The capacity of countries toefficiently move goods andconnect manufacturers andconsumers with international marketsis improving around the world, butmuch more progress is needed to spurfaster economic growth and help firmsbenefit from trade recovery, accordingto a new World Bank Group survey ontrade logistics.
Germany is the top performer, Singapore second, and Sweden third among the 155 economies ranked in the Logistics Performance Indicators (LPI), which are included in the report, Connecting to Compete 2010: Trade Logistics in the Global Economy. The study was based on a comprehensive world survey of international freight forwarders and express carriers. Three World Bank ranks country logistics performance other Asian countries appear in the top 20: Japan (7), Hong Kong (13), Taiwan (20).
“Economic competitiveness is relentlessly driving countries to strengthen performance, and improving trade logistics is a smart way to deliver moreefficiencies, lower costs and added economicgrowth,†said World Bank grouppresident Robert Zoellick. “Streamliningthe connections among markets,manufacturers, farmers and consumersoffers tremendous growth and investmentopportunities and should be a topfocus for developing country growthstrategies.â€Â
According to the LPI, high income economies dominate the top logistics rankings, with most of them occupying important places in global and regional supply chains. By contrast, the 10 lowest performing countries are almost all from the low and lower income groups.
Developing trends
Although the study shows a substantial “logistics gap†between rich countries and most developing countries, it finds positive trends in some areas essential to logistics performance and trade. Some of them include the modernization of customs, use of information technology, and development of private logistics services.
“Following our first survey in 2007, many developing countries have improved their capacity to connect to international markets, which is a key ingredient for competitiveness and economic growth,†said Otaviano Canuto, World Bank vice president for poverty reduction and economic management. “But if developing countries want to come out of the crisis in a stronger and more competitive position, they need to invest in better trade logistics.â€Â
“Countries with better logistics performance can grow faster, become more competitive and increase their level of investment,†said Bernard Hoekman, World Bank trade department director. “Our research shows that increasing logistics performance in low-income countries to the middle-income average could boost trade by around 15 percent and benefit all firms and consumers through lower prices and better quality services.â€Â
The report also notes that among developing economies logistics performance transcends the level of per capita income, with many countries performing better than their income level would suggest. Significant overperformers include China (27), India (47), Vietnam (53), Thailand (35), and the Philippines (44).
Border issues
According to the study, logistics performance is heavily influenced by the quality of public sector institutions and the effective coordination of border clearance processes among all border management agencies. In this area, customs performs better than many other agencies, pointing to the need for border management reforms. In low performing countries, on average, half of the containers are physically inspected and one container out of seven at least twice.
Other areas for improvement include better transport policies; increasing competition in traderelated services such as trucking, freight forwarding and railways; and better trade-related infrastructure. For many low-income countries the most binding constraints are often in logistics services and international transit systems.
The World Bank says that it is working with IBM, Microsoft and the Global Express Association to develop pilot projects in developing countries that apply innovative IT solutions to streamline border procedures.