemen, Rep. 151 91 160 2.18 1.67 2.69 37.9 159 1.63 153 1.87 134 2.35 141 2.21 144 2.21 124 2.78 Cuba 152 126 158 2.18 1.91 2.45 37.8 136 2.17 155 1.84 123 2.47 154 2.08 156 1.99 152 2.45 Sudan 153 132 158 2.16 1.93 2.39 37.2 155 1.87 152 1.90 144 2.23 144 2.18 125 2.42 156 2.33 Djibouti 154 117 159 2.15 1.80 2.50 36.8 134 2.20 150 2.00 158 1.80 140 2.21 155 2.00 132 2.74 Syrian Arab Republic 155 134 159 2.09 1.81 2.37 34.9 142 2.07 144 2.08 150 2.15 159 1.82 158 1.90 145 2.53 Eritrea 156 132 159 2.08 1.78 2.39 34.7 153 1.90 159 1.68 157 1.90 136 2.23 153 2.01 122 2.79 Congo, Rep. 157 139 159 2.08 1.83 2.33 34.5 160 1.50 157 1.83 148 2.17 146 2.17 147 2.17 142 2.58 Afghanistan 158 153 158 2.07 1.97 2.16 34.3 137 2.16 158 1.82 156 1.99 152 2.12 159 1.85 149 2.48 Congo, Dem. Rep. 159 154 160 1.88 1.60 2.15 28.2 158 1.78 156 1.83 160 1.70 158 1.84 151 2.10 159 2.04 Somalia 160 149 160 1.77 1.32 2.23 24.8 147 2.00 160 1.50 159 1.75 160 1.75 160 1.75 160 1.88 Note: The LPI index is a multidimensional assessment of logistics performance, rated on a scale from 1 (worst) to 5 (best). The six core components captured by the LPI survey are rated by respondents on a scale of 1–5, where 1 is very low or very difficult and 5 is very high or very easy, except for question 15, where 1 is hardly ever and 5 is nearly always. The relative LPI score is obtained by normalizing the LPI score: Percentage of highest performer = 100 × [LPI – 1] / [LPI highest – 1]. Thus, the best performer has the maximum relative LPI score of 100 percent. Source: Logistics Performance Index 2014. C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 37 APPENDIX 2 Domestic LPI results, by region and income group Percent of respondents Region Income group Europe Latin Middle East and America East and Sub- Lower Upper Response Asia and Central and North South Saharan Low middle middle High Question categories Pacific Asia Caribbean Africa Asia Africa income income income income Question 17: Level of fees and charges High or very high 56 35 68 39 51 70 68 62 47 52 Port charges Low or very low 9 16 3 14 12 6 19 4 7 6 High or very high 50 38 44 32 26 51 36 45 44 43 Airport charges Low or very low 14 4 12 15 15 8 14 10 9 13 High or very high 49 23 59 25 47 68 65 46 43 37 Road transport rates Low or very low 12 16 16 16 14 6 9 10 16 15 High or very high 22 43 15 9 33 46 51 28 25 37 Rail transport rates Low or very low 27 19 42 36 43 21 20 33 30 12 High or very high 29 16 49 26 32 49 31 40 35 41 Warehousing/transloading charges Low or very low 25 25 9 8 26 1 5 14 16 17 High or very high 9 17 22 8 10 28 11 17 22 29 Agent fees Low or very low 35 35 7 26 41 23 27 24 25 23 Question 18: Quality of infrastructure Low or very low 44 49 52 53 21 33 38 48 41 23 Ports High or very high 24 10 20 33 28 23 15 18 26 53 Low or very low 34 36 30 51 34 38 32 49 30 10 Airports High or very high 29 27 20 18 28 20 22 17 27 56 Low or very low 46 56 72 49 32 53 59 57 51 16 Roads High or very high 16 10 7 11 27 19 15 4 21 46 Low or very low 60 64 82 86 57 89 86 76 72 32 Rail High or very high 6 4 1 7 7 3 2 5 5 27 Low or very low 48 39 27 20 33 44 59 51 17 10 Warehousing/transloading facilities High or very high 20 22 7 17 24 22 10 12 26 61 Low or very low 11 16 23 9 6 23 25 18 14 7 Telecommunications and IT High or very high 23 32 24 36 58 34 23 27 39 77 Question 19: Quality and competence of service Low or very low 29 41 25 31 36 29 30 38 27 9 Roads High or very high 20 24 9 22 26 15 13 10 25 62 Low or very low 63 47 82 60 54 77 75 66 63 32 Rail High or very high 11 9 1 6 10 5 6 9 4 31 Low or very low 10 14 13 16 9 12 13 14 11 5 Air transport High or very high 29 31 32 48 37 31 24 26 42 63 Low or very low 7 17 11 6 19 10 18 7 12 5 Maritime transport High or very high 33 32 27 46 51 42 30 31 44 61 Warehousing/transloading Low or very low 25 28 22 26 37 28 40 28 20 7 and distribution High or very high 29 36 26 29 25 31 16 21 42 63 Low or very low 5 9 11 14 1 1 4 2 11 1 Freight forwarders High or very high 51 38 46 47 57 36 32 36 53 64 Low or very low 18 20 28 31 8 32 25 29 23 16 Customs agencies High or very high 29 32 14 32 23 30 20 23 32 61 Quality/standards Low or very low 43 35 50 26 33 34 55 47 25 15 inspection agencies High or very high 16 29 8 34 22 27 15 21 26 47 38 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y Appendix 2  Domestic LPI results, by region and income group Region Income group Europe Latin Middle East and America East and Sub- Lower Upper Response Asia and Central and North South Saharan Low middle middle High Question categories Pacific Asia Caribbean Africa Asia Africa income income income income Health/sanitary and Low or very low 52 36 55 40 37 44 49 53 37 25 phytosanitary agencies High or very high 21 24 6 25 17 18 13 17 20 42 Low or very low 19 8 22 31 32 14 18 22 16 8 Customs brokers High or very high 29 52 22 37 35 37 34 31 39 65 Low or very low 21 39 34 51 26 35 32 34 37 17 Trade and transport associations High or very high 25 23 12 19 26 30 21 21 25 51 Low or very low 23 19 11 28 9 8 17 11 17 11 Consignees or shippers High or very high 22 32 14 18 47 30 17 26 30 42 Question 20: Efficiency of processes Hardly ever or rarely 29 21 21 20 7 22 31 17 19 5 Clearance and delivery of imports Often or nearly always 55 62 37 52 47 47 39 49 54 83 Hardly ever or rarely 4 4 12 5 2 18 4 8 13 8 Clearance and delivery of exports Often or nearly always 75 60 63 62 85 64 67 62 68 88 Hardly ever or rarely 53 39 28 20 22 20 32 41 23 11 Transparency of customs clearance Often or nearly always 30 48 38 31 58 38 28 35 48 80 Transparency of other Hardly ever or rarely 51 37 41 4 20 22 38 40 22 11 border agencies Often or nearly always 28 52 39 26 50 40 24 36 48 77 Provision of adequate and timely Hardly ever or rarely 45 38 28 43 34 33 37 35 36 23 information on regulatory changes Often or nearly always 23 32 23 40 35 35 25 27 35 67 Expedited customs clearance for Hardly ever or rarely 31 35 41 28 7 34 53 23 30 14 traders with high compliance levels Often or nearly always 34 49 35 39 38 19 20 37 38 66 Question 21: Sources of major delays Compulsory warehousing/ Often or nearly always 7 10 33 24 18 39 21 26 24 11 transloading Hardly ever or rarely 40 57 26 21 34 32 27 38 38 67 Often or nearly always 14 10 46 44 33 36 35 23 33 13 Preshipment inspection Hardly ever or rarely 37 79 14 16 27 24 25 34 37 67 Often or nearly always 12 20 39 26 47 40 40 22 33 12 Maritime transshipment Hardly ever or rarely 32 60 17 19 24 26 28 37 28 60 Criminal activities Often or nearly always 10 13 36 5 24 10 20 12 19 2 (such as stolen cargo) Hardly ever or rarely 57 74 43 91 49 61 48 63 66 85 Often or nearly always 25 25 49 12 18 40 38 35 28 7 Solicitation of informal payments Hardly ever or rarely 38 57 24 28 28 38 35 29 43 77 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 39 Appendix 2  Domestic LPI results, by region and income group Region Income group Europe Latin Middle East and America East and Sub- Lower Upper Response Asia and Central and North South Saharan Low middle middle High Question categories Pacific Asia Caribbean Africa Asia Africa income income income income Question 22: Changes in the logistics environment since 2011 Much worsened or worsened 11 10 37 20 8 18 18 10 26 12 Customs clearance procedures Improved or much improved 55 36 35 26 78 56 50 47 44 60 Much worsened or worsened 6 12 28 42 5 10 3 15 24 15 Other official clearance procedures Improved or much improved 57 20 29 24 47 41 37 33 35 38 Much worsened or worsened 4 8 28 38 9 9 13 13 18 10 Trade and transport infrastructure Improved or much improved 68 34 36 22 50 50 50 44 40 47 Much worsened Telecommunications and or worsened 1 7 12 19 1 3 0 3 12 2 IT infrastructure Improved or much improved 75 51 63 54 95 72 70 75 60 64 Much worsened or worsened 0 7 11 2 0 1 0 2 8 1 Private logistics services Improved or much improved 83 52 63 56 75 63 65 73 57 65 Much worsened or worsened 19 23 12 8 9 13 19 7 18 10 Regulation related to logistics Improved or much improved 35 23 30 17 56 38 33 39 27 33 Much worsened or worsened 12 24 37 25 8 26 25 21 26 4 Solicitation of informal payments Improved or much improved 38 20 24 19 39 32 25 34 24 41 Note: Responses are calculated at the country level and then averaged by region and income group. Source: Logistics Performance Index 2014. 40 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 3 APPENDIX Domestic LPI results, time and cost data Question 23: Export time and cost Question 25: Import time and cost Port or airport supply chaina Land supply chainb Port or airport supply chainc Land supply chainb Distanced Lead time Coste Distance Lead time Cost f Distance Lead time Coste Distance Lead time Cost f Economy (kilometers) (days) (US$) (kilometers) (days) (US$) (kilometers) (days) (US$) (kilometers) (days) (US$) Albania — 1 3,000 — 2 1,732 — 1 750 — 2 2,000 Algeria 75 3 707 — — — — 4 2,000 — — — Angola — 5 1,500 — — — — 4 1,500 — — — Argentina — 2 1,313 535 4 1,842 — 3 1,670 792 4 2,943 Australia — 2 1,033 — 1 1,030 — 2 1,006 75 1 806 Austria 256 2 809 335 1 728 263 2 1,024 203 2 515 Bahamas, The — 1 2,000 — — — — 2 2,000 — — — Bahrain — 1 5,000 — 1 2,000 — 1 5,000 — 1 2,000 Bangladesh 385 2 602 301 2 463 472 3 806 295 3 788 Belarus — — — 43 1 250 — — — 474 5 274 Belgium 48 2 269 143 1 326 — 1 393 — 1 979 Benin — 6 5,000 775 10 4,472 — 8 4,472 — 11 4,472 Bolivia 750 3 1,225 1,225 5 2,739 750 4 2,000 1,225 7 2,828 Bosnia and Herzegovina 300 1 1,500 1,250 3 2,000 300 2 500 1,250 3 2,000 Brazil 149 2 866 322 2 1,000 — 3 1,015 606 3 1,191 Bulgaria 300 1 600 342 1 508 300 1 600 220 1 454 Burundi 75 1 250 2,000 6 3,000 — — — 2,000 7 5,000 Cambodia 186 1 469 335 1 707 150 1 397 302 2 465 Cameroon — 3 1,442 304 2 1,651 1,543 5 1,817 775 11 3,464 Canada — 1 542 171 4 758 92 2 414 57 1 454 Chile 227 1 931 407 5 1,145 161 1 669 300 4 1,500 China 198 2 494 248 2 683 172 3 683 137 2 514 Colombia 272 3 1,303 1,034 3 1,351 1,409 2 1,655 1,620 4 2,178 Costa Rica 138 1 410 87 2 274 — 2 383 — 2 500 Croatia 300 2 500 300 1 500 300 3 750 300 1 500 Czech Republic — — — 150 1 354 — — — 150 1 433 Denmark 150 1 500 75 1 500 — 1 500 — — — Djibouti 750 3 2,000 — — — 750 3 2,000 — — — Dominican Republic 75 2 433 75 1 250 106 3 553 75 2 500 Ecuador 224 3 866 750 2 4,000 177 4 274 750 2 1,000 Egypt, Arab Rep. 379 2 419 755 2 740 426 3 665 673 2 875 Estonia 75 1 500 387 2 1,000 75 1 500 2,000 4 3,000 Ethiopia 750 14 1,500 750 13 2,236 750 13 1,500 750 11 2,739 Finland 124 2 552 438 2 1,383 — 1 681 327 2 809 France 300 1 612 300 2 750 300 1 612 300 2 750 Gabon — 1 500 — — — — 1 500 — — — Georgia — 1 1,000 — 1 1,000 300 2 1,000 — 1 1,000 Germany 282 1 675 367 2 1,129 455 2 892 1,030 3 1,326 Ghana 387 4 2,259 713 9 3,129 — 5 1,856 — 9 3,976 Greece 296 5 1,225 2,000 4 3,000 — 2 500 2,000 4 4,000 Guatemala 300 2 707 — — — 300 2 866 — — — Haiti — 1 500 — — — — 1 750 — — — C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 41 Appendix 3  Domestic LPI results, time and cost data Question 23: Export time and cost Question 25: Import time and cost Port or airport supply chaina Land supply chainb Port or airport supply chainc Land supply chainb Distanced Lead time Coste Distance Lead time Cost f Distance Lead time Coste Distance Lead time Cost f Economy (kilometers) (days) (US$) (kilometers) (days) (US$) (kilometers) (days) (US$) (kilometers) (days) (US$) Honduras 75 2 465 75 2 266 106 2 397 150 3 354 Hong Kong SAR, China 36 1 194 43 1 194 43 1 211 — 1 194 Hungary — 1 866 474 1 612 306 3 866 150 1 274 Iceland 75 1 500 75 1 500 — 1 750 — — — India 384 2 492 199 2 430 403 2 518 206 3 579 Indonesia 133 3 579 255 2 579 94 4 568 189 5 1,233 Iran, Islamic Rep. 1,462 7 655 612 6 1,225 775 3 1,000 553 5 1,500 Iraq — — — 2,000 2 5,000 2,000 1 3,000 — — — Italy 189 1 647 487 1 1,316 179 2 647 487 1 1,456 Jamaica — — — 750 5 500 300 3 500 75 5 500 Japan — 2 500 — — — — 2 750 — — — Jordan 210 2 1,078 368 2 848 245 3 976 438 3 1,149 Kenya 148 3 1,261 478 4 1,601 316 4 1,669 520 7 2,048 Korea, Rep. 300 1 500 — — — 300 1 500 — — — Kuwait 75 1 750 — — — — 2 1,500 — — — Kyrgyz Republic 87 1 500 3,500 14 5,000 296 2 1,581 3,500 5 5,000 Lao PDR 750 2 2,000 — — — — — — 750 2 2,000 Latvia 66 1 356 381 3 1,917 78 2 304 911 5 1,524 Lebanon — 2 500 1,250 12 3,000 — 13 3,000 — — — Lithuania 300 1 472 612 2 612 300 1 472 612 2 866 Luxembourg 25 1 150 — — — 25 1 150 — — — Macedonia, FYR — — — 474 1 750 — — — 612 2 1,061 Malaysia 512 1 3,000 — — — 512 1 3,000 — — — Maldives — 2 5,000 — 5 5,000 — 3 5,000 — 6 5,000 Malta 25 1 250 25 2 — — — — 25 2 — Mauritania 300 1 2,000 — — — — — — 300 1 3,000 Mauritius — 1 866 — — — — 3 866 — — — Mexico 714 2 1,348 1,300 4 1,511 586 2 1,292 1,620 3 2,060 Mongolia 25 1 250 — 4 1,145 25 1 194 348 2 1,310 Montenegro 750 7 2,000 — — — 1,250 12 1,500 — — — Myanmar 25 1 250 — — — 25 1 150 — — — Namibia 300 2 1,500 1,250 4 3,000 300 2 1,500 1,250 2 3,000 Nepal — 3 5,000 381 3 1,225 — 3 3,000 — 3 1,581 Netherlands 111 1 530 199 1 447 160 2 554 164 1 419 Nicaragua 3,500 8 1,500 1,620 13 2,739 3,500 8 4,000 968 5 1,732 Nigeria — 4 1,856 282 3 2,081 — 5 2,643 — 6 2,783 Norway 300 1 866 306 2 1,225 300 1 866 — 1 2,121 Pakistan 313 3 520 417 4 970 274 3 684 515 4 1,307 Panama — 2 2,000 — 3 2,000 — — — 75 2 3,000 Peru 237 3 500 — — — — 2 1,118 — — — Philippines — 2 572 — 2 1,000 — 2 630 — 2 1,000 Poland 300 1 707 3,500 46 2,000 300 2 500 3,500 46 3,000 Portugal 75 3 335 75 1 — — 2 572 — — — Qatar — 7 1,500 — — — — 5 1,500 — — — Romania 750 2 866 — — — 474 2 707 300 1 500 Russian Federation 286 2 1,225 3,500 11 3,162 1,225 4 1,732 3,500 15 4,472 Saudi Arabia 300 8 1,000 300 8 1,000 300 9 1,000 — — — 42 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y Appendix 3  Domestic LPI results, time and cost data Question 23: Export time and cost Question 25: Import time and cost Port or airport supply chaina Land supply chainb Port or airport supply chainc Land supply chainb Distanced Lead time Coste Distance Lead time Cost f Distance Lead time Coste Distance Lead time Cost f Economy (kilometers) (days) (US$) (kilometers) (days) (US$) (kilometers) (days) (US$) (kilometers) (days) (US$) Senegal 750 1 750 775 2 1,500 750 1 1,500 137 3 866 Serbia 25 1 250 75 1 150 — 1 500 750 3 750 Singapore 30 2 323 — 2 909 — 2 266 — 2 783 Slovak Republic 750 2 1,000 968 2 1,414 750 3 1,000 750 2 1,061 South Africa 221 2 1,688 530 2 1,846 — 2 1,623 — 2 2,141 Spain 1,543 3 2,289 300 2 750 1,543 2 2,621 1,543 3 1,000 Sri Lanka 53 2 579 61 1 391 — 2 662 — 1 433 Sudan 1,250 6 5,000 1,250 7 5,000 2,000 5 5,000 2,000 6 5,000 Switzerland — 1 1,500 750 2 3,000 — 1 1,500 750 2 3,000 Taiwan, China 300 1 500 150 1 354 150 1 354 474 1 500 Tajikistan 3,500 14 5,000 — — — 3,500 14 5,000 — — — Tanzania 750 7 750 2,000 12 750 750 10 1,500 1,225 8 4,472 Thailand 25 1 250 — 1 1,000 — 1 500 — 1 2,000 Togo — 3 750 — — — — 3 750 — — — Tunisia — 1 500 — 1 500 — 2 866 — 3 1,000 Turkey 142 2 759 295 2 1,165 175 2 767 427 3 1,196 Uganda — — — 1,250 4 1,500 — — — 1,250 5 4,000 Ukraine 3,500 5 5,000 750 2 750 3,500 5 5,000 750 2 750 United Arab Emirates — 2 559 51 2 417 — 2 647 — 2 590 United Kingdom 145 2 890 383 3 825 83 2 528 183 2 913 United States 177 2 921 287 3 1,293 160 2 769 454 3 944 Uruguay — 1 715 433 3 1,316 — 2 692 413 3 1,145 Uzbekistan 3,500 18 5,000 3,500 18 5,000 3,500 18 5,000 3,500 18 5,000 Venezuela, RB — 8 4,000 — 7 3,000 — 10 5,000 — — — Vietnam 36 1 237 43 1 274 — 1 281 — 1 354 Zambia 612 3 3,162 1,710 5 4,217 612 4 3,162 2,061 7 4,217 Zimbabwe 224 2 1,732 — 1 1,500 — 1 750 224 1 1,732 — is not available. a. From the point of origin (the seller’s factory, typically located either in the capital city or in the largest commercial center) to the port of loading or equivalent (port/airport), and excluding international shipping (EXW to FOB). b. From the point of origin (the seller’s factory, typically located either in the capital city or in the largest commercial center) to the buyer’s warehouse (EXW to DDP). c. From the port of discharge or equivalent to the buyer’s warehouse (DAT to DDP). d. Aggregates of the distance indicator for port and airport. e. Typical charge for a 40-foot dry container or a semi-trailer (total freight including agent fees, port, airport, and other charges). f. Typical charge for a 40-foot dry container or a semi-trailer (total freight including agent fees and other charges). Source: Logistics Performance Index 2014. C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 43 Appendix 3  Domestic LPI results, time and cost data Question 31: Question 32: Question 26: Question 29: Physical Multiple % of shipments Clearance time (days)a inspection inspection meeting quality Question 27: Question 28: criteria Number of agencies Number of forms Without With % of % of shipments physical physical import physically Economy % of shipments Imports Exports Imports Exports inspection inspection shipments inspected Albania — 5 2 5 5 1 1 2 1 Algeria 85 4 4 4 4 3 9 75 11 Angola — 4 4 5 5 2 5 6 1 Argentina 91 5 4 5 4 3 4 12 3 Australia 92 3 1 2 2 0 2 2 1 Austria 77 2 1 2 2 0 1 5 2 Bahamas, The 88 1 1 2 1 1 3 50 1 Bahrain 93 1 1 2 1 0 1 18 1 Bangladesh 72 4 4 5 5 2 3 35 7 Belarus 87 7 3 3 3 4 4 2 4 Belgium 96 2 2 2 1 0 1 3 2 Benin 57 2 2 2 2 2 5 3 9 Bolivia — 3 4 3 4 2 4 30 7 Bosnia and Herzegovina — 2 2 4 4 1 1 75 18 Brazil 82 4 4 4 5 5 8 8 3 Bulgaria 84 2 2 2 3 1 1 9 3 Burundi — 5 3 4 4 4 6 35 18 Cambodia 84 3 3 3 3 1 1 17 3 Cameroon 57 6 6 7 7 3 4 39 7 Canada 90 2 1 2 1 1 3 2 1 Chile 77 3 2 2 2 1 1 1 1 China 76 3 3 5 4 2 3 7 2 Colombia 76 5 6 5 5 1 2 5 6 Costa Rica 83 2 3 2 2 1 2 13 3 Croatia 83 3 3 3 3 1 1 18 1 Czech Republic 98 1 1 2 2 0 1 1 1 Denmark 93 2 1 1 2 0 1 3 3 Djibouti — 3 4 5 2 — — 3 1 Dominican Republic 73 3 3 2 2 1 2 29 4 Ecuador 57 7 7 8 8 2 5 35 25 Egypt, Arab Rep. 67 4 3 5 4 2 6 24 6 Estonia 95 2 2 2 2 0 1 1 1 Ethiopia 40 6 6 10 10 — — 75 75 Finland 91 1 1 1 1 0 1 2 2 France 90 6 6 2 2 0 1 — — Gabon 83 5 5 5 5 6 12 75 35 Georgia — 1 1 2 2 0 1 3 3 Germany 76 3 3 4 4 1 1 3 3 Ghana 67 8 5 6 4 4 6 45 16 Greece 97 3 3 3 3 2 2 6 3 Guatemala 57 3 3 4 3 1 3 61 4 Haiti 40 3 2 3 2 — — 75 50 Honduras 86 3 3 4 4 2 4 18 12 Hong Kong 95 4 4 4 4 0 1 1 1 SAR, China Hungary 97 1 1 3 2 1 1 3 2 44 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y Appendix 3  Domestic LPI results, time and cost data Question 31: Question 32: Question 26: Question 29: Physical Multiple % of shipments Clearance time (days)a inspection inspection meeting quality Question 27: Question 28: criteria Number of agencies Number of forms Without With % of % of shipments physical physical import physically Economy % of shipments Imports Exports Imports Exports inspection inspection shipments inspected Iceland 97 1 1 2 2 0 1 1 1 India 67 3 3 4 4 1 2 22 8 Indonesia 70 4 3 5 4 2 5 8 3 Iran, Islamic Rep. 85 4 5 8 7 3 6 52 14 Iraq — 2 2 2 2 0 1 75 18 Italy 83 2 2 3 2 1 2 4 1 Jamaica 83 3 4 4 5 3 3 75 75 Japan 89 7 7 3 3 1 1 3 1 Jordan 67 3 2 2 2 1 3 26 6 Kenya 56 6 5 3 3 2 3 60 28 Korea, Rep. 97 2 2 2 2 1 1 18 18 Kuwait 90 3 2 2 2 1 2 75 9 Kyrgyz Republic 70 3 2 4 3 1 1 58 1 Lao PDR — 3 3 5 5 1 1 75 1 Latvia 90 3 2 2 2 1 1 12 4 Lebanon 88 3 3 8 8 1 3 50 3 Lithuania 95 2 2 2 2 0 1 1 1 Luxembourg 97 2 2 2 2 1 1 6 1 Macedonia, FYR 83 3 3 5 3 1 1 11 6 Malaysia 97 2 2 4 4 1 2 2 1 Maldives 83 3 3 4 3 3 7 3 6 Malta 40 1 2 1 1 1 3 35 1 Mauritania 97 4 4 3 3 2 5 6 1 Mauritius 90 5 3 1 1 1 1 6 1 Mexico 80 4 3 3 2 1 2 6 6 Mongolia 65 3 3 4 3 2 2 57 16 Montenegro 83 4 4 4 4 4 5 6 6 Myanmar 40 3 2 5 5 0 1 75 3 Namibia 83 2 2 2 2 3 5 18 1 Nepal 40 5 4 6 6 1 1 9 10 Netherlands 94 2 1 2 1 0 1 3 2 Nicaragua 57 8 8 5 4 1 4 42 11 Nigeria 69 8 7 6 6 4 5 32 5 Norway 92 1 1 1 1 0 1 1 1 Pakistan 67 3 4 4 3 2 3 26 8 Panama 88 — — — — — — 6 1 Peru 57 3 3 3 3 1 3 11 2 Philippines 71 5 4 7 4 2 5 10 4 Poland 95 2 1 1 1 0 2 2 1 Portugal 92 1 1 2 2 1 2 7 1 Qatar — 3 3 2 2 3 5 — — Romania 84 3 3 2 3 1 2 9 2 Russian Federation 77 3 3 5 4 1 3 17 3 Saudi Arabia 40 3 3 5 5 3 5 35 35 Senegal 59 4 3 5 4 2 3 14 7 Serbia 88 1 1 2 1 1 1 3 1 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 45 Appendix 3  Domestic LPI results, time and cost data Question 31: Question 32: Question 26: Question 29: Physical Multiple % of shipments Clearance time (days)a inspection inspection meeting quality Question 27: Question 28: criteria Number of agencies Number of forms Without With % of % of shipments physical physical import physically Economy % of shipments Imports Exports Imports Exports inspection inspection shipments inspected Singapore 92 1 1 1 1 0 1 5 3 Slovak Republic 87 1 1 2 2 0 1 7 7 South Africa 83 2 2 4 4 1 4 9 2 Spain 87 3 2 2 1 0 1 8 3 Sri Lanka 76 4 4 4 3 1 3 49 5 Sudan — 4 4 4 3 2 3 75 3 Switzerland 97 5 5 1 1 0 1 1 1 Taiwan, China 61 3 2 4 4 1 1 2 1 Tajikistan — 3 3 6 7 1 1 50 6 Tanzania 40 3 4 6 5 5 8 51 25 Thailand 83 4 3 2 2 1 1 3 2 Togo 40 2 2 1 1 3 4 18 6 Tunisia 57 5 4 5 3 2 4 61 11 Turkey 82 4 3 4 3 1 2 10 5 Uganda — 1 1 1 1 — — — — Ukraine — 5 6 5 6 — — 50 35 United Arab Emirates 88 3 3 2 2 1 1 5 2 United Kingdom 77 2 2 2 2 1 1 3 2 United States 87 4 3 3 3 1 2 4 2 Uruguay 78 4 4 2 1 1 3 14 2 Uzbekistan — 2 3 2 4 2 4 50 3 Venezuela, RB 40 5 5 6 6 4 10 75 75 Vietnam 76 4 4 5 3 1 2 53 7 Zambia 51 5 5 3 3 2 4 9 1 Zimbabwe — 10 10 6 5 1 2 14 42 — is not available. a. Time taken between the submission of an accepted customs declaration and notification of clearance. Source: Logistics Performance Index 2014. 46 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 4 APPENDIX LPI results across four editions (2007, 2010, 2012, and 2014) As a new feature in the 2014 Report, the scores of the six com- another and enables the comparison of 166 countries. Each year’s ponents across the four LPI surveys were used to generate a “big scores in each component were given weights: 6.7 percent for 2007, picture” to better indicate countries’ logistics performance. This 13.3 percent for 2010, 26.7 percent for 2012, and 53.3 percent for approach reduces random variation from one LPI survey to 2014. In this way, the most recent data carry the highest weight. International Logistics quality LPI Customs Infrastructure shipments and competence Tracking and tracing Timeliness Mean Mean Mean Mean Mean Mean Mean Economy Rank score Rank score Rank score Rank score Rank score Rank score Rank score Germany 1 4.10 2 4.01 1 4.30 3 3.72 1 4.12 1 4.14 2 4.36 Singapore 2 4.06 1 4.03 2 4.24 1 3.82 4 4.03 7 4.00 5 4.30 Netherlands 3 4.05 3 3.94 3 4.21 4 3.72 2 4.12 4 4.10 6 4.30 Belgium 4 4.00 10 3.80 7 4.09 6 3.71 3 4.07 3 4.10 4 4.32 United Kingdom 5 3.97 7 3.84 9 4.07 9 3.65 6 3.99 5 4.07 7 4.29 Sweden 6 3.95 13 3.75 6 4.09 7 3.68 5 4.00 8 3.98 8 4.28 Japan 7 3.93 11 3.77 5 4.14 13 3.56 7 3.96 6 4.01 11 4.24 Hong Kong SAR, China 8 3.92 8 3.81 12 4.02 2 3.76 11 3.90 10 3.95 14 4.14 United States 9 3.91 16 3.69 4 4.16 24 3.46 9 3.95 2 4.13 12 4.16 Luxembourg 10 3.89 12 3.76 16 3.89 5 3.71 20 3.74 18 3.77 1 4.50 Norway 11 3.87 4 3.93 8 4.08 26 3.45 8 3.95 24 3.64 9 4.28 Switzerland 12 3.86 6 3.88 10 4.05 17 3.52 14 3.83 14 3.88 16 4.09 Canada 13 3.86 19 3.63 11 4.03 23 3.48 10 3.92 11 3.94 10 4.24 Denmark 14 3.86 9 3.81 14 3.91 11 3.64 13 3.86 21 3.66 3 4.32 France 15 3.84 18 3.63 13 3.97 10 3.64 16 3.79 13 3.92 13 4.15 Australia 16 3.79 14 3.74 15 3.90 15 3.53 18 3.75 15 3.83 21 4.04 Finland 17 3.78 5 3.90 18 3.77 12 3.58 12 3.87 20 3.69 26 3.94 Ireland 18 3.78 17 3.67 23 3.69 22 3.49 15 3.82 9 3.97 17 4.09 Austria 19 3.76 20 3.61 17 3.78 19 3.50 17 3.76 12 3.93 22 4.00 Taiwan, China 20 3.71 24 3.47 24 3.67 8 3.66 23 3.62 17 3.79 20 4.04 Spain 21 3.69 21 3.51 22 3.72 21 3.49 19 3.75 23 3.64 18 4.05 Italy 22 3.67 26 3.34 20 3.74 20 3.49 22 3.65 16 3.80 19 4.04 Korea, Rep. 23 3.66 25 3.42 21 3.73 18 3.50 21 3.65 19 3.70 23 3.99 United Arab Emirates 24 3.63 22 3.49 19 3.76 30 3.37 25 3.58 22 3.64 24 3.98 New Zealand 25 3.59 15 3.74 26 3.58 16 3.53 28 3.49 31 3.47 37 3.76 Malaysia 26 3.54 27 3.31 27 3.50 14 3.54 30 3.44 28 3.53 28 3.90 China 27 3.51 30 3.20 25 3.61 25 3.45 29 3.46 30 3.50 31 3.84 South Africa 28 3.51 31 3.19 29 3.40 27 3.45 24 3.59 29 3.53 30 3.87 Portugal 29 3.50 28 3.25 31 3.34 31 3.36 26 3.56 25 3.62 29 3.88 Turkey 30 3.44 33 3.14 28 3.46 35 3.22 27 3.53 26 3.59 38 3.75 Poland 31 3.44 29 3.22 45 3.05 28 3.39 34 3.36 32 3.44 15 4.12 Czech Republic 32 3.38 32 3.15 37 3.17 29 3.38 32 3.40 33 3.44 40 3.69 Iceland 33 3.35 23 3.47 30 3.35 46 3.10 33 3.40 39 3.34 53 3.49 Qatar 34 3.35 40 3.00 35 3.24 33 3.25 36 3.30 34 3.41 27 3.92 Thailand 35 3.34 35 3.10 34 3.27 32 3.27 38 3.19 35 3.36 32 3.83 Israel 36 3.32 37 3.08 32 3.30 64 2.93 31 3.40 40 3.29 25 3.98 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 47 Appendix 4  LPI results across four editions (2007, 2010, 2012, and 2014) International Logistics quality LPI Customs Infrastructure shipments and competence Tracking and tracing Timeliness Mean Mean Mean Mean Mean Mean Mean Economy Rank score Rank score Rank score Rank score Rank score Rank score Rank score Hungary 37 3.30 44 2.91 38 3.15 39 3.19 37 3.22 27 3.56 35 3.79 Slovenia 38 3.27 39 3.01 36 3.22 45 3.11 35 3.33 37 3.34 41 3.66 Chile 39 3.21 34 3.13 39 3.12 51 3.06 41 3.11 41 3.28 45 3.58 Latvia 40 3.19 41 3.00 59 2.84 38 3.20 49 3.01 38 3.34 39 3.73 Slovak Republic 41 3.17 50 2.85 41 3.09 43 3.13 39 3.12 59 3.03 34 3.80 Estonia 42 3.16 38 3.08 42 3.08 42 3.14 40 3.12 53 3.09 55 3.47 Saudi Arabia 43 3.16 51 2.84 33 3.27 60 2.96 42 3.09 45 3.18 43 3.65 Bahrain 44 3.12 36 3.10 40 3.12 53 3.01 47 3.04 36 3.35 85 3.12 Romania 45 3.11 61 2.71 65 2.63 36 3.21 48 3.01 43 3.21 33 3.82 Bulgaria 46 3.11 55 2.76 55 2.89 34 3.23 50 3.00 64 2.98 36 3.76 Lithuania 47 3.08 46 2.90 54 2.90 50 3.07 57 2.93 58 3.03 42 3.66 India 48 3.08 58 2.73 57 2.88 44 3.12 44 3.09 51 3.11 47 3.54 Mexico 49 3.08 63 2.64 47 3.00 47 3.09 45 3.06 50 3.15 46 3.55 Greece 50 3.08 42 2.96 44 3.05 68 2.89 46 3.04 54 3.09 52 3.50 Panama 51 3.08 45 2.91 53 2.92 55 3.00 63 2.85 42 3.21 44 3.59 Cyprus 52 3.08 43 2.91 50 2.96 49 3.08 54 2.96 48 3.16 62 3.38 Vietnam 53 3.07 56 2.76 56 2.88 40 3.16 56 2.94 49 3.15 51 3.51 Malta 54 3.06 48 2.88 46 3.04 41 3.15 52 2.98 61 3.01 68 3.30 Croatia 55 3.02 47 2.89 51 2.93 63 2.95 60 2.90 56 3.05 58 3.40 Argentina 56 3.02 77 2.54 58 2.85 48 3.08 55 2.95 44 3.18 54 3.48 Brazil 57 3.01 82 2.47 49 2.97 67 2.89 43 3.09 46 3.17 49 3.51 Philippines 58 3.01 52 2.83 67 2.63 37 3.21 53 2.97 52 3.10 74 3.24 Indonesia 59 3.00 59 2.71 62 2.76 65 2.90 51 2.99 55 3.08 48 3.53 Kuwait 60 3.00 57 2.74 43 3.07 81 2.77 59 2.91 47 3.16 61 3.38 Oman 61 2.94 49 2.86 52 2.93 52 3.04 71 2.74 86 2.66 59 3.39 Morocco 62 2.90 73 2.55 48 2.98 61 2.96 73 2.73 71 2.81 63 3.38 Egypt, Arab Rep. 63 2.88 64 2.63 61 2.77 77 2.83 58 2.92 62 3.00 82 3.13 Ukraine 64 2.86 79 2.50 68 2.61 75 2.84 68 2.78 57 3.05 60 3.38 Peru 65 2.86 74 2.54 63 2.70 66 2.89 67 2.79 67 2.86 65 3.32 Serbia 66 2.84 108 2.35 70 2.60 54 3.00 62 2.85 65 2.88 71 3.27 Bahamas, The 67 2.84 54 2.79 64 2.68 74 2.84 65 2.81 83 2.68 77 3.19 El Salvador 68 2.81 62 2.66 75 2.55 70 2.87 61 2.90 69 2.84 105 2.98 Uganda 69 2.80 53 2.79 107 2.33 56 2.98 92 2.58 125 2.45 50 3.51 Dominican Republic 70 2.78 75 2.54 77 2.55 78 2.82 69 2.76 75 2.79 76 3.19 Bosnia and Herzegovina 71 2.78 87 2.46 74 2.57 71 2.86 76 2.71 93 2.62 56 3.42 Pakistan 72 2.77 60 2.71 72 2.58 57 2.97 75 2.71 85 2.67 116 2.93 Jordan 73 2.77 81 2.47 73 2.58 58 2.97 78 2.68 96 2.60 69 3.29 Tunisia 74 2.77 94 2.42 81 2.52 62 2.96 88 2.60 82 2.69 64 3.35 Guatemala 75 2.76 65 2.63 85 2.50 85 2.74 77 2.70 81 2.70 72 3.26 Uruguay 76 2.76 68 2.58 69 2.61 89 2.71 79 2.68 66 2.88 88 3.08 Lebanon 77 2.74 98 2.39 78 2.54 106 2.62 64 2.83 63 2.99 90 3.08 Malawi 78 2.73 67 2.61 60 2.79 88 2.71 66 2.80 117 2.49 95 3.02 Costa Rica 79 2.73 88 2.45 87 2.49 92 2.69 72 2.73 68 2.84 79 3.16 Ecuador 80 2.72 96 2.42 84 2.51 79 2.81 86 2.62 87 2.66 67 3.30 Colombia 81 2.71 71 2.56 80 2.53 91 2.70 74 2.72 94 2.61 84 3.12 Côte d'Ivoire 82 2.70 119 2.30 103 2.36 82 2.77 85 2.63 70 2.83 73 3.24 48 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y Appendix 4  LPI results across four editions (2007, 2010, 2012, and 2014) International Logistics quality LPI Customs Infrastructure shipments and competence Tracking and tracing Timeliness Mean Mean Mean Mean Mean Mean Mean Economy Rank score Rank score Rank score Rank score Rank score Rank score Rank score Venezuela, RB 83 2.69 124 2.27 89 2.46 76 2.83 87 2.61 76 2.79 80 3.15 São Tomé and Príncipe 84 2.69 97 2.41 98 2.42 69 2.87 94 2.58 60 3.01 131 2.82 Albania 85 2.69 107 2.35 102 2.38 80 2.78 97 2.57 103 2.55 57 3.41 Paraguay 86 2.68 93 2.42 95 2.44 95 2.66 84 2.65 77 2.77 83 3.12 Kazakhstan 87 2.68 100 2.37 94 2.44 87 2.72 80 2.67 78 2.77 91 3.06 Montenegro 88 2.66 69 2.57 71 2.60 84 2.76 119 2.40 91 2.64 101 2.99 Kenya 89 2.66 152 2.05 116 2.29 59 2.96 104 2.51 72 2.80 70 3.28 Benin 90 2.66 76 2.54 101 2.40 105 2.62 101 2.55 84 2.67 78 3.17 Nigeria 91 2.66 132 2.22 93 2.44 100 2.64 90 2.60 74 2.79 75 3.22 Jamaica 92 2.65 72 2.55 79 2.53 97 2.65 106 2.48 88 2.66 100 3.00 Sri Lanka 93 2.64 83 2.47 121 2.25 96 2.65 70 2.74 89 2.65 97 3.01 Russian Federation 94 2.63 145 2.13 86 2.50 104 2.63 81 2.67 79 2.75 87 3.10 Bangladesh 95 2.63 140 2.18 119 2.27 72 2.86 102 2.54 106 2.53 66 3.30 Cambodia 96 2.63 80 2.48 100 2.40 94 2.66 99 2.56 73 2.80 129 2.83 Maldives 97 2.62 66 2.62 91 2.46 90 2.70 82 2.66 99 2.57 146 2.69 Belarus 98 2.61 84 2.46 66 2.63 110 2.58 113 2.44 101 2.57 102 2.99 Honduras 99 2.60 70 2.56 114 2.29 86 2.73 110 2.47 102 2.55 107 2.96 Senegal 100 2.60 78 2.53 108 2.33 73 2.84 96 2.57 105 2.54 142 2.72 Georgia 101 2.60 90 2.43 88 2.48 123 2.49 100 2.56 95 2.61 94 3.03 Mauritius 102 2.60 99 2.38 76 2.55 98 2.65 108 2.48 114 2.50 96 3.02 Armenia 103 2.59 91 2.42 109 2.33 103 2.63 91 2.59 120 2.47 92 3.05 Nicaragua 104 2.58 86 2.46 130 2.19 102 2.63 111 2.46 109 2.52 81 3.14 Botswana 105 2.55 89 2.44 104 2.36 143 2.35 98 2.56 108 2.52 89 3.08 Macedonia, FYR 106 2.55 112 2.32 83 2.52 116 2.54 95 2.57 113 2.50 128 2.84 Ghana 107 2.54 127 2.25 90 2.46 93 2.67 116 2.42 90 2.65 135 2.78 Namibia 108 2.54 117 2.31 92 2.46 114 2.54 103 2.53 111 2.52 124 2.87 Moldova 109 2.53 116 2.32 99 2.42 83 2.76 131 2.31 119 2.47 123 2.88 Liberia 110 2.52 102 2.37 96 2.42 113 2.55 89 2.60 121 2.47 144 2.70 Algeria 111 2.51 95 2.42 113 2.29 112 2.56 125 2.35 122 2.46 112 2.95 Bolivia 112 2.51 106 2.35 124 2.23 129 2.44 93 2.58 92 2.63 133 2.79 Guinea 113 2.50 101 2.37 131 2.18 120 2.52 107 2.48 118 2.48 106 2.97 Iran, Islamic Rep. 114 2.50 133 2.21 97 2.42 124 2.49 83 2.66 123 2.46 141 2.75 Madagascar 115 2.50 118 2.31 117 2.28 126 2.47 114 2.44 124 2.45 93 3.04 Burkina Faso 116 2.47 110 2.34 120 2.27 131 2.44 115 2.44 129 2.41 114 2.94 Azerbaijan 117 2.47 115 2.32 82 2.52 107 2.59 150 2.18 132 2.39 130 2.83 Solomon Islands 118 2.47 105 2.35 115 2.29 152 2.28 112 2.46 116 2.49 110 2.95 Rwanda 119 2.47 126 2.25 153 2.06 109 2.58 130 2.31 98 2.58 111 2.95 Niger 120 2.46 92 2.42 135 2.16 119 2.52 128 2.34 134 2.38 117 2.93 Central African Republic 121 2.46 85 2.46 110 2.31 155 2.24 105 2.49 133 2.39 122 2.88 Ethiopia 122 2.46 125 2.26 146 2.11 125 2.49 120 2.39 115 2.49 108 2.96 Uzbekistan 123 2.45 159 1.98 142 2.14 145 2.33 124 2.38 80 2.74 86 3.11 Fiji 124 2.45 130 2.22 111 2.30 108 2.59 149 2.19 136 2.37 104 2.98 Tanzania 125 2.44 136 2.20 118 2.28 118 2.52 133 2.31 141 2.35 115 2.93 Yemen, Rep. 126 2.43 160 1.95 139 2.15 115 2.54 121 2.38 112 2.51 98 3.01 Angola 127 2.43 121 2.28 136 2.16 111 2.57 146 2.20 128 2.41 121 2.89 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 49 Appendix 4  LPI results across four editions (2007, 2010, 2012, and 2014) International Logistics quality LPI Customs Infrastructure shipments and competence Tracking and tracing Timeliness Mean Mean Mean Mean Mean Mean Mean Economy Rank score Rank score Rank score Rank score Rank score Rank score Rank score Togo 128 2.42 139 2.19 138 2.15 101 2.64 142 2.24 97 2.59 149 2.67 Lao PDR 129 2.42 103 2.37 127 2.21 122 2.50 129 2.33 145 2.29 134 2.79 Guinea-Bissau 130 2.42 111 2.33 112 2.29 134 2.43 118 2.40 146 2.28 140 2.76 Papua New Guinea 131 2.41 134 2.21 133 2.16 128 2.45 126 2.34 137 2.36 119 2.90 Libya 132 2.41 122 2.27 144 2.13 137 2.38 136 2.28 100 2.57 132 2.79 Cameroon 133 2.40 151 2.08 156 2.00 147 2.32 109 2.47 104 2.54 103 2.98 Tajikistan 134 2.40 120 2.28 128 2.20 117 2.53 127 2.34 144 2.30 147 2.69 Turkmenistan 135 2.39 129 2.23 141 2.15 130 2.44 148 2.20 139 2.35 113 2.94 Mali 136 2.39 149 2.09 147 2.10 121 2.51 152 2.17 110 2.52 120 2.90 Zambia 137 2.38 104 2.36 149 2.10 154 2.26 134 2.28 126 2.44 126 2.86 Zimbabwe 138 2.38 157 2.01 137 2.16 139 2.36 123 2.38 135 2.38 99 3.01 Guyana 139 2.37 114 2.32 123 2.24 141 2.35 139 2.26 140 2.35 145 2.70 Nepal 140 2.36 131 2.22 152 2.06 144 2.34 132 2.31 127 2.43 138 2.77 Gambia, The 141 2.36 141 2.18 155 2.02 99 2.64 122 2.38 148 2.27 153 2.58 Bhutan 142 2.35 143 2.14 140 2.15 133 2.43 117 2.41 130 2.39 156 2.56 Equatorial Guinea 143 2.35 109 2.35 145 2.11 159 2.11 147 2.20 107 2.53 125 2.86 Chad 144 2.35 128 2.24 134 2.16 153 2.27 151 2.17 142 2.34 118 2.92 Mauritania 145 2.35 146 2.13 105 2.34 151 2.29 141 2.25 138 2.36 136 2.78 Comoros 146 2.34 113 2.32 143 2.14 146 2.32 138 2.27 131 2.39 152 2.59 Lesotho 147 2.32 137 2.20 126 2.22 136 2.39 137 2.27 156 2.15 148 2.68 Syrian Arab Republic 148 2.31 138 2.19 122 2.24 140 2.36 159 2.10 157 2.13 127 2.85 Kyrgyz Republic 149 2.31 135 2.21 132 2.17 135 2.41 145 2.21 149 2.26 154 2.57 Mongolia 150 2.30 150 2.08 129 2.20 127 2.46 153 2.17 153 2.20 150 2.63 Myanmar 151 2.27 154 2.04 151 2.07 156 2.23 156 2.15 143 2.30 137 2.78 Gabon 152 2.26 153 2.05 150 2.08 132 2.43 135 2.28 159 2.10 155 2.57 Mozambique 153 2.26 144 2.13 148 2.10 138 2.37 155 2.16 155 2.15 151 2.61 Burundi 154 2.26 123 2.27 125 2.23 149 2.31 143 2.22 154 2.18 164 2.32 Haiti 155 2.24 147 2.10 157 1.97 150 2.30 162 2.07 147 2.28 143 2.71 Iraq 156 2.22 161 1.94 154 2.02 148 2.31 157 2.15 158 2.12 139 2.76 Sudan 157 2.19 158 1.99 159 1.94 157 2.17 140 2.26 150 2.26 160 2.48 Cuba 158 2.16 148 2.10 160 1.92 142 2.35 161 2.08 161 2.07 161 2.40 Congo, Rep. 159 2.16 165 1.68 165 1.64 158 2.14 144 2.21 151 2.25 109 2.95 Congo, Dem. Rep. 160 2.13 156 2.03 158 1.95 162 2.02 158 2.15 152 2.24 163 2.36 Afghanistan 161 2.10 142 2.16 162 1.83 161 2.06 163 2.07 164 1.93 159 2.51 Djibouti 162 2.07 155 2.04 161 1.91 164 1.90 160 2.09 162 1.97 157 2.56 Sierra Leone 163 2.06 163 1.78 106 2.34 163 1.91 164 1.92 160 2.07 162 2.36 Eritrea 164 2.05 162 1.83 163 1.70 160 2.07 154 2.16 163 1.93 158 2.55 Timor-Leste 165 1.71 166 1.63 164 1.67 166 1.50 166 1.60 165 1.67 165 2.25 Somalia 166 1.63 164 1.76 166 1.51 165 1.59 165 1.62 166 1.52 166 1.75 Source: Logistics Performance Index 2007, 2010, 2012, and 2014. 50 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 5 APPENDIX The LPI methodology Because logistics has many dimensions, mea- engine relies heavily on a specialized country suring and summarizing performance across selection methodology for survey respondents countries is challenging. Examining the time based on high trade volume between coun- and costs associated with logistics processes— tries, the USR can help countries with lower port processing, customs clearance, transport, trade volumes rise to the top during country and the like—is a good start, and in many selection. cases this information is readily available. But The 2014 survey engine builds a set of coun- even when complete, this information can- tries for the survey respondents that are subject not be easily aggregated into a single, consis- to the rule set (see table A5.1). After 200 sur- tent cross-country dataset, because of struc- veys, the USR is introduced into the engine’s tural differences in countries’ supply chains. process for country selection. For each new Even more important, many critical elements survey respondent, the USR solicits a response of good logistics—such as process transpar- from a country chosen at random but with non- ency and service quality, predictability, and uniform probability—with weights chosen ­reliability—cannot be assessed using only time to evolve the sampling toward uniform prob- and cost information. ability. Specifically, a country i is chosen with a probability (N–ni) / 2N, where ni is the sample Constructing the international LPI size of country i so far, and N is the total sample size. The first part of the LPI survey (questions The international LPI is a summary indica- 10–15) provides the raw data for the interna- tor of logistics sector performance, combining tional LPI. Each survey respondent rates eight data on six core performance components into a overseas markets on six core components of single aggregate measure. Some respondents did logistics performance. The eight countries are not provide information for all six components, chosen based on the most important export so interpolation is used to fill in missing values. and import markets of the country where the The missing values are replaced with the coun- respondent is located, on random selection, try mean response for each question, adjusted and—for landlocked countries—on neighbor- by the respondent’s average deviation from the ing countries that form part of the land bridge country mean in the answered questions. connecting them with international markets. The six core components are: The method used to select the group of coun- • The efficiency of customs and border clear- tries rated by each respondent varies by the char- ance, rated from “very low” (1) to “very acteristics of the country where the respondent high” (5) in survey question 10. is located (table A5.1). • The quality of trade and transport infra- Respondents take the survey online. The structure, rated from “very low” (1) to web engine for 2014 is the same as the new en- “very high” (5) in survey question 11. gine put in place in 2012. It incorporates the • The ease of arranging competitively Uniform Sampling Randomized (USR) ap- priced shipments, rated from “very dif- proach to gain the most possible responses from ficult” (1) to “very easy” (5) in survey underrepresented countries. Because the survey question 12. C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 51 • The competence and quality of logistics Full details of the PCA procedure are in ta- services, rated from “very low” (1) to bles A5.2 and A5.3. The first line of table A5.2 “very high” (5) in survey question 13. shows that the first (principal) eigenvalue of the • The ability to track and trace consign- correlation matrix of the six core indicators is ments, rated from “very low” (1) to “very greater than one—and much larger than any high” (5) in survey question 14. other eigenvalue. Standard statistical tests, such • The frequency with which shipments as the Kaiser Criterion and the eigenvalue scree reach consignees within scheduled or ex- plot, suggest that a single principal component pected delivery times, rated from “hardly be retained to summarize the underlying data. ever” (1) to “nearly always” (5) in survey This principal component is the international question 15. LPI. Table A5.2 shows that the international The LPI is constructed from these six indica- LPI accounts for 92 percent of the variation in tors using principal component analysis (PCA), a the six components. standard statistical technique used to reduce the To construct the international LPI, normal- dimensionality of a dataset. In the LPI, the inputs ized scores for each of the six original indicators for PCA are country scores on questions 10–15, are multiplied by their component loadings (table averaged across all respondents providing data on A5.3) and then summed. The component load- a given overseas market. Scores are normalized ings represent the weight given to each original by subtracting the sample mean and dividing by indicator in constructing the international LPI. the standard deviation before conducting PCA. Since the loadings are similar for all six, the in- The output from PCA is a single indicator—the ternational LPI is close to a simple average of the LPI—that is a weighted average of those scores. indicators. Although PCA is re-run for each ver- The weights are chosen to maximize the percent- sion of the LPI, the weights remain very steady age of variation in the LPI’s original six indicators from year to year. There is thus a high degree of that is accounted for by the summary indicator. comparability across the various LPI editions. Table A5.1 Methodology for selecting country groups for survey respondents Respondents from Respondents from Respondents from low‑income countries middle‑income countries high‑income countries Three most important export partner countries + The most important import partner country Five most important export + partner countries Respondents from Four countries randomly, one Two countries randomly from a + coastal countries from each country group: list of five most important export Three most important a. Africa partner countries and five most partner countries b. East, South, and important import partner countries Central Asia + c. Latin America Four countries randomly, one d. Europe less Central from each country group: Asia and OECD a. Africa Three most important b. East, South, and export partner countries Central Asia + c. Latin America The most important import d. Europe less Central Four most important export partner country Asia and OECD partner countries + + + Two land-bridge countries Two countries randomly Respondents from from the combined country Two most important import + landlocked countries groups a, b, c, and d partner countries Two countries randomly, one + from each country group: Two land-bridge countries a. Africa, East, South, and Central Asia, and Latin America b. Europe less Central Asia and OECD Source: Logistics Performance Index 2014. 52 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y Constructing the Table A5.2 Results of principal component analysis for the international LPI confidence intervals Variance proportion To account for the sampling error created by the Component Eigenvalue Difference Individual Cumulative LPI’s survey-based methodology, LPI scores are 1 5.45 5.25 0.91 0.91 presented with approximate 80 percent confi- 2 0.20 0.04 0.03 0.94 dence intervals. These intervals make it possible 3 0.16 0.06 0.03 0.97 to provide upper and lower bounds for a coun- 4 0.10 0.06 0.02 0.98 try’s LPI score and rank. To determine whether 5 0.05 0.00 0.01 0.99 a change in score or a difference between two 6 0.05 na 0.01 1.00 scores is statistically significant, confidence na is not applicable. intervals must be examined carefully. For exam- Source: Authors’ analysis. ple, a statistically significant improvement in a country’s performance should not be concluded Table A5.3 Component loadings for unless the lower bound of the country’s 2014 the international LPI LPI score exceeds the upper bound of its 2012 Component Weight score. Customs 0.40 Despite being the most comprehensive data Infrastructure 0.42 source for country logistics and trade facilita- International shipments 0.40 tion, the LPI has two important limitations. Logistics quality and competence 0.42 First, the experience of international freight Tracking and tracing 0.41 forwarders might not represent the broader lo- Timeliness 0.40 gistics environment in poor countries, which often rely on traditional operators. And the in- Source: Authors’ analysis. ternational and traditional operators might dif- fer in their interactions with government agen- t-distribution. As a result of this approach, cies—and in their service levels. Second, for confidence intervals and low-high ranges for landlocked countries and small island states, scores and ranks are larger for small markets the LPI might reflect access problems outside with few respondents, since these estimates the country assessed, such as transit difficulties. are less certain. The low rating of a landlocked country might The high and low scores are used to calculate not adequately reflect its trade facilitation ef- upper and lower bounds on country ranks. The forts, which depend on the workings of complex upper bound is the LPI rank a country would international transit systems. Landlocked coun- receive if its LPI score were at the upper bound tries cannot eliminate transit inefficiencies with of the confidence interval rather than at the cen- domestic reforms. ter. The lower bound is the LPI rank a country To calculate the confidence interval, the would receive if its LPI score were at the lower standard error of LPI scores across all respon- bound of the confidence interval rather than at dents is estimated for a country. The upper and the center. In both cases the scores of all other lower bounds of the confidence interval are countries are kept constant. then The average confidence interval on the 1–5 scale is 0.23, or about 8 percent of the average t(0.1, N–1)S country’s LPI score. Because of the bunching of LPI ± , N LPI scores in the middle of the distribution, the confidence interval translates into an average where LPI is a country’s LPI score, N is of 20 rank places, using upper and lower rank the number of survey respondents for that bounds as calculated above. Caution must be country, s is the estimated standard error of taken when interpreting small differences in each country’s LPI score, and t is Student’s LPI scores and rankings. C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 53 Constructing the domestic on their countries’ international supply chains, LPI database offering choices in a dropdown menu. When a response indicates a single value, the answer is The second part of the LPI survey instrument is coded as the logarithm of that value. When a the domestic LPI, in which respondents provide response indicates a range, the answer is coded qualitative and quantitative information on the as the logarithm of the midpoint of that range. logistics environment in the country where they For example, export distance can be indicated work. as less than 50 kilometers, 50–100 kilometers, Questions 17–22 ask respondents to choose 100–500 kilometers, and so forth—so a re- one of five performance categories. In question sponse of 50–100 kilometers is coded as log(75). 17, for example, they can describe port charges Full details of the coding matrix are available in their country as “very high,” “high,” “aver- on request. age,” “low,” or “very low.” As in the international Country scores are produced by exponen- LPI, these options are coded from 1 (worst) to 5 tiating the average of responses in logarithms (best). Appendix 2 displays country averages of across all respondents for a given country. This the percentage of respondents rating each aspect method is equivalent to taking a geometric aver- of the logistics environment as 1–2 or 4–5. age in levels. Scores for regions, income groups, With a few exceptions, questions 23–34 and LPI quintiles are simple averages of the rel- ask respondents for quantitative information evant country scores. 54 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 6 APPENDIX Respondent demographics The vital aspects of logistics performance are Figure A6.1 2014 LPI survey respondents, best assessed by operators on the ground. So the by World Bank income group LPI uses a structured online survey of logistics Number of respondents professionals at multinational freight forward- ers and at the main express carriers. Low High income The 2014 LPI data are based on a survey income 61 conducted between October and December non-OECD 66 2013, answered by 1,000 respondents at inter- Lower middle income national logistics companies in 143 countries. High income 310 OECD The number of respondents is about the same as 172 for the other editions of the LPI. Upper middle income Geographic dispersion 219 of respondents The location of respondents for the 2014 Source: Logistics Performance Index 2014. LPI reflects the growing importance of trade facilitation for the developing world. Among Respondents’ positions the respondents, 70 percent are in either low- in their companies income countries (7 percent) or middle-income countries (63 percent). The overall number is The LPI assesses both large companies and similar to the 2012 LPI, but it is more heavily small and medium enterprises. Large companies skewed toward middle-income countries. The (those with 250 employees or more) account for relative lack of representation of low-income around 23 percent of responses, which is slightly countries is due to their more marginal role in higher than in 2012. Most of the responses are world trade, and the difficulty of communicat- thus from small and medium enterprises. ing effectively with operators on the ground. Knowledgeable senior company members are Even so, the survey is based on a sample of expe- important to the survey. The 2014 respondents rience in both the developing and developed include senior executives (47 percent), area or world (figure A6.1). country managers (15 percent), and department Among developing countries, all regions managers (21 percent). These groups of profes- are well represented (figure A6.2). In the sionals have oversight of, or are directly involved 2014 survey, responses are somewhat skewed in, day-to-day operations, not only from company toward South Asia because of strong involve- headquarters but also from country offices. The ment from local freight forwarding associa- relative seniority of respondents is quite stable tions there. Representation of other regions from 2012 to 2014. Almost two-thirds of respon- is relatively similar. Increasing involvement of dents are at corporate or regional headquarters local associations and operators will hopefully (41 percent) or at country branch offices (22 per- help build response rates in the future in other cent). The rest are at local branch offices (11 per- regions. cent) or independent firms (26 percent). C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 55 Figure A6.2 2014 LPI survey respondents, Figure A6.3 Latin America and Caribbean, by World Bank region ratings of and by other regions Number of respondents Score Rating of Latin America Rating by Latin America & Caribbean & Caribbean Middle East & North America Sub- North Saharan Africa 4 Africa 47 South Asia European Union 69 Europe & High income 3 Central Asia 238 70 2 Latin America 1 & Caribbean Sub-Saharan East Asia 78 Africa & Pacific East Asia & Pacific South Asia 92 234 Middle East & Europe & North Africa Central Asia Latin America & Caribbean Note: World Bank regions do not include high-income countries, so they are included as a separate category. Source: Logistics Performance Index 2014. Source: Logistics Performance Index 2014. The majority of respondents (44 percent) are are North America and the European Union involved in providing a range of logistics services (EU)—higher than LAC’s self-rating, suggest- as their main line of work. Such services include ing that trade with the former two regions is warehousing and distribution, customer-tai- easier than within LAC. Indeed, a size and lored logistics solutions, courier services, bulk attractiveness effect of these markets is defi- or break bulk cargo transport, and less-than- nitely at play here (made easier by language, full container, full-container, or full-trailer for example). Moreover, these ratings are not load transport. By contrast, just 31 percent of re- symmetrical: the EU’s perception of LAC is spondents are at companies with business mod- quite unfavorable, ranking it sixth of the eight els based on full-container or full-trailer load regions. North America’s and East Asia and the transport (19 percent) or on customer-tailored Pacific’s (EAP; LAC’s main import partners in logistics solutions (12 percent). 2012) ratings of LAC are lower than LAC’s rat- Among all respondents, 40  percent deal ings of them, but they are relatively good com- with multimodal transport, 24  percent with pared with how other regions have been rated: maritime transport, and 15  percent with air LAC comes third for North America, after transport. Whereas 35 percent usually oversee North America itself and the EU, and fourth both domestic and international operations, for EAP, after North America, the EU, and another 32 percent deal exclusively with inter- EAP itself. national shipping (both exports and imports). It is not particularly surprising that South And whereas 24 percent work with most of the Asia (SAR) and Sub-­ Saharan Africa (SSA) rate world’s regions, others concentrate their work LAC the highest, given that both tend to rate in Asia (27 percent), Europe (25 percent), or the other regions quite highly in general, while Americas (13 percent). ranking themselves last. These regions are in- deed relatively isolated and exhibit poor lo- Bilateral perception issues gistics performance (2.6 for SAR and 2.5 for SSA). There is some degree of reciprocity in as- Bilateral issues might play a role in driving sur- sessments: SSA actually rates LAC seventh of vey respondents’ perceptions when rating their the eight regions. This finding puts into per- respective regions. Consider Latin America and spective SSA’s high rating of LAC as compared the Caribbean (LAC; figure A6.3). The regions with other regions, and the fact that looking at that LAC rated highest on the total LPI score LAC’s rankings alone, SSA almost comes last. 56 C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y Moreover, where average performing regions scores, and thus does not endanger the reliabil- such as LAC and Europe and Central Asia rate ity of the survey: there might be some idiosyn- each other, their ratings are about the same. cratic effects, but despite slight subjectivity, the Together these findings reinforce the sug- ratings are relatively tightly bunched around the gestion that perception does not seem to bias average score. 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Washington, DC. Administration, Finland, November 16–17. C O N N E C T I N G T O C O M P E T E 2 0 14 T R A D E L O G I S T I C S I N T H E G L O B A L E C O N O M Y 59 What is the Logistics Performance Index? Based on a worldwide survey of global freight forwarders and express carriers, the Logistics Performance Index is a benchmarking tool developed by the World Bank that measures performance along the logistics supply chain within a country. Allowing for comparisons across 160 countries, the index can help countries identif y challenges and opportunities and improve their logistics performance. The World Bank conducts the survey every two years. Reliable logistics is indispensable to integrate global value chains—and reap the benefit of trade opportunities for growth and poverty reduction. The ability to connect to the global logistics web depends on a country’s infrastructure, service markets, and trade processes. Government and the private sector in many developing countries should improve these areas—or face the large and growing costs of exclusion. This is the fourth edition of Connecting to Compete, a report summarizing the findings from the new dataset for the 2014 Logistics Performance Index (LPI) and its component indicators. The 2014 LPI also provides expanded data on import and export supply chains in 116 countries, including information on time, cost, and reliability and ratings on domestic infrastructure quality, the performance of core services, and the friendliness of trade clearance procedures. The 2014 LPI and its indicators encapsulate the firsthand knowledge of movers of international trade. This information is relevant for policymakers and the private sector seeking to identify priorities for reform of their “soft” and “hard” trade and logistics infrastructure. Findings include: • The gap between the best and worst performers is slowly narrowing, thanks to improvements in infrastructure and border clearance. • A mature logistics services market is distinctive of the high-performing countries. • To achieve efficient border clearance, improvements are needed in customs and other control agencies. • Countries that implement sound reforms tend to outperform their peers at a given development stage. • A new generation of reforms tends to be more complex and span across many sectors. • The attention to green logistics is growing but remains concentrated in high-income countries.