Connecting 2010 to Compete 55852 Trade Logistics in the Global Economy The Logistics Performance Index and Its Indicators LPI 1­2.48 LPI 2.48­2.75 LPI 2.75­3.23 LPI 3.23­5 No data 1 is the lowest score; 5 is the maximum score. Connecting to Compete 2010 Trade Logistics in the Global Economy The Logistics Performance Index and Its Indicators Jean-François Arvis The World Bank Monica Alina Mustra The World Bank Lauri Ojala Turku School of Economics Ben Shepherd The World Bank Daniel Saslavsky The World Bank © 2010 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 Department The World Bank 1818 H Street NW, Room MSN G4-176, 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 second edition of Connecting to Com- trade, and investment in private services. It also pete: Trade Logistics in the Global Economy, shows that logistics overperformers--countries which was first published in November 2007. with a higher LPI score than income would pre- The Logistics Performance Index (LPI) and its dict--are countries that have consistently in- indicators are a joint venture of the World Bank, vested in reforms and improvements. The 2010 logistics providers, and academic partners. The LPI highlights new areas that need further at- LPI is a comprehensive index created to help tention, such as the coordination of agencies countries identify the challenges and opportu- involved in border clearance and the quality nities they face in trade logistics performance. of domestic trucking and customs brokerage The World Bank conducts the LPI survey every services. two years. Connecting to Compete 2007 helped spark di- Logistics encompasses an array of essen- alogue in several countries among various stake- tial activities--from transport, warehousing, holders in the government and between policy- cargo consolidation, and border clearance to in- makers and the private sector about measures to country distribution and payment systems-- address logistics bottlenecks and facilitate inter- involving a variety of public and private agents. national trade and transportation. The optimis- A competitive network of global logistics is tic messages from Connecting to Compete 2010 the backbone of international trade. Unfortu- should encourage countries to do even more, nately, many developing countries have not yet particularly important for countries whose trade benefited from the productivity gains of logis- logistics performance continues to be low. tics modernization and internationalization With the LPI, the World Bank aims to focus implemented over the last 20 years by advanced attention on an issue of global importance and economies. provide a platform for dialogue among govern- Improving logistics performance has be- ment, business, and civil society. By showing come an important development policy objec- how countries compare to others in the area of tive in recent years because logistics have a major trade logistics and illuminating the costs of poor impact on economic activity. Evidence from the logistics performance, we hope the LPI will con- 2007 and 2010 LPIs indicates that, for coun- tinue to serve as a catalyst, helping policymakers tries at the same level of per capita income, those and the private sector build the case for domes- with the best logistics performance experience tic policy reform, for investment in trade-related additional growth: 1 percent in gross domestic infrastructure, and for the regional and multi- product and 2 percent in trade. These findings lateral cooperation that is needed for countries are especially relevant today, as developing coun- to break out of the vicious circle of "logistics tries need to invest in better trade logistics to unfriendliness." boost recovery from the current economic crisis and emerge in a stronger and more competitive position. On a hopeful note, the 2010 LPI points to Otaviano Canuto modest but positive trends in key areas such as Vice-President and Head of Network customs, use of information technologies for Poverty Reduction and Economic Management C o n n E C T i n G T o C o m p E T E 2 0 10 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 is the second report presenting a new data- medium-size logistics companies worldwide. The set for the Logistics Performance Index (LPI) survey was designed and implemented with Fin- and indicators. The survey is conducted every land's Turku School of Economics (www.tse.fi), two years to improve the reliability of the indi- which has worked with the World Bank to de- cators and to build a dataset comparable across velop the concept since 2000. countries and over time. The authors express their gratitude to the The LPI survey would not have been possi- hundreds of employees of freight forwarding ble without the support and participation of the and express carrier companies around the world International Federation of Freight Forwarders who took the time to respond to the survey. Associations (www.fiata.com), the Global Ex- Their participation was central to the quality press Association (www.global-express.org), the and credibility of the project, and their continu- Global Facilitation Partnership for Transporta- ing involvement and feedback will be essential tion and Trade (www.gfptt.org), ten major inter- as we develop and refine the survey and the LPI national logistics companies, and a large group of in future years. iv C o n n E C T i n G T o C o m p E T E 2 0 10 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 Authors This report was prepared by the World Bank's of the results. The authors are also grateful to International Trade Department (PRMTR), Tapio Naula (USAID Regional Trade Liberaliza- under the guidance of Bernard Hoekman tion and Customs Project) for providing material (director) and Mona Haddad (sector manager). on Central Asia and to Yann Duval (UNESCAP The project leaders and main authors were Trade and Investment Division) for providing Jean-François Arvis and Monica Alina Mustra. material on East Asia. The LPI survey website2 Authors also included Professor Lauri Ojala was designed and developed by Patrick Tse and (Turku School of Economics), Ben Shepherd, Steffen Soulejman Janus of the World Bank Insti- and Daniel Saslavsky (consultants).1 tute. The 2010 LPI website is produced and sup- Gerard McLinden, Marc Juhel, Louis-Paul ported by Arseny Malov and Adarsh Desai from Tardif (Transport Canada), Aart Kraay, Andreas the World Bank Institute under close guidance Dietrich Kopp, Lilya Repa, Charles Kunaka, of the core team. Scott Johnson from the World Robin Carruthers, and Giuseppe Iarossi provided Bank Information Solutions Group assisted the major inputs to the survey concept and the review team with monitoring survey responses. C o n n E C T i n G T o C o m p E T E 2 0 10 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 Table of contents Foreword iii Acknowledgments iv Authors v LPI ranking and scores 2010 viii Summary and key findings 1 1. The 2010 Logistics Performance Index 3 From awareness to implementation 3 Logistics performance in 2010: what's new? 4 New features of the LPI survey 5 Key findings from the 2010 LPI 6 2. Unbundling logistics performance 14 Infrastructure 14 Services 14 Border procedures and time 16 Supply chain reliability 20 3. Policy priorities in trade facilitation and logistics 23 Infrastructure 24 Improving the quality of trade and transport services 24 Coordinating border management 24 Regional facilitation: making trade corridors work better 25 References 26 Appendix 1. International LPI results 28 Appendix 2. Domestic LPI results, by region and income group 32 Appendix 3. Domestic LPI results, time and cost data 35 Appendix 4. The LPI methodology 41 Appendix 5. Comparing the international LPI with other indicators 45 Notes 49 Boxes 1.1 Measuring logistics performance using the LPI 4 1.2 Private sector opinions matter 6 1.3 How precise are LPI scores and ranks? 11 1.4 Policy applications of the 2007 LPI at the regional and global levels 12 2.1 Trade logistics and facilitation in landlocked Central Asia 21 vi C o n n E C T i n G T o C o m p E T E 2 0 10 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 Figures 1.1 Lead time to export 5 1.2 Cumulative distribution of LPI scores, 2010 7 1.3 2010 LPI score, average and minimum/maximum range by income group 9 1.4 Distribution of country performance across income levels, by LPI quintile 9 1.5 LPI overperformers and underperformers in 2010, relative to income per capita 10 1.6 Number of countries with a statistically significant change in the LPI from 2007 to 2010, by income group 11 1.7 LPI score as percentage of highest LPI score, by LPI quintile, 2007 and 2010 12 2.1 Respondents indicating high or very high average quality of services and policy restrictiveness of distribution services 15 2.2 Median import lead time and average clearance time, by LPI quintile 16 2.3 Median export lead time, by LPI quintile 17 2.4 Red tape affecting import and export transactions, by LPI quintile 18 2.5 Compliance with overseas security requirements compared with 2005, by LPI quintile 19 2.6 Comparison of UNCTAD Liner Shipping Connectivity Index and the LPI measures of the transshipment constraint 20 2.7 Structure of logistics costs faced by traders 21 2.8 Respondents indicating shipments are often or nearly always cleared and delivered as scheduled, by LPI quintile 22 2.9 Shipments not meeting company quality criteria, by LPI quintile 22 A5.1 Relation of the share of parts and components in total exports and the LPI score 46 A5.2 Relationship of Global Enabling Trade Index 2009 and 2010 LPI 47 A5.3 Doing Business trade facilitation data and LPI 2010 47 A5.4 Doing Business import time versus LPI lead import time (median) for port/airport 48 Tables 1.1 Top 10 logistics performers 2010 7 1.2 Bottom 10 logistics performers 2010 7 1.3 Top 10 logistics performers 2010, upper middle-income countries 8 1.4 Top 10 logistics performers 2010, lower middle-income countries 8 1.5 Top 10 logistics performers 2010, low-income countries 8 1.6 Respondents indicating an improved or much improved logistics environment since 2005, by LPI quintile 13 2.1 Respondents indicating high or very high quality of infrastructure in listed areas, by LPI quintile 14 2.2 Respondents indicating high or very high competence and quality of service in listed sectors, by LPI quintile 15 2.3 Respondents indicating that listed customs procedures are available and being used, by LPI quintile 17 2.4 Respondents indicating that listed border agencies are of high or very high competence and quality, by LPI quintile 17 2.5 Respondents indicating that they often or nearly always experience delay factors, by LPI quintile 19 2.6 Export distance, cost, and time in landlocked countries 20 3.1 Typology of countries according to impediments to logistics performance 23 A4.1 Methodology for selecting country groups for survey respondents 42 A4.2 Results of principal component analysis for the international LPI 43 A4.3 Component loadings for the international LPI 43 A5.4 Correlation matrix of Doing Business and LPI time data 48 C o n n E C T i n G T o C o m p E T E 2 0 10 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 2010 2010 LPI 2010 LPI 2010 LPI % of % of % of highest highest highest Economy Rank Score performer Economy Rank Score performer Economy Rank Score performer Germany 1 4.11 100.0 Vietnam 53 2.96 63.1 Cameroon 105 2.55 49.7 Singapore 2 4.09 99.2 Greece 54 2.96 62.8 Niger 106 2.54 49.4 Sweden 3 4.08 98.8 Qatar 55 2.95 62.6 Nicaragua 107 2.54 49.3 Netherlands 4 4.07 98.5 Costa Rica 56 2.91 61.3 Jamaica 108 2.53 49.2 Luxembourg 5 3.98 95.7 Slovenia 57 2.87 60.2 Côte d'Ivoire 109 2.53 49.2 Switzerland 6 3.97 95.5 Senegal 58 2.86 59.8 Pakistan 110 2.53 49.1 Japan 7 3.97 95.2 Romania 59 2.84 59.1 Armenia 111 2.52 48.9 United Kingdom 8 3.95 94.9 Oman 60 2.84 59.1 Bolivia 112 2.51 48.5 Belgium 9 3.94 94.5 Tunisia 61 2.84 58.9 Gambia, The 113 2.49 48.0 Norway 10 3.93 94.2 Kazakhstan 62 2.83 58.9 Turkmenistan 114 2.49 47.9 Ireland 11 3.89 92.9 Bulgaria 63 2.83 58.8 Chad 115 2.49 47.9 Finland 12 3.89 92.6 Malta 64 2.82 58.6 Congo, Rep. 116 2.48 47.4 Hong Kong SAR, China 13 3.88 92.4 Dominican Republic 65 2.82 58.5 Ghana 117 2.47 47.3 Canada 14 3.87 92.3 Uganda 66 2.82 58.4 Lao PDR 118 2.46 47.0 United States 15 3.86 91.7 Peru 67 2.80 57.9 Albania 119 2.46 46.8 Denmark 16 3.85 91.4 Uzbekistan 68 2.79 57.5 Comoros 120 2.45 46.5 France 17 3.84 91.3 Benin 69 2.79 57.4 Montenegro 121 2.43 45.9 Australia 18 3.84 91.2 Honduras 70 2.78 57.1 Gabon 122 2.41 45.4 Austria 19 3.76 88.7 Ecuador 71 2.77 57.0 Ethiopia 123 2.41 45.4 Taiwan, China 20 3.71 86.9 Colombia 72 2.77 57.0 Papua New Guinea 124 2.41 45.3 New Zealand 21 3.65 85.0 Macedonia, FYR 73 2.77 56.9 Maldives 125 2.40 45.1 Italy 22 3.64 84.9 Croatia 74 2.77 56.8 Djibouti 126 2.39 44.8 Korea, Rep. 23 3.64 84.7 Indonesia 75 2.76 56.5 Liberia 127 2.38 44.4 United Arab Emirates 24 3.63 84.5 Paraguay 76 2.75 56.3 Bhutan 128 2.38 44.3 Spain 25 3.63 84.3 Uruguay 77 2.75 56.3 Cambodia 129 2.37 44.0 Czech Republic 26 3.51 80.5 Bahamas, The 78 2.75 56.1 Algeria 130 2.36 43.7 China 27 3.49 79.9 Bangladesh 79 2.74 56.0 Tajikistan 131 2.35 43.2 South Africa 28 3.46 78.9 Syrian Arab Republic 80 2.74 55.9 Libya 132 2.33 42.8 Malaysia 29 3.44 78.4 Jordan 81 2.74 55.8 Myanmar 133 2.33 42.7 Poland 30 3.44 78.2 Mauritius 82 2.72 55.3 Botswana 134 2.32 42.3 Israel 31 3.41 77.5 Serbia 83 2.69 54.1 Solomon Islands 135 2.31 42.0 Bahrain 32 3.37 76.2 Venezuela, RB 84 2.68 53.9 Mozambique 136 2.29 41.5 Lebanon 33 3.34 75.1 Congo, Dem. Rep. 85 2.68 53.8 Sri Lanka 137 2.29 41.4 Portugal 34 3.34 75.0 El Salvador 86 2.67 53.7 Zambia 138 2.28 41.2 Thailand 35 3.29 73.6 Bosnia and Herzegovina 87 2.66 53.4 Mali 139 2.27 40.7 Kuwait 36 3.28 73.2 Madagascar 88 2.66 53.2 Guyana 140 2.27 40.7 Latvia 37 3.25 72.2 Azerbaijan 89 2.64 52.6 Mongolia 141 2.25 40.2 Slovak Republic 38 3.24 71.9 Guatemala 90 2.63 52.4 Angola 142 2.25 40.1 Turkey 39 3.22 71.4 Kyrgyz Republic 91 2.62 52.0 Afghanistan 143 2.24 39.9 Saudi Arabia 40 3.22 71.3 Egypt, Arab Rep. 92 2.61 51.8 Fiji 144 2.24 39.7 Brazil 41 3.20 70.6 Georgia 93 2.61 51.8 Burkina Faso 145 2.23 39.4 Iceland 42 3.20 70.5 Russian Federation 94 2.61 51.6 Sudan 146 2.21 38.7 Estonia 43 3.16 69.3 Tanzania 95 2.60 51.4 Nepal 147 2.20 38.6 Philippines 44 3.14 68.8 Togo 96 2.60 51.4 Iraq 148 2.11 35.5 Lithuania 45 3.13 68.5 Guinea 97 2.60 51.2 Guinea-Bissau 149 2.10 35.4 Cyprus 46 3.13 68.4 Haiti 98 2.59 51.1 Cuba 150 2.07 34.3 India 47 3.12 67.9 Kenya 99 2.59 51.0 Rwanda 151 2.04 33.4 Argentina 48 3.10 67.4 Nigeria 100 2.59 51.0 Namibia 152 2.02 32.8 Chile 49 3.09 67.3 Yemen, Rep. 101 2.58 50.8 Sierra Leone 153 1.97 31.2 Mexico 50 3.05 65.7 Ukraine 102 2.57 50.6 Eritrea 154 1.70 22.4 Panama 51 3.02 65.0 Iran, Islamic Rep. 103 2.57 50.5 Somalia 155 1.34 10.9 Hungary 52 2.99 63.8 Moldova 104 2.57 50.5 viii C o n n E C T i n G T o C o m p E T E 2 0 10 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 This report presents the findings of the second edi- logistics gap between high- and low-income coun- tion of Connecting to Compete, a report on the new tries. The LPI scores of advanced economies and dataset for the 2010 Logistics Performance Index some emerging and transition economies are rela- (LPI) and its component indicators. The LPI is a tively high due to their well-developed trade facili- multidimensional assessment of logistics perfor- tation programs. But most countries are still in the mance, rated on a scale from one (worst) to five process of addressing their performance bottlenecks. (best). It uses more than 5,000 individual country Although small differences in scores and rankings assessments made by nearly 1,000 international of individual countries should be interpreted with freight forwarders to compare the trade logistics pro- caution, especially for countries in the intermedi- files of 155 countries. ate group of performers, the countries that have The 2010 LPI also provides a snapshot of selected the worst performance--mostly least developed performance indicators in nearly 130 countries, in- countries--are hampered by severe capacity con- cluding expanded information on the time, cost, and straints that make sustained progress difficult. reliability of import and export supply chains, infra- Income is not the only determinant of a country's structure quality, performance of core services, and logistics environment. Even in low-income countries, the friendliness of trade clearance procedures. The policymakers can do much to boost performance. 2010 LPI and its indicators encapsulate the firsthand Liberalizing logistics services markets, for example, knowledge of movers of international trade, collected can encourage local service providers to increase amid the economic turmoil of 2009. quality and price competitively. This is particularly The importance of efficient logistics for trade important in sectors such as trucking and customs and growth is now widely acknowledged. Analysis brokerage that are essential to efficient service deliv- based on the 2007 LPI or similar information has ery by international forwarders. shown that better logistics performance is strongly Countries with low LPI scores tend to have associated with trade expansion, export diversifica- higher average times to import or export. But it is tion, ability to attract foreign direct investments, important to keep these delays in perspective. Lead and economic growth. In other words, trade logis- times reported by international forwarders are much tics matter. shorter than shipping times. Landlocked developing World trade is moved between countries by a countries are at a disadvantage because they cannot network of increasingly global logistics operators. control shipping conditions outside their borders. But the ease with which traders can use this net- Importing into a landlocked developing country typ- work to connect with international markets de- ically takes a week longer than for its coastal neigh- pends in large part on country-specific factors such bors, but times can vary widely, especially in Africa. as trade procedures, transport and telecommunica- Even more than time and cost, logistics perfor- tions infrastructure, and the domestic market for mance depends on the reliability and predictability support services. The LPI and its component indi- of the supply chain. The level of logistics service avail- cators provide a unique global point of reference to able in the best performing countries is about double better understand these key dimensions of logistics that in the lowest performing countries. In the low- performance. est performing countries, importers and exporters Germany and Singapore receive the highest rat- incur extra costs as a result of the need to mitigate ings in the 2010 LPI with scores over 4.08, while the effects of unreliable supply chains, for example, Somalia ranks last with a score of 1.34. As observed by increasing inventory to hedge against failed deliv- in Connecting to Compete 2007, there is a large eries. The costs of poor performance ultimately fall C o n n E C T i n G T o C o m p E T E 2 0 10 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 on end users or consumers. The relative--and paperwork and inspection processes in often even absolute--burden of such costs is the lowest performing countries. highest in the least developed countries. · A major challenge for the international Unreliability of logistics can come in many community is how to help the lowest forms in low performance countries. Excessive performing countries benefit from an physical inspection or inappropriate reliance increasingly open global trading system. on inspector discretion causes large variations These countries need to make substan- in clearance times, and multiple inspections are tial improvements in logistics compe- frequent. Increasingly strict safety and security tence, processes, and business practices, measures impair service provision in all but the which may be difficult to attain given top ranking countries. numerous other priorities. The challenge The information obtained from logistics is compounded by the fact that many of professionals reflected in the 2010 LPI is very these countries are landlocked and often relevant for helping to identify priorities for depend on transit countries that have government agencies planning to implement low logistics performance themselves. reform agendas in cooperation with private To escape the resulting multiplicative ef- stakeholders: fects on trade costs, enhancing regional · Except in high-income countries, the cooperation and implementing efficient availability and quality of trade-related transit systems on trade corridors is infrastructure is a major constraint to critical. performance--but the specific priori- While Connecting to Compete 2010 high- ties tend to vary across countries. In- lights priority areas for increased policy atten- formation technology infrastructure tion, the report offers an optimistic message. Lo- is widely available and widely used for gistics professionals assess the trends in logistics trade processing, even in low-income and trade facilitation in their country of work countries. Countries in the interme- to be generally positive. The use of increasingly diate range of logistics performance standardized information technology solutions tend to be relatively more impacted by in logistics is widespread worldwide, and cus- the quality and availability of physical toms reform has progressed in most countries, infrastructure (ports or roads). Rail irrespective of their level of performance. services receive very low scores almost In fact, the logistics performance of a sig- everywhere. nificant number of countries is gradually con- · Efficient border management and co- verging toward the level attained in the top ordination of the various agencies in- performing countries. Part of this convergence volved in border clearance is increas- is driven by a global trend toward consolidation ingly important. The performance of and homogenization of service provision, espe- agencies responsible for enforcement of cially in container, air freight, express cargo, and sanitary and phytosanitary regulation contract logistics. The current economic situa- --and to a lesser extent other types of tion will further encourage this trend. But the product standards--appears to lag well increased awareness and proactive policies of a behind customs in many countries. LPI growing number of countries also play a major survey respondents rate the activities of role in driving better performance, underpin- such agencies as a major factor leading ning some of the most encouraging increases in to additional, sometimes redundant, LPI scores compared with the 2007 LPI report. 2 C o n n E C T i n G T o C o m p E T E 2 0 10 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 SECTion The 2010 Logistics performance index trade logistics performance From awareness to implementation evidence confirms this link. As measured by is directly linked with the World Bank's Logistics Performance Index International trade is moved by a network of (LPI), trade logistics performance is directly important economic increasingly global logistics operators who deal linked with important economic outcomes, such outcomes, such as trade with a number of functions in the international as trade expansion, diversification of exports, and expansion, diversification supply chains: ocean shipping, air freight, land growth (see appendix 5 for more details). transport, warehousing, and third party logis- Countries wishing to improve trade logistics of exports, and growth tics. Globalization has made the demand for may need to reform and modernize border man- logistics services more sophisticated, pushing agement institutions, change transport regula- for integration and diversification of services to tion policy, and, in some cases, invest signifi- help operate uninterrupted supply chains. Key cantly in trade-related infrastructure. The key segments of the logistics industry3 are domi- issue--highlighted by the 2007 LPI--is that a nated by 25 large corporations, especially in the trade supply chain is only as strong as its weak- maritime, port, and air freight segments.4 But est link. Determining where the weakest links the industry remains much less concentrated are and addressing them through targeted de- in traditional subsectors that are more local velopment interventions has therefore become in nature and have low costs of entry, such as a major element of the trade facilitation and lo- trucking or "traditional" freight forwarding and gistics agenda. customs brokerage. In global logistics the physi- Until recently, policymakers and private cal movement of goods is supported by a chain sector stakeholders have not had the data they of service providers who should work together needed to identify trade constraints or create con- seamlessly. stituencies for reform. The LPI fills that gap. The The ease with which exporters can connect to first edition (2007) helped intensify the dialogue this logistics network5 depends on domestic fac- between policymakers and the private sector in tors such as infrastructure, trade procedures, and several countries about logistics bottlenecks and the market for trade-related support services. In- facilitating international trade and transporta- ternational companies trying to implement con- tion at the country or subregional level. sistent standards worldwide find that the level of In the two years since the first LPI, several service they can achieve depends on local oper- countries have launched programs promoting ating conditions in each country. A recent trade improvements in logistics performance. Rather facilitation audit in a Mediterranean country6 than separately addressing issues such as border found that leading express carriers were not per- procedures, port performance, international mitted to operate 24/7, own bonded facilities, or transit, or investment in services, more countries employ their own brokers--all basic prerequisites are implementing comprehensive programs to for delivering courier or parcel service. address the weakest links in their macro-supply Facilitating trade and transport is essential chain and stimulate cooperation between public for countries to compete in the global market- agencies and private stakeholders. place: traders need to be able to move goods For example, shortly after the 2007 LPI re- and services across borders on time and with port, Indonesia launched an ambitious public low transaction costs. Extensive recent research and private dialogue on trade facilitation and C o n n E C T i n G T o C o m p E T E 2 0 10 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 logistics. It prepared an action plan addressing in 2007: in the first (international) part respon- the costs of international trade (port facilita- dents assess six key dimensions of logistics per- tion), as well as the unique logistics costs of a formance in eight important overseas markets; in large archipelago. Vietnam has embarked on a the second (domestic) part they provide detailed similar process. data on the logistics environment in their own With the LPI, the World Bank aims to focus country, including a mix of qualitative and quan- attention on an issue of global importance and titative time and cost data (see box 1.1). Thanks provide a platform for dialogue among govern- to increased private sector involvement in the ment, business, and civil society. By showing LPI survey, country coverage for the interna- countries how they compare with their competi- tional LPI has increased from 150 to 155.11 tors and illuminating the costs of poor logistics Although the LPI represents a useful bench- performance, the LPI indicators can continue mark of a country's logistics performance, the to serve as a catalyst, helping policymakers and LPI survey also collects important and detailed the private sector build the case for reform-- data on domestic logistics and the time and cost and helping countries break out of the vicious burdens of import and export transactions. circle of "logistics unfriendliness." Country coverage for the domestic LPI has increased to nearly 130 countries. These data Logistics performance in 2010: allow practitioners, analysts, and policymakers what's new? to examine the determinants of logistics perfor- mance in individual countries. Used jointly, the The World Bank conducts the LPI survey every international and domestic data can identify two years. The core approach remains the same as supply chain bottlenecks. Comparison of index Box 1.1 Measuring logistics performance using the LPI the World Bank's Logistics Performance Index (LPI) summarizes responsible for moving goods around the world: multinational the performance of countries in six areas that capture the most freight forwarders and the main express carriers. Freight forward- important aspects of the current logistics environment: ers and express carriers are in a privileged position to assess how · Efficiency of the customs clearance process. countries perform. And their views matter, directly affecting the · Quality of trade and transport-related infrastructure. choice of shipping routes and gateways and influencing firms' deci- · Ease of arranging competitively priced shipments. sions about production location, choice of suppliers, and selection · Competence and quality of logistics services. of target markets. their participation is central to the quality and · Ability to track and trace consignments. credibility of the LPI project, and their continuing involvement and · Frequency with which shipments reach the consignee within feedback have been essential in further developing and refining the the scheduled or expected time. survey in this second edition of the LPI. Nearly 1,000 logistics pro- these areas range from traditional issues (customs procedures fessionals from international logistics companies in 130 countries and infrastructure quality) to new concerns (tracking and tracing participated in this edition of the LPI survey, a 25 percent increase shipments, timeliness in reaching a destination, and the compe- from 2007--and a testament to the interest the LPI has generated tence of the domestic logistics industry).7 None of these areas alone in the private sector. can ensure good logistics performance. their selection is based on the LPI survey consists of two major parts offering two dif- the latest theoretical and empirical research8 and on extensive inter- ferent perspectives: international and domestic. the international views with professionals involved in international freight logistics.9 LPI provides qualitative evaluations of a country, in the six areas the LPI uses standard statistical techniques to aggregate the data described above, by its trading partners--logistics professionals into a single indicator10 (see appendix 4 for a detailed description working outside of the country. the domestic LPI provides both of the way in which the LPI is calculated). this approach makes it qualitative and quantitative assessments on the country by logistics possible to conduct meaningful comparisons across countries, re- professionals working inside it, including more detailed information gions, and income groups, as well as to undertake country-specific on the logistics environment, core logistics processes, institutions, diagnostic work. and performance time and cost data. this additional information on Because these vital aspects of logistics performance can best different aspects of logistics was used to interpret the LPI as well as be assessed by operators on the ground, the LPI relies on a struc- validate and crosscheck the information underlying it. tured online survey of logistics professionals from the companies the LPI questionnaire is available at www.worldbank.org/lpi. 4 C o n n E C T i n G T o C o m p E T E 2 0 10 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 scores across countries should therefore only be by land between the seller's factory and buyer's the World Bank aims a starting point for using the LPI. warehouse.12 to focus attention on an The revised survey instrument also provides issue of global importance New features of the LPI survey extensive new details on the customs clearance process in the domestic section of the LPI, al- and provide a platform The LPI survey has been refined in light of feed- lowing a more nuanced analysis of particular for dialogue among back on the 2007 survey from users, policy- aspects of customs and the clearance process. government, business, makers, and logistics professionals. There is In addition to assessing clearance time and rat- very little change in the first (international) ing the efficiency of customs as in 2007, respon- and civil society section, in which respondents assess the same dents also assessed customs valuation methods; six key dimensions of logistics performance in methods for determining whether or not ship- eight important overseas markets as they did ments will be physically inspected; use of elec- in 2007--thus maintaining a comparable way tronic submission, pre-arrival clearance, and for computing the LPI. But the revised survey post-clearance audit procedures; and the trans- (conducted in 2009) collects extensive new parency of customs procedures and administra- information in the second (domestic) section-- tion, including the extent of industry consulta- such as more detail about the customs clearance tion, advance notification of regulatory changes, process--and increases the quality and scope of and availability of review or appeal procedures. the quantitative physical performance indicators Reflecting the important role now played by that can help support sound policymaking. border security requirements, a new question on Expanded information includes: cargo security in the international part of the · Time/cost data for import and export survey is designed to help assess the extent to transactions. which these measures constrain international · Customs administration and procedures. supply chains. For each of the eight major trad- · Border security measures (from an ad- ing partners of their home country, respondents ditional question in the international indicate whether it has become easier or more section). complicated to comply with cargo security re- · Quality data for infrastructure and ser- quirements, such as screening and provision of vice providers. advance information. The base year for compar- The major innovation of the revised survey ative purposes is 2005. is the import and export time/cost data. Re- The 2007 LPI focused on the quality of spondents self-identified as having experience in two types of infrastructure--transport and export pre-carriage (between the seller's factory telecommunications--and the competence of and port or airport, excluding international ship- ping), export carriage (by land, between the sell- Figure 1.1 Lead time to export er's factory and buyer's warehouse), import on- carriage (between port or airport to the buyer's Lead time export warehouse), or import carriage (by land, between the seller's factory and buyer's warehouse). These distinctions enabled the LPI to iden- EXW FOB DDP (shipper) (free carrier at (delivered tify logistics concerns for specific types of ship- port of loading duty paid) or equivalent) ping, including important differences between moving goods by land and by sea or by air. For example, respondents describing the export of Delivery Alongside a full load from their home country provided to dock vessel Delivered to separate time and cost data for the two portions Point of origin buyer's seller's factory Exporting warehouse of the supply chain in their home country (fig- country Border ure 1.1): export pre-carriage between the seller's Source: Authors. factory and port or airport and export carriage C o n n E C T i n G T o C o m p E T E 2 0 10 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 having an LPI lower by a range of logistics service providers. The 2010 can be regarded as heavily marginalized from one point--such as 2.5 LPI expands coverage in these areas in two ways. regional and global supply chains. Tables 1.3 First, infrastructure data now separately iden- through 1.5, which present the top 10 perform- rather than 3.5--implies tify ports, airports, road, rail, warehousing, and ers by income group, largely reinforce these two to four additional transloading facilities, and information and assessments. days for moving communications (ICT) infrastructure. Second, How do the LPI scores and rankings relate respondents are now asked to assess both the to logistics performance on the ground? Using imports and exports competence and quality of core logistics service additional country-specific information gath- between the port and a providers, such as transport operators, distribu- ered in the survey, it is possible to give an idea of company's warehouse tors, freight forwarders, customs and border the average association between LPI scores and agencies, and shippers. Focusing on quality of performance in particular areas. For example, service in addition to the competence of service having an LPI lower by one point--such as 2.5 providers provides important additional infor- rather than 3.5--implies two to four additional mation on the determinants of overall logistics days for moving imports and exports between performance (box 1.2). the port and a company's warehouse. It also implies a rate of physical inspection that is 25 Key findings from the 2010 LPI percentage points higher.15 These findings show the ways in which the LPI can be used to help As in 2007, the 2010 LPI shows that high- identify bottlenecks and supply chain reliability income countries dominate the top logistics problems in practice. rankings (table 1.1). The list of countries in the Figure 1.2 shows the cumulative distribu- global top 10 is very similar to the 2007 top tion of LPI scores, with vertical lines indicating 10.14 Most of them can be seen as key players in the quintile boundaries.16 This report will often the logistics sector, occupying important places present the components of the LPI by quintiles in a variety of global and regional supply chains. (containing equal numbers of countries) to fa- The results mirror the openness of these coun- cilitate reading the results. The fifth (bottom) tries to international trade and investment as quintile contains the countries with the lowest part of their successful economic development LPI scores, the first (top) quintile those with the strategy. highest score). By contrast, the 10 lowest performing coun- The distribution of LPI scores suggests four tries (table 1.2) are almost all from the low- and types of country logistics environments, in- lower middle-income groups, geographically troduced in the 2007 edition of Connecting to concentrated in Africa. In most cases, they Compete: logistics unfriendly, or severely logis- tics constrained countries, such as least devel- Box 1.2 Private sector opinions matter oped countries (bottom quintile); partial per- formers, such as the low- and middle-income the LPI combines quantitative and qualitative assessments within dual international countries facing similar constraints (fourth and and domestic perspectives on logistics performance. Part 1 of the survey (international) third quintiles); consistent performers, such as relies on qualitative indicators--private sector experts rating performance of their trad- countries achieving better logistics performance ing partners on the basis of their own opinions and experience--across a range of in- than their income group (second quintile); and dicators on various dimensions of logistics performance. In contrast, part 2 (domestic) logistics friendly, high performers, for the most contains both qualitative assessments of the domestic logistics environment and quan- titative data on performance of domestic supply chains and core logistics processes part high-income countries (top quintile). The (time, cost) by international professionals located in the country evaluated. challenges faced by these different groups will hallward-Driemeier and Aterido show that firm-level qualitative data correlate be discussed in sections 2 and 3. strongly with quantitative measures of the business environment, whether taken from within a survey (such as in the LPI) or from outside sources.13 this confirms The "logistics gap" persists that qualitative measures of constraints can capture meaningful variations across LPI scores are on average about 45 percent countries and within countries and therefore reflect a real assessment of actual higher for high-income countries than for low- conditions on the ground and how important they are to the firm. income countries (figure 1.3). This gap is to be 6 C o n n E C T i n G T o C o m p E T E 2 0 10 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 1.1 Top 10 logistics performers 2010 2010 LPI 2007 LPI LPI LPI % of highest LPI LPI % of highest Economy rank score performer rank score performer Germany 1 4.11 100.0 3 4.10 97.1 Singapore 2 4.09 99.2 1 4.19 100.0 Sweden 3 4.08 98.8 4 4.08 96.4 Netherlands 4 4.07 98.5 2 4.18 99.6 Luxembourg 5 3.98 95.7 23 3.54 79.5 Switzerland 6 3.97 95.5 7 4.02 94.5 Japan 7 3.97 95.2 6 4.02 94.8 United Kingdom 8 3.95 94.9 9 3.99 93.8 Belgium 9 3.94 94.5 12 3.89 90.7 Norway 10 3.93 94.2 16 3.81 88.1 Source: Logistics Performance Index, 2007 and 2010. Table 1.2 Bottom 10 logistics performers 2010 2010 LPI 2007 LPI LPI LPI % of highest LPI LPI % of highest Economy rank score performer rank score performer Somalia 155 1.34 10.9 127 2.16 36.3 Eritrea 154 1.70 22.4 124 2.19 37.2 Sierra Leone 153 1.97 31.2 144 1.95 29.9 Namibia 152 2.02 32.8 126 2.16 36.3 Rwanda 151 2.04 33.4 148 1.77 24.3 Cuba 150 2.07 34.3 n/a n/a n/a Guinea-Bissau 149 2.10 35.4 116 2.28 40.0 Iraq 148 2.11 35.5 n/a n/a n/a Nepal 147 2.20 38.6 130 2.14 35.7 Sudan 146 2.21 38.7 64 2.71 53.6 Source: Logistics Performance Index, 2007 and 2010. Figure 1.2 Cumulative distribution of LPI scores, 2010 Cumulative density 1.0 5th quintile 4th 3rd 2nd quintile 1st quintile quintile quintile Partial performers Consistent performers 0.8 Logistics unfriendly Logistics friendly 0.6 0.4 0.2 0.0 1.5 2.0 2.5 3.0 3.5 4.0 LPI score Source: Logistics Performance Index, 2010. C o n n E C T i n G T o C o m p E T E 2 0 10 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 Table 1.3 Top 10 logistics performers 2010, upper middle-income countries 2010 LPI 2007 LPI LPI LPI % of highest LPI LPI % of highest Economy rank score performer rank score performer South Africa 28 3.46 78.9 24 3.53 79.4 Malaysia 29 3.44 78.4 27 3.48 77.7 Poland 30 3.44 78.2 40 3.04 63.9 Lebanon 33 3.34 75.1 98 2.37 42.9 Latvia 37 3.25 72.2 42 3.02 63.2 Turkey 39 3.22 71.4 34 3.15 67.5 Brazil 41 3.20 70.6 61 2.75 54.9 Lithuania 45 3.13 68.5 58 2.78 55.7 Argentina 48 3.10 67.4 45 2.98 62.1 Chile 49 3.09 67.3 32 3.25 70.5 Source: Logistics Performance Index, 2007 and 2010. Table 1.4 Top 10 logistics performers 2010, lower middle-income countries 2010 LPI 2007 LPI LPI LPI % of highest LPI LPI % of highest Economy rank score performer rank score performer China 27 3.49 79.9 30 3.32 72.8 Thailand 35 3.29 73.6 31 3.31 72.5 Philippines 44 3.14 68.8 65 2.69 52.9 India 47 3.12 67.9 39 3.07 64.9 Tunisia 61 2.84 58.9 60 2.76 55.3 Honduras 70 2.78 57.1 80 2.50 47.0 Ecuador 71 2.77 57.0 70 2.60 50.1 Indonesia 75 2.76 56.5 43 3.01 63.0 Paraguay 76 2.75 56.3 71 2.57 49.2 Syrian Arab Republic 80 2.74 55.9 135 2.09 34.1 Source: Logistics Performance Index, 2007 and 2010. Table 1.5 Top 10 logistics performers 2010, low-income countries 2010 LPI 2007 LPI LPI LPI % of highest LPI LPI % of highest Economy rank score performer rank score performer Vietnam 53 2.96 63.1 53 2.89 59.2 Senegal 58 2.86 59.8 101 2.37 42.8 Uganda 66 2.82 58.4 83 2.49 46.7 Uzbekistan 68 2.79 57.5 129 2.16 36.3 Benin 69 2.79 57.4 89 2.45 45.3 Bangladesh 79 2.74 56.0 87 2.47 46.1 Congo, Dem. Rep. 85 2.68 53.8 n/a n/a n/a Madagascar 88 2.66 53.2 120 2.24 39.0 Kyrgyz Republic 91 2.62 52.0 103 2.35 42.3 Tanzania 95 2.60 51.4 137 2.08 34.0 Source: Logistics Performance Index, 2007 and 2010. 8 C o n n E C T i n G T o C o m p E T E 2 0 10 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 1.3 2010 LPI score, average and Figure 1.4 Distribution of country Policy has a strong minimum/maximum range performance across by income group income levels, by LPI quintile influence on logistics sector performance LPI 2010 Top quintile, highest performance Third quintile, average performance 5 Second quintile, high performance Fourth quintile, low performance Bottom quintile, lowest performance Percent 100 4 75 3 50 2 25 1 Low Lower Upper High income middle income middle income income Note: Vertical rules show minimum/maximum range. Source: Logistics Performance Index, 2010. 0 Low Lower Upper High income High income income middle middle non-OECD OECD income income expected. Low-income countries face severe Source: Logistics Performance Index, 2010. constraints on infrastructure quantity and qual- ity, as well as human, technical, and financial capacity. These factors all negatively affect per- income countries and sufficiently high to place formance in a sector that is complex on a techni- it in the second 20 percent of logistics perform- cal level and requires a mix of public and private ers worldwide. inputs to function efficiently. Plotting an average relation between coun- try income and logistics performance makes it Income alone does not explain possible to identify over- and underperformers logistics performance in the logistics sector (figure 1.5). An over- Despite this logistics gap, country income performer is a country with a higher LPI score alone does not account for the wide variety than would be expected based solely on its in- of performance levels across countries. Logis- come level, an underperformer a country with tics performance varies considerably within a lower than expected LPI score. Excluding income groups (tables 1.3­1.5 and figure 1.3). high-income countries, the 10 most significant This assessment is reinforced by grouping LPI overperformers are Bangladesh, China, Demo- scores into five equal-sized groups (quintiles) cratic Republic of Congo, India, Madagascar, and examining the distribution of countries Philippines, South Africa, Thailand, Uganda, by quintiles across income groups (figure 1.4). and Vietnam. The 10 most significant under- Most high-income countries are in the top 20 performers are Botswana, Croatia, Eritrea, percent of LPI performers, but other country Fiji, Gabon, Greece, Montenegro, Namibia, income groups display considerably more dis- Russian Federation, and Slovenia. The existence persion. Upper and lower middle-income coun- of these two groups, as well as the general dis- tries, for example, are distributed across all five persion in performance within income groups, of the 2010 LPI quintiles--with scores ranging suggests that policy has a strong influence on lo- from the bottom group of logistics performers gistics sector performance. to the top. Even low-income countries have LPI A number of countries stand out (see fig- scores across four of the five quintiles. Vietnam, ure 1.5). Algeria, for example, has an LPI score a low-income country, has an LPI score broadly of 2.36, ranking it 130 out of 155 countries. This comparable with those of some upper middle- is a low level of performance relative to its upper C o n n E C T i n G T o C o m p E T E 2 0 10 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 the overwhelming majority Figure 1.5 LPI overperformers and underperformers in 2010, relative to income per capita of statistically significant LPI score LPI changes are positive 4.5 4.0 China South Africa 3.5 India Philippines Thailand Vietnam 3.0 Greece Uganda Bangladesh Croatia Congo, Dem. Rep. Slovenia Madagascar 2.5 Montenegro Russian Federation Gabon Fiji Botswana 2.0 Namibia Eritrea 1.5 4 5 6 7 8 9 10 11 12 Log of GNI per capita (US$) Note: Fitted values are based on an ordinary least squares regression using data for all countries. Underperformers (black diamonds) are defined as the non-high income countries with the 10 smallest residuals. Overperformers (black circles) are defined as the non-high income countries with the 10 largest residuals. Other oil-producing countries are represented by triangles. Source: Logistics Performance Index, 2010, and World Bank 2008b. middle-income status. Comparatively low logis- LPI scores is just over 90 percent, with the rank tics performance is a feature of many oil export- correlation only slightly weaker at 87 percent. ing countries, possibly representing a significant A number of changes at the level of indi- drag on their broader economic integration and vidual country ranks and scores might appear diversification agendas. to be large at first glance, but the LPI is subject China, in contrast, is a lower middle-income to sampling error because of its survey method- country with an LPI score (3.49) far higher than ology. A vital part of the LPI dataset is the es- would be expected based solely on its income timated confidence interval for each country's level, ranking it in the top 20 percent of logis- score (box 1.3). Only in cases where the confi- tics performers on par with such high-income dence intervals for 2007 and 2010 do not over- countries as the Czech Republic. Of course, it is lap can we conclude that a statistically signifi- important not to overinterpret this result. Be- cant change has taken place. cause LPI survey respondents have much more Based on this criterion of nonoverlapping experience with a country's main international confidence intervals, 26 countries have statisti- gateways than with its smaller or more remote cally significant LPI changes.19 The overwhelm- border crossings, a high LPI score does not nec- ing majority (25) of these changes are positive, essarily indicate uniformly strong performance indicating that overall logistics performance has within a large and diverse country. improved (figure 1.6). Evident across all devel- Least developed countries with higher oping country income groups, this pattern sug- scores, such as Uganda (see section 2) or Mada- gests that very little backsliding is occurring.20 gascar,17 also underscore the impact of proac- The majority of these improvements (15 out of tive trade and transport facilitation policies 25) are concentrated among lower middle-21 and even in poor countries. Both have been rela- upper middle-income22 countries. Eight low- tively successful, despite post-conflict environ- income countries show statistically significant ments, in improving their customs or trade improvements in their performance, 23 but only infrastructure.18 two high-income economies do so.24 Among the countries showing statistically Logistics performance is (slowly) improving significant improvement, Colombia has imple- Results for the 2010 LPI are close to those for mented key reforms, such as an interagency the 2007 LPI. The correlation between the two single window, has approved a national logistics 10 C o n n E C T i n G T o C o m p E T E 2 0 10 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 Number of countries with a Prime Minister--to implement a comprehensive statistically significant change action plan building on earlier successes, nota- in the LPI from 2007 to 2010, bly in port facilitation. Some key components of by income group the action plan dealing with border procedures, Significant LPI increase Significant LPI decrease ports, and logistics services were included in the competitiveness program designed with the Eu- Number of countries 12 ropean Union, the World Bank, and the Afri- can Development Bank. Morocco has developed 10 a similar program. 8 It is not a coincidence that overachievers among emerging economies have followed the 6 same strategy as top high-income countries, 4 which have also outlined or are currently devel- oping advanced national logistics policies to en- 2 hance their competitiveness. Germany, ranked 0 first in the 2010 LPI, issued a Freight Transport and Logistics Masterplan in 2008. Similar doc- ­2 uments are being drafted in a number of other Low Lower Upper High income middle income middle income income countries, such as Sweden and Finland, ranked Source: Logistics Performance Index, 2007 and 2010. 3 and 12 in the 2010 LPI. Policymakers clearly recognize the impor- tance of trade facilitation and logistics and are action plan, and is setting up a logistics observa- making visible efforts to put in place the struc- tory to assess its performance at a fine level and tures needed to boost performance. Since its monitor the impact of reforms. Brazil is follow- launch in 2007, the LPI and its component in- ing a similar track to address "Custo Brasil." dicators have gained rapid acceptance, used by Other countries are introducing reforms. policymakers and professionals at the national, In 2009 Tunisia established a national logistics regional, and global levels (box 1.4). council--involving the lead government agen- Another change since the 2007 version cies and the private sector and reporting to the is visible by comparing a relative measure of Box 1.3 How precise are LPI scores and ranks? Although representing the most comprehensive and comparable data transit routes (through tanzania or Kenya, plus Uganda), the effi- source currently available on country logistics and trade facilitation ciency of which is dependent upon others. environments, the LPI and its components have their own domain of As an additional aid to interpretation, LPI scores are presented validity. First, the experience of international freight forwarders sur- with approximate confidence intervals (appendix 4). these ranges veyed may not represent the broader logistics environment in poor are designed to take into account the sampling error created by LPI's countries, where they tend to co-exist with more traditional operators. survey-based dataset. they make it possible to provide upper and the two groups' interactions with government agencies, as well as the lower bounds for a country's LPI score and rank.25 Confidence intervals service levels they offer, might differ significantly. In most developing tend to be broader for the third and fourth quintile. It is important to pay countries, agents or affiliates of international networks tends to serve close attention to confidence intervals before concluding that a change large companies and operate at different levels of performance than in score or a difference between two scores is significant. As shown in traditional trading networks, including in terms of time and costs. figure 1.6, only when the lower bound of a country's 2010 LPI score is Second, in the case of landlocked or island countries, the LPI higher than its 2007 upper bound can it be concluded that there has may capture access problems outside the country being assessed-- been a statistically significant improvement in performance. for example, transit difficulties. the low rating of a landlocked coun- For these reasons, excessive reliance on the exact ranking may try such as Rwanda might not give full justice to its efforts to reform not be as relevant for policymakers as the country's wider performance and facilitate trade because it is dependent upon long international group or the existence of statistically significant improvements. C o n n E C T i n G T o C o m p E T E 2 0 10 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 the 2007 and 2010 LPI.34 The relative score is Figure 1.7 LPI score as percentage of highest LPI score, by LPI quintile, higher in 2010 across all quintiles, consistent 2007 and 2010 with a gradual convergence of logistics perfor- mance, because all countries are now perform- 2007 2010 ing better compared with the country with the Percent highest score (figure 1.7). Logistics performance 90 appears to have improved in all groups, except for the top 20 percent. Although this develop- 80 ment is potentially significant from the point of 70 view of developing country competitiveness and integration with the world economy, it is impor- 60 tant not to overstate it. The gap between the top performing countries and the lowest perform- 50 ing countries remains large and will require sub- stantial time and resources to close. 40 The assessment of widespread, if gradual, 30 improvement in the logistics environment is Bottom Fourth Third Second Top confirmed by other qualitative assessments quintile quintile quintile quintile quintile from the LPI survey. Consider the percentage Source: Logistics Performance Index, 2007 and 2009. of survey respondents in each LPI quintile who Box 1.4 Policy applications of the 2007 LPI at the regional and global levels At the global level, a number of prominent reports have made ex- Mekong Subregion's East-West Economic Corridor used the LPI tensive use of 2007 LPI data. the World Economic Forum's Global to highlight important cross-country divergences in performance Enabling Trade Report 2009 uses LPI data in its composite Enabling and the need to pay particular attention to reforms in Myanmar trade Index to capture important aspects of supply chain perfor- and Laos. 27 the Economic Commission for Latin America and the mance affecting the extent of international economic integration. Caribbean used the LPI as a benchmarking and diagnostic tool the World Bank's Global Monitoring Report 2008 uses the LPI to in analyzing the transport system challenges facing landlocked highlight the importance of trade logistics for developing country countries in South America. 28 the Asia-Pacific Economic Coop- competitiveness and the ways in which the sector can help coun- eration Secretariat highlighted the importance of the LPI's holistic tries reap the benefits of globalization and fight poverty. the United approach to assessing performance and its strong links to evolving Nations Industrial Development Organization's Industrial Develop- commercial practices in the sector. 29 helble and colleagues used ment Report 2009 emphasizes the important role that logistics can LPI data in constructing measures of transparency in the trading play in helping poor countries become more competitive in breaking environment, which they show can constitute a major source of into new sectors and markets. trade gains in the Asia-Pacific region.30 And the World Economic Another important policy application of the LPI, the United Forum's Africa Competitiveness Report 2009 used LPI data and States Agency for International Development's Estimating the the Enabling trade Index to highlight how the logistics sector con- Global In-Country Supply Chain Costs of Meeting the Millennium strains export performance in a number of African countries.31 the Development Goals by 2015,26 notes that supply chain performance LPI can also be used to diagnose particular supply chain con- can be an important determinant of a country's ability to meet some straints in the regional context, as did Raballand and Macchi to health-related aspects of the Millennium Development Goals, be- show that the quality of transport services in Africa is low com- cause they require the efficient and cost-effective distribution of pared with other regions.32 medicines and medical supplies. Using data from the LPI and other As Daniel Ikenson of the Cato Institute concluded in 2008, "suc- sources, the authors analyze logistics costs across 49 International cessful participation in the global economy will be increasingly de- Development Association countries and develop a costing model termined by whether a country maintains high-quality, reliable trade designed to aid practitioners and policymakers in assessing the infrastructure, whether competition is permitted to flourish in the investments required to support achievement of the Millennium De- logistics services industries, and whether the regulatory environ- velopment Goals by 2015. ment is conducive to the relatively frictionless movement of goods A variety of regional policy initiatives have also made extensive and services through the supply chain."33 use of the LPI. For example, a recent assessment of the Greater 12 C o n n E C T i n G T o C o m p E T E 2 0 10 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 say that particular elements of the logistics envi- Table 1.6 Respondents indicating an improved or much improved ronment are improved or much improved since logistics environment since 2005, by LPI quintile 2005. Although progress in some cases is more Percent of respondents noticeable in the higher LPI quintiles, strong Bottom quintile Fourth quintile Third quintile Second quintile Top quintile evidence of broad gains is visible at all levels (lowest (low (average (high (highest performance) performance) performance) performance) performance) of logistics performance (table 1.6). The bot- Customs 48 54 53 56 66 tom quintile--the most logistics-constrained Other border procedures 38 40 33 37 57 group--has markedly improved ICT infra- Transport infrastructure 46 41 47 46 57 structure, private logistics services, and logis- ICT infrastructure 66 56 63 78 77 tics regulations. Progress in the same group Private logistics services 63 62 66 78 70 seems less widespread for border agencies other Logistics regulation 53 30 26 29 41 than customs, transport infrastructure, and Incidence of corruption 27 29 31 35 36 corruption. Source: Logistics performance survey data, 2009. C o n n E C T i n G T o C o m p E T E 2 0 10 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 SECTion 2 Unbundling logistics performance the quality of services The Logistics Performance Index (LPI) survey relatively small compared with the difference sector regulation can be contains detailed information on countries' between them and the top performers, espe- logistics environments, core logistics processes cially for infrastructure such as logistics facili- an important determinant and institutions, and performance time and cost ties (warehousing) or airports that are depen- of sector performance data. In the domestic LPI, respondents assess the dent on management quality or public­private logistics environment in the country where they partnerships. Infrastructure quality appears to work. This information can be used to analyze be a widespread constraint on logistics perfor- the major determinants of overall logistics per- mance in developing countries. formance, focusing on four main groups of fac- Second, satisfaction is not constant across tors: infrastructure, services, border procedures infrastructure types included in the LPI survey. and time, and supply chain reliability. Country In all groups, survey participants view the qual- performance in these areas tends to be a strong ity of information and communication tech- determinant of overall logistics performance. nologies (ICT) infrastructure as superior to that of other types of infrastructure, with two Infrastructure or three times more respondents indicating that ICT infrastructure is high or very high quality Two pronounced trends emerge in the percent- compared with other infrastructure. In con- age of LPI survey respondents who consider trast, rail infrastructure appears to be a prob- that infrastructure in their country is of high or lem: rail is rated as being of high or very high very high quality, averaged across LPI quintiles quality by at most half as many survey respon- (table 2.1). First, satisfaction with infrastructure dents as in other areas--frequently far fewer. quality is much higher among top-performing Evident across all performance groups, this pat- countries than in the other four quintiles. tern suggests systematic dissatisfaction with rail Differences among the four other groups are infrastructure. Road infrastructure appears to be slightly less of a problem across performance Table 2.1 Respondents indicating high or very high quality of groups than other types of infrastructure, but infrastructure in listed areas, by LPI quintile road quality is of higher concern in the third Percent of respondents and fourth quintile of performance. Information and Warehousing communication and technologies Services Ports Airports Roads Rail transloading (ICTs) Bottom quintile The quality and competence of core logistics (lowest performance) 7 11 21 4 18 39 service providers is also an important aspect of Fourth quintile (low performance) 21 17 14 7 11 24 overall country performance. The quality and Third quintile competence of freight forwarders35 tends to (average performance) 11 14 13 1 16 37 be significantly higher than that of other ser- Second quintile (high performance) 18 21 28 11 28 47 vice providers in all LPI performance quintiles Top quintile (table 2.2). There is a higher correlation between (highest performance) 57 65 58 33 70 82 quality of services and overall level of logistics Source: Logistics performance survey data, 2009. performance than is the case for infrastructure, 14 C o n n E C T i n G T o C o m p E T E 2 0 10 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 an observation consistent with the indicators Table 2.2 Respondents indicating high or very high competence on level of service (see figures 2.7 and 2.8 later and quality of service in listed sectors, by LPI quintile in the section). Countries in the second quin- Percent of respondents tile acknowledge an intermediate level of ser- Maritime Warehousing, vice quality, but there is less difference between Road Rail Air transport transloading, Freight transport transport transport and ports and distribution forwarders countries in the three bottom quintiles. Bottom quintile Also important, in the air and maritime (lowest performance) 22 4 34 24 11 41 transport sectors survey respondents are signifi- Fourth quintile (low performance) 11 5 29 37 19 32 cantly more satisfied with service providers than Third quintile with infrastructure quality (compare tables 2.2 (average performance) 19 1 38 28 27 40 and 2.1), suggesting an important ongoing role Second quintile for development of air and maritime transport (high performance) 32 10 56 49 41 58 Top quintile infrastructure. But the low ranking for rail ser- (highest performance) 66 31 76 71 67 75 vices is almost the same as for rail infrastructure, highlighting that survey respondents consider Source: Logistics performance survey data, 2009. the two components to be very close. Rail qual- by trade-related regulations) as a proxy for the ity is assessed as low even in the top-perform- quality of regulation in core logistics sectors. ing group, consistent with long-term trends in Regulatory data were collected by an Organisa- Europe of shifting from rail freight to trucking. tion for Economic Co-operation and Develop- The quality of services sector regulation can ment survey and aggregated into a single index be an important determinant of sector perfor- using standard econometric methods. mance. Regulations supporting competition The downward sloping fitted line in figure 2.1 by lowering entry barriers and reducing the in- indicates that more restrictive regulation--which cidental costs falling on service providers can imposes higher costs on operators--is associated encourage quality upgrading and cost effective- with significantly lower average quality and com- ness. Figure 2.1 demonstrates this point, using petence of service providers. Policymakers there- data on trade restrictiveness in the wholesale fore have considerable scope to boost the scores and retail distribution sector (measured as the reported in table 2.2 by implementing regulatory percentage markup over marginal cost induced reform in core logistics services sectors. Figure 2.1 Respondents indicating high or very high average quality of services and policy restrictiveness of distribution services Percent of respondents 100 75 50 25 0 0 25 50 75 100 Policy restrictiveness in distribution services (% ad valorem equivalent) Note: Policy restrictiveness is measured in percent ad valorem equivalent terms, the percentage difference between the cost of services at the border and their price within the domestic market. Measured in this way, the restrictiveness of services policies is expressed in an analogous manner to the ad valorem tariff in goods markets. Distribution is used as a proxy for the logistics sector because detailed data on logistics policies are not available. Source: Logistics performance survey data, 2009, and Dihel and Shepherd 2007. C o n n E C T i n G T o C o m p E T E 2 0 10 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 there is a generally Border procedures and time performance groups, the time taken to clear higher level of satisfaction goods through customs is a relatively small The LPI includes several indicators of border fraction of total import time, but that time in- with customs than with procedures and time. creases significantly when goods are physically other border agencies inspected (see figure 2.2, right scale). Core cus- Import and export time toms procedures converge strongly across all per- A useful outcome measure of logistics perfor- formance groups, but physical inspection--and mance is the time taken to complete trade trans- even multiple inspections of the same shipment actions. The median import lead time, as mea- by different agencies--are much more common sured by the LPI survey (left scale of figure 2.2), in low performance countries (table 2.3). shows that lead time for port or airport supply Export supply chains typically face fewer chains is nearly twice as long in low performance procedural burdens than imports, evidenced by countries as in high performance ones. For land the shorter lead time to exports than to imports supply chains the contrast is even stronger: lead (figure 2.3). time in low performance countries is more than Customs is not the only agency involved in five times longer. These times are strongly corre- border management; collaboration among all lated with distance in both cases, with a correla- border management agencies--including stan- tion coefficient of 0.67 for port and airport sup- dards, sanitary, phytosanitary, transport, and ply chains and 0.62 for land supply chains. This veterinary agencies--and the introduction of association suggests that geographic hurdles, and modern approaches to regulatory compliance possibly internal transport markets, continue to are especially important. Evidence points to pose substantial difficulties in those countries. more streamlined processes by customs agencies, Of course, geography and speed en route are across performance groups (tables 2.3 and 2.4). not the only factors that can affect import lead A corollary of the gradual convergence of times. There is scope for reducing time across customs procedures worldwide is that other all dimensions of the border process (time to border agencies are seen to be an increasingly clear goods as opposed to lead time, which also serious constraint on supply chain performance includes transport), especially on the import in many countries. There is a generally higher side. Ongoing efforts at border management re- level of satisfaction with customs than with form need to focus on the prevalence of physi- other border agencies, such as quality and stan- cal inspection, proliferation of procedures, and dards inspection agencies and even more so with red tape in low performance countries. In all health or sanitary and phytosanitary agencies Figure 2.2 Median import lead time and average clearance time, by LPI quintile Median lead time, import (days) Port/airport Land Average clearance time (days) 14 7 12 6 Clearance time with physical inspection 10 5 Clearance time without physical inspection 8 4 6 3 4 2 2 1 0 0 Bottom quintile Fourth quintile Third quintile Second quintile Top quintile (lowest performance) (low performance) (average performance) (high performance) (highest performance) Source: Logistics performance survey data, 2009. 16 C o n n E C T i n G T o C o m p E T E 2 0 10 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 2.3 Median export lead time, by LPI quintile Lead time, export (days) Port/airport Land 8 6 4 2 0 Bottom quintile Fourth quintile Third quintile Second quintile Top quintile (lowest performance) (low performance) (average performance) (high performance) (highest performance) Source: Logistics performance survey data, 2009. Table 2.3 Respondents indicating that listed customs procedures are available and being used, by LPI quintile Percent of respondents Bottom quintile Fourth quintile Third quintile Second quintile Top quintile (lowest (low (average (high (highest performance) performance) performance) performance) performance) Online processing 86 85 100 99 99 Pre-arrival clearance 80 91 100 97 94 Post-clearance audits 72 95 100 96 93 Release with guarantee pending final clearance 89 92 98 100 95 Formal dialogue process 83 85 96 89 92 Availability of review/appeal 88 92 94 94 98 Advance notification of changes 86 93 100 96 96 Physical inspection (percent of shipments) 36 38 32 20 3 Multiple physical inspections 13 10 7 4 2 Valuation using reference price 91 96 93 88 92 Valuation using invoice value 89 100 100 97 98 Valuation using inspector discretion 97 97 88 83 87 Valuation using other methods 67 85 84 70 70 Source: Logistics performance survey data, 2009. Table 2.4 Respondents indicating that listed border agencies are of high or very high competence and quality, by LPI quintile Percent of respondents Quality/standards Customs agencies inspection agencies Health/SPS agencies Bottom quintile (lowest performance) 26 24 15 Fourth quintile (low performance) 25 11 14 Third quintile (average performance) 18 19 4 Second quintile (high performance) 35 21 20 Top quintile (highest performance) 62 62 57 Source: Logistics performance survey data, 2009. C o n n E C T i n G T o C o m p E T E 2 0 10 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 Operators in countries (see table 2.4). The contrast is particularly strik- However, simplifying documentation and with high-quality logistics ing with health and phytosanitary agencies, sug- single window initiatives may not be enough gesting that they may constrain the efficiency of without addressing weaknesses in the other environments appear import procedures in a wide variety of countries. dimensions of border management and, more to be relatively well Experience on the ground indicates that one rea- generally, the soft and hard trade-related infra- placed to adapt to new son quality and standards inspection agencies structure. This partly explains why some top are perceived to be less of a problem than health performers in the Doing Business database, such security requirements, and sanitary and phytosanitary agencies is the as Egypt, do not fare as well in logistics perfor- but the same is not true higher level of automation these agencies employ, mance as measured by the LPI. of operators in logistics as well as the fact that they are typically not deal- In the post­September 11 environment, ing with time-sensitive, perishable products, thus cargo security36 also looms large as an impor- constrained environments requiring fewer inspection procedures. tant border management issue in which coordi- Indicators of red tape also illustrate a lack of nation is key. Although increased attention to coordination at the border and the burden it im- border security is understandable, it is impor- poses on private logistics operators. Operators in tant to be aware of the costs it imposes on the the highest performing countries typically deal private sector and thus its potential to inhibit with around half the number of government international trade. It is clearly preferable from agencies as operators in low performance coun- an economic welfare point of view for security tries (figure 2.4). The same is true for document requirements to be implemented in the most ef- requirements: two or three documents are typi- ficient, timely, and cost-effective way possible. cally required in the countries with the highest Results from the LPI survey suggest that LPI scores, versus five or six in those with the operators in countries with high-quality logis- lowest scores. The question of simplifying doc- tics environments appear to be relatively well umentation has always been high on the trade placed to adapt to new security requirements,37 facilitation agenda, reflected in the many initia- but the same is not true of operators in logistics tives to create single trade windows. Some busi- constrained environments (figure 2.5).38 ness environment indicators--such as the Doing Business indicators from the World Bank and Delays and governance the International Finance Corporation--give Sources of underperformance are not all as high weight to simplification in this area. endogenous to the supply chain as the quality Figure 2.4 Red tape affecting import and export transactions, by LPI quintile Import agencies Export agencies Import documents Export documents Number 6 5 4 3 2 1 0 Bottom quintile Fourth quintile Third quintile Second quintile Top quintile (lowest performance) (low performance) (average performance) (high performance) (highest performance) Source: Logistics performance survey data, 2009. 18 C o n n E C T i n G T o C o m p E T E 2 0 10 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 Compliance with overseas Table 2.5 Respondents indicating that they often or nearly security requirements compared always experience delay factors, by LPI quintile with 2005, by LPI quintile Percent of respondents About the same Easier More complicated Major Major delays from delays from Major delays Percent of respondents compulsory preshipment from maritime Informal warehousing inspection transshipment Theft payments 100 Bottom quintile 39 34 30 18 36 (lowest performance) Fourth quintile 32 23 29 19 38 75 (low performance) Third quintile 32 25 24 13 33 (average performance) 50 Second quintile 21 28 22 9 18 (high performance) Top quintile 2 6 4 2 3 (highest performance) 25 Source: Logistics performance survey data, 2009. 0 Nations Conference on Trade and Development Bottom Fourth Third Second Top quintile quintile quintile quintile quintile Liner Shipping Connectivity Index, which mea- sures how much a country has direct access to its Source: Logistics performance survey data, 2009. markets by container shipping (figure 2.6).39 of service or the costs and speed of the clearance Trade corridors processes. Other constraints, such as depen- Another case of dependence is that of land- dence on an indirect maritime route, may be locked countries, which depend on trade corri- out of the country's control. dors to access ports or regional trade partners. The LPI dataset provides more detailed in- Evidence from the LPI survey confirms that formation on the possible sources of delays not landlocked developing countries, most of them directly related to the performance of domestic in Africa or Central Asia (box 2.1), are typically services and agencies (table 2.5). The contrast be- at a disadvantage, whether in terms of time or tween the lowest and highest performing coun- costs (table 2.6). The state of trade corridor tries is striking across all five delay categories for infrastructure, rehabilitation needs, and, above which LPI data are available but particularly large all, sustainable resources for maintenance are in relation to three factors: compulsory ware- key concerns, especially for landlocked devel- housing, theft, and informal (corrupt) payments. oping countries. But of increasing concern are Delays and unexpected costs are commonplace in the transit procedures that make the movement low performance countries, with strong potential of goods possible without payment of duties or to hold back overall supply chain performance. excessive control in the transit country.40 The case of transshipment illuminates how a In rare cases facilitation efforts by the land- country's connectivity to its market through the locked countries may almost eliminate this hierarchical hub-and-spoke network of interna- handicap. For example, landlocked Uganda is the tional shipments can affect trade. Lack of con- third best performing low-income country in the nectivity primarily affects smaller countries and entire sample (66th place), even doing better than south-south trade. For example, Algerian and its transit country Kenya (99th). Uganda's story Tunisian respondents complain the most about is closely related to successful ongoing regional the impact of transshipment. Those countries integration efforts with neighboring countries are dependent on shipping to a European or Mo- and trade logistics and facilitation projects sup- roccan hub even to trade over short distances in ported by the World Bank Group and a number the Mediterranean. The LPI data on transship- of international donors and development agen- ment constraints are consistent with the United cies. In particular, the Malaba project--located C o n n E C T i n G T o C o m p E T E 2 0 10 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 Figure 2.6 Comparison of UNCTAD Liner Shipping Connectivity Index and the LPI measures of the transshipment constraint UNCTAD Liner Shipping Connectivity Index 2009 150 125 100 75 50 25 0 1 2 3 4 5 Delays in maritime transshipment (1 = worst; 5 = best) Source: Logistics performance survey data, 2009, and UNCTAD 2009. Table 2.6 Export distance, cost, and time in landlocked countries Africa Europe Coastal Landlocked Coastal Landlocked countries countries countries countries LPI score 2.46 2.39 3.68 3.58 Export time (days) 4.82 18.10 2.3 2.4 Import time (days) 7.21 6.99 2.2 3.6 Port or airport Export cost (US$) 1,810 2,867 696 1,227 Import cost (US$) 2,701 3,059 823 1,496 Export time (days) 4.13 4.67 2.3 6.0 Import time (days) 6.93 8.41 2.9 2.9 Land Export cost (US$) 2,125 4,000 593 1,704 Import cost (US$) 2,581 3,221 670 1,489 Note: African coastal countries: Benin, Cameroon, Côte d'Ivoire, Ghana, Kenya, Mozambique, Namibia, Nigeria, Senegal, Togo, Tanzania, and South Africa. African landlocked countries: Burkina Faso, Central African Republic, Chad, Ethiopia, Malawi, Mali, Rwanda, Uganda, and Zambia. European coastal countries: Belgium, Croatia, Germany, Italy, Netherlands, and Poland. European landlocked countries: Austria, Czech Republic, Hungary, Luxembourg, and Slovak Republic. Source: Logistics performance survey data, 2009. at the border of Kenya and Uganda and one of costs on the supply chain can be even larger than the busiest border posts in the region--is key to the direct costs of freight.42 Traders face a trade- understanding the improvements in Uganda's off between direct freight costs and reliability, logistics performance.41 depending on their commodity and the logistics performance of each country (figure 2.7). Reli- Supply chain reliability ability and logistics costs directly affect firm competitiveness and, for developing countries, The reliability of the supply chain is the most the potential to diversify from time-insensitive important aspect of logistics performance. A commodities. high degree of uncertainty means that opera- In Malawi, for example, exporters face dif- tors have to adopt costly hedging strategies, such ferent trade-offs between direct transportation as maintaining relatively high inventory levels. costs and costs induced by a long supply chain. Recent research suggests that these induced For sugar--an inexpensive and time-insensitive 20 C o n n E C T i n G T o C o m p E T E 2 0 10 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 2.1 Trade logistics and facilitation in landlocked Central Asia Central Asia is one of the two large concentrations of landlocked 2010 LPI scores of selected Central Asian countries: developing countries in the world. the nine landlocked countries 2010 LPI "outside view" versus "Central Asian view" in Central Asia have a population of more than 70 million people. For obvious reasons, these landlocked developing countries are Freight forwarders particularly dependent on the performance of their trade and transit 2010 LPI Kazakh Uzbek Kyrgyz connections. Since the Almaty Declaration on landlocked develop- China 3.49 3.31 2.91 3.57 ing countries at the Almaty Ministerial Conference in October 2003, Russian Federation 2.61 3.64 2.97 3.22 assistance has increased substantially, including corridor projects, Uzbekistan 2.79 3.07 -- 2.75 customs reform, multimodal transport, railroad projects, and re- Tajikistan 2.35 3.01 2.64 2.66 structuring airport and aviation services. the World Bank is increas- Kyrgyz Rep. 2.62 3.16 2.68 -- ingly linking lending with advisory activities to stimulate change in Kazakhstan 2.83 -- 2.63 3.24 trade facilitation, customs, and transit systems. In parallel with the web-based LPI survey, about 300 operators Source: The Central Asian data was provided by the USAID Regional Trade Liberalization and Customs Project located in Bishkek, Kyrgyz Republic. A team of researchers was trained in the were interviewed using the LPI questionnaire with a focus on scoring survey methodology and helped collect data through face-to-face interviews of international their countries and other countries in the region. this subsurvey pro- freight forwarding agencies' personnel. vided not only information on regional bottlenecks but also a com- parison between regional assessments and the global ranking. the most notable difference between observations from Cen- Interesting findings emerge when LPI data collected in Central tral Asia and those from "the rest of the world" concern the Russian Asia are compared with LPI data received from outside Central Asia. Federation and tajikistan, ranked 94th and 131st in the 2010 LPI, the LPI assessment from outside Central Asia is lower than the respectively. If scores given by Central Asian respondents were scores collected within the region. Kazakh freight forwarders in par- used, Russia would rank 20th to 40th, and tajikistan 52nd to 90th ticular see the regional operational environment as much easier. in the 2010 LPI (box table): illustrating the impact of long-standing China's regional score is the only exception. Uzbek freight for- relationships and a common language and legacy facilitating trade warders rate China significantly lower than do LPI respondents from between the Commonwealth of Independent States (CIS) countries. outside the region or from Kazakhstan or Kyrgyzstan. But Kyrgyz Conversely, the absence of these ties and differences in trade re- freight forwarders rate China higher than its LPI index score, indicat- gimes create impediments for trade between CIS countries and ing the closer trade relations between these two countries. many other parts of the world. Figure 2.7 Structure of logistics costs performance, illustrated by a stark difference faced by traders in reliability between countries at the bottom and top ends of the LPI ranking (figure 2.8). In Direct costs Induced costs the highest performing countries, import and Cost of nondelivery or Freight and other costs associated with shipment avoidance of nondelivery, export shipments nearly always arrive on sched- storage, delivery ule. In low performing countries only about half Source: Authors. of survey respondents feel that this condition is fulfilled. In the fourth through second quintiles commodity--exporters prefer to save money by there is also a considerable gap in performance using a very unreliable railway to intermediate between exports and imports: the reliability of storage in the small and not-very-productive the export supply chain appears to be substan- port of Nacala in northern Mozambique. But tially higher. Addressing sources of unexpected garment manufacturers participating in the delays should therefore be an important aspect preferential African Growth and Opportunity of logistics upgrading in low performance coun- Act program with the United States pay the cost tries. Delays can be caused by the unpredictabil- of trucking to the distant but efficient ports of ity of the clearance process itself (see figure 2.8), Durban or the Cape in South Africa (2,500 to delays in inland transit, or the low reliability of 5,000 km and up to US$ 10,000) to use as di- some services. rect a maritime connection as possible.43 Delay in and predictability of actual delivery As highlighted in the 2007 LPI report, may be more important than average import/ delays tend to rise steeply with lower logistics export lead time in understanding logistics C o n n E C T i n G T o C o m p E T E 2 0 10 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 Figure 2.8 Respondents indicating shipments are often or nearly always Delay in and predictability cleared and delivered as scheduled, by LPI quintile of actual delivery may Imports Exports be more important than Percent of respondents average import/export 100 lead time in understanding logistics performance 75 50 25 0 Bottom quintile Fourth quintile Third quintile Second quintile Top quintile (lowest performance) (low performance) (average performance) (high performance) (highest performance) Source: Logistics performance survey data, 2009. Figure 2.9 Shipments not meeting company quality criteria, by LPI quintile Percent of shipments 40 30 20 10 0 Bottom quintile Fourth quintile Third quintile Second quintile Top quintile (lowest performance) (low performance) (average performance) (high performance) (highest performance) Source: Logistics performance survey data, 2009. performance. Surprisingly, the lead times re- shipments do not meet company quality crite- vealed by this survey are relatively lower--at ria, a proportion more than doubled in the bot- least in developing countries--than informa- tom quintile. The most important quality cri- tion previously available: lead time to import/ terion in freight forwarding is delivery within export is usually much shorter than typical the promised time window. Another is the share ocean shipping time to distant markets. of shipments that have no errors in cargo com- Time and cost are not the only dimensions position or in documentation. In high perform- in which reliability is important. Quality is also ing countries the acceptable quality window is a significant consideration for private sector much narrower and tolerance for quality defects operators and their clients, with a large gap be- is much lower than in low performing countries, tween high and low performers (figure 2.9). In magnifying the actual gap in quality shown in the top LPI quintile, fewer than 15 percent of figure 2.9. 22 C o n n E C T i n G T o C o m p E T E 2 0 10 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 policy priorities in trade SECTion facilitation and logistics Priorities for trade logistics and facilitation are Using these categories, and based on the set at the country or regional level. However, analysis of various performance factors, a rough because the robustness of a supply chain depends intuitive typology of typical constraints faced on its weakest link, the benefits of progress in by these four groups of countries can be identi- one area may not be reaped until impediments fied (table 3.1). to trade in other areas are removed as well. Achieving practical trade or transport fa- The impediments observed in logistics per- cilitation reform has become a key development formance show similar patterns in countries ac- priority in recent years. Traditional efforts to fa- cording to their progress on reform. Following cilitate trade have focused on supporting trade the typology proposed in the 2007 Connecting infrastructure investment and modernizing cus- to Compete report and section 1 of this report toms, notably through the use of information (see figure 1.2), countries belong to one of four technology. However, the focus needs to be ex- broad groups: tended to new areas of intervention highlighted · Logistics friendly (top quintile)--high in this report, such as the market for logistics performers, for the most part high- services, the coordination of border processes, income countries. and the case for joint cross-border initiatives, · Consistent performers (second quintile)-- especially to serve landlocked countries. typically emerging economies with a Progression from the logistics unfriendly strong logistics constituency. group to the partial performers group requires · Partial performers (third and fourth a very large increase in a country's LPI score-- quintile)--typically low or middle- a trade logistics "big push" in which a country income countries that have not yet con- advances simultaneously on a number of fronts. sistently addressed all the factors of non- The gap between partial and consistent per- performance. formers is considerably narrower, with passage · Logistics unfriendly (bottom quintile)-- from one group to the other depending on the severely logistically constrained (least steady design and implementation of reforms in developed countries). weak areas. Moving from consistent performer Table 3.1 Typology of countries according to impediments to logistics performance Logistics performance Logistics Partial Consistent Logistics impediments unfriendly performers performers friendly Trade-related Serious constraint Major constraint Capacity bottlenecks to Few bottlenecks, infrastructure support trade expansion except rail Quality and supply of Low development Weak market Emergence of a diversified Industry leaders logistics services supply of logistics services Core customs Often still a major Potentially a major No longer a constraint Best practice modernization constraint constraint Integration of border Comparatively a Major constraint Typically the final Lesser problem management lesser problem binding constraint Regional facilitation Main issue for landlocked Problematic Depends on the region Streamlined and transit least developed countries Source: Logistics performance survey data, 2009. C o n n E C T i n G T o C o m p E T E 2 0 10 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 Many improvements in to logistics friendly again requires a substantial Improving the quality of trade trade facilitation have improvement, including development and use of and transport services state-of-the-art trade facilitation. contributed to the overall Even though moving forward simultane- Improving the quality of logistics and trade- convergence process ously on different policy fronts is challenging, supporting services is also a key element of the many improvements in trade facilitation have new agenda, recognizing that high quality is contributed to the overall convergence pro- central to achieving effective trade and trans- cess.44 Some of these efforts stem from reforms port facilitation and associated regulatory implemented at the country level. Others re- reforms. Recent trucking surveys indicate that quire bilateral and regional cooperation schemes freight cost differentials among countries often for trade facilitation reform to be effective, such result from inefficiencies in the market structure as land border trade and transit trade for land- for transport providers and from regulatory bar- locked countries. riers preventing open competition.45 Although the problem is recognized, gov- Infrastructure ernments and the international development community have limited experience implement- The LPI survey data shows encouraging trends, ing reforms to improve private logistics services. reflecting successful trade facilitation projects. Therefore it is essential for the new trade facili- In port management, the separation of com- tation agenda to focus on providing meaningful mercial activities from statutory and regulatory incentives to encourage high quality and reliable missions of the port authority is now the norm services, most notably through eliminating bar- in developing countries, with many examples riers to entry. of successful private sector participation in Tackling this agenda presents many new container terminal operations. Automation challenges, as a range of political economy con- of customs procedures is now commonplace, siderations may not favor changes that depart with few countries still without some form of from current business practices or that limit his- automated customs system. But logistics pro- torical rent seeking activities. In even the most in- fessionals also confirmed that the quantity and efficient environments, some stakeholders stand performance of infrastructure, especially roads to lose from reforms. In many developing coun- and ports, remain important factors in virtu- tries, for example, customs broker licenses are a ally all developing countries--and, in relative de facto privilege for retired customs officers, and terms, probably even more so in middle-income fragmented informal trucking regimes are often countries. maintained to meet social goals even when the The massive distrust of railways by freight long-term economic impact is negative. forwarders is not a surprise, but it is a problem as the world seeks to reduce carbon emissions Coordinating border management by shifting to environmentally friendly freight modes. So far there are few examples of efficient The trade facilitation and logistics agenda must container movements by rail that compete with go beyond customs. LPI data suggest that cus- roads. Price signals alone are unlikely to encour- toms procedures are already converging, with age a substantial shift toward rail freight beyond pre-arrival clearance, online submission, and captive markets such as bulk goods. Major qual- post-clearance audit now widely available (see itative changes are needed to bridge the gap of table 2.3). This development undoubtedly owes logistics performance, quality, and reliability in something to the gradual dissemination of rail services. Because these improvements often World Customs Organization/World Trade hinge on institutional changes in rail transport Organization principles, supported by technical management and operations, railway reform is assistance and capacity building. becoming an important part of the transport But customs is not the only agency involved sector development agenda. in border management. Two other key players 24 C o n n E C T i n G T o C o m p E T E 2 0 10 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 are quality and standards inspection agencies themselves. These cases require urgent atten- Delays and unexpected and health, sanitary, and phytosanitary inspec- tion from the international community to help problems in quality tion agencies. Data from the LPI survey show reduce logistics costs and develop sustainable and standards and in that in all LPI performance groups customs is export-oriented activities. consistently rated as providing a better level of Efforts should target not only the corridor health and sanitary and service than the other agencies (see table 1.6). infrastructure but also the transit regime or re- phytosanitary areas have Delays and unexpected problems in quality and gional agreements. These arrangements--often just as much potential standards and in health and sanitary and phyto- designed decades ago with state intervention sanitary areas have just as much potential as cus- in logistics organization--are often at odds as customs to create toms to create supply chain problems and thus with the current paradigm of service quality supply chain problems poor overall logistics performance. and international logistics networks. Exten- Taking a more holistic approach to the clear- sive changes may be needed. But new regimes ance of goods is a key element of the new agenda. and agreements will depend also on progress in It will require better collaboration among all the other dimensions, especially services and border management agencies--including stan- border management, and may face the same dards, sanitary, phytosanitary, transport, and obstacles.46 veterinary agencies--and the introduction of modern approaches to regulatory compliance. * * * It matters little if customs employs high levels of Both "new" and "old"-style reforms, as well automation and adopts principles of risk man- as investments in improving logistics perfor- agement allowing them to selectively examine mance, need reliable indicators to inform the goods if other government agencies are not auto- dialogue among policymakers, the private sec- mated and continue to routinely inspect all im- tor, and other stakeholders and to monitor ported goods regardless of the risk they pose. impact. Although the LPI and its components guarantee international comparability, they Regional facilitation: making are coarse-grained indicators. They need to be trade corridors work better complemented by efforts in countries to develop logistics-related indicators that are more specific Many of the economies in the logistics --for example, port indicators for a facility, cor- unfriendly group are small and are often land- ridor performance indicators for a route, or mea- locked and post-conflict, heavily dependent surement of logistics costs for certain activities. on trade and transit systems set up with bigger An increasing number of countries are begin- neighbors--not always good logistics performers ning to do so.47 C o n n E C T i n G T o C o m p E T E 2 0 10 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 References APEC (Asia-Pacific Economic Cooperation) Secretariat. 2009. indicators, 1996­2008." Policy Research Working Paper 4978. 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C o n n E C T i n G T o C o m p E T E 2 0 10 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 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 Rank bound bound Score bound bound performer Rank Score Rank Score Rank Score Rank Score Rank Score Rank Score Germany 1 4 1 4.11 4.07 4.16 100.0 3 4.00 1 4.34 9 3.66 4 4.14 4 4.18 3 4.48 Singapore 2 4 1 4.09 4.01 4.17 99.2 2 4.02 4 4.22 1 3.86 6 4.12 6 4.15 14 4.23 Sweden 3 10 1 4.08 3.90 4.25 98.8 5 3.88 10 4.03 2 3.83 2 4.22 3 4.22 11 4.32 Netherlands 4 4 1 4.07 4.00 4.14 98.5 4 3.98 2 4.25 11 3.61 3 4.15 9 4.12 6 4.41 Luxembourg 5 20 1 3.98 3.68 4.28 95.7 1 4.04 9 4.06 7 3.67 21 3.67 19 3.92 1 4.58 Switzerland 6 17 2 3.97 3.84 4.11 95.5 12 3.73 6 4.17 25 3.32 1 4.32 1 4.27 15 4.20 Japan 7 10 5 3.97 3.91 4.03 95.2 10 3.79 5 4.19 12 3.55 7 4.00 8 4.13 13 4.26 United Kingdom 8 11 5 3.95 3.89 4.02 94.9 11 3.74 16 3.95 8 3.66 9 3.92 7 4.13 8 4.37 Belgium 9 14 5 3.94 3.86 4.02 94.5 9 3.83 12 4.01 26 3.31 5 4.13 2 4.22 12 4.29 Norway 10 19 1 3.93 3.72 4.14 94.2 6 3.86 3 4.22 24 3.35 13 3.85 10 4.10 10 4.35 Ireland 11 19 5 3.89 3.74 4.05 92.9 18 3.60 19 3.76 5 3.70 16 3.82 13 4.02 4 4.47 Finland 12 19 5 3.89 3.74 4.03 92.6 7 3.86 8 4.08 19 3.41 10 3.92 11 4.09 25 4.08 Hong Kong SAR, China 13 18 6 3.88 3.78 3.98 92.4 8 3.83 13 4.00 6 3.67 14 3.83 17 3.94 26 4.04 Canada 14 18 7 3.87 3.78 3.97 92.3 13 3.71 11 4.03 32 3.24 8 3.99 15 4.01 5 4.41 United States 15 18 11 3.86 3.82 3.89 91.7 15 3.68 7 4.15 36 3.21 11 3.92 5 4.17 16 4.19 Denmark 16 20 5 3.85 3.65 4.04 91.4 19 3.58 15 3.99 16 3.46 15 3.83 18 3.94 7 4.38 France 17 18 11 3.84 3.78 3.91 91.3 17 3.63 14 4.00 28 3.30 12 3.87 14 4.01 9 4.37 Australia 18 19 9 3.84 3.73 3.95 91.2 14 3.68 18 3.78 3 3.78 17 3.77 20 3.87 18 4.16 Austria 19 25 5 3.76 3.53 4.00 88.7 20 3.49 21 3.68 4 3.78 20 3.70 22 3.83 23 4.08 Taiwan, China 20 25 16 3.71 3.56 3.85 86.9 25 3.35 22 3.62 10 3.64 22 3.65 12 4.04 30 3.95 New Zealand 21 40 3 3.65 3.22 4.08 85.0 16 3.64 26 3.54 23 3.36 26 3.54 25 3.67 17 4.17 Italy 22 25 20 3.64 3.57 3.72 84.9 23 3.38 20 3.72 37 3.21 18 3.74 21 3.83 24 4.08 Korea, Rep. 23 25 21 3.64 3.57 3.70 84.7 26 3.33 23 3.62 15 3.47 23 3.64 23 3.83 28 3.97 United Arab Emirates 24 25 20 3.63 3.54 3.72 84.5 21 3.49 17 3.81 14 3.48 27 3.53 28 3.58 33 3.94 Spain 25 25 20 3.63 3.52 3.73 84.3 22 3.47 25 3.58 48 3.11 24 3.62 16 3.96 21 4.12 Czech Republic 26 32 21 3.51 3.36 3.66 80.5 27 3.31 34 3.25 17 3.42 35 3.27 27 3.60 19 4.16 China 27 28 26 3.49 3.45 3.53 79.9 32 3.16 27 3.54 27 3.31 29 3.49 30 3.55 36 3.91 South Africa 28 36 24 3.46 3.28 3.63 78.9 31 3.22 29 3.42 31 3.26 25 3.59 24 3.73 57 3.57 Malaysia 29 35 26 3.44 3.29 3.59 78.4 36 3.11 28 3.50 13 3.50 31 3.34 41 3.32 37 3.86 Poland 30 36 26 3.44 3.25 3.62 78.2 34 3.12 43 2.98 35 3.22 36 3.26 33 3.45 2 4.52 Israel 31 42 24 3.41 3.19 3.63 77.5 35 3.12 24 3.60 42 3.17 28 3.50 38 3.39 46 3.77 Bahrain 32 40 26 3.37 3.22 3.53 76.2 37 3.05 30 3.36 54 3.05 30 3.36 26 3.63 39 3.85 Lebanon 33 51 21 3.34 3.02 3.65 75.1 29 3.27 41 3.05 69 2.87 19 3.73 49 3.16 29 3.97 Portugal 34 43 26 3.34 3.16 3.51 75.0 28 3.31 35 3.17 59 3.02 33 3.31 39 3.38 40 3.84 Thailand 35 43 31 3.29 3.15 3.43 73.6 39 3.02 36 3.16 30 3.27 39 3.16 37 3.41 48 3.73 Kuwait 36 49 28 3.28 3.09 3.47 73.2 38 3.03 32 3.33 47 3.12 43 3.11 34 3.44 52 3.70 Latvia 37 51 28 3.25 3.02 3.48 72.2 40 2.94 49 2.88 21 3.38 46 2.96 29 3.55 49 3.72 Slovak Republic 38 51 28 3.24 3.02 3.46 71.9 47 2.79 42 3.00 57 3.05 41 3.15 31 3.54 34 3.92 Turkey 39 49 33 3.22 3.08 3.37 71.4 46 2.82 39 3.08 44 3.15 37 3.23 56 3.09 31 3.94 Saudi Arabia 40 49 33 3.22 3.09 3.36 71.3 43 2.91 33 3.27 82 2.80 32 3.33 42 3.32 45 3.78 Brazil 41 47 35 3.20 3.10 3.29 70.6 82 2.37 37 3.10 65 2.91 34 3.30 36 3.42 20 4.14 Iceland 42 51 32 3.20 3.02 3.37 70.5 30 3.22 31 3.33 50 3.10 42 3.14 53 3.14 84 3.27 28 C o n n E C T i n G T o C o m p E T E 2 0 10 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 Logistics International quality and Tracking and LPI rank LPI score Customs Infrastructure shipments competence tracing Timeliness % of Lower Upper Lower Upper highest Rank bound bound Score bound bound performer Rank Score Rank Score Rank Score Rank Score Rank Score Rank Score Estonia 43 58 28 3.16 2.85 3.47 69.3 33 3.14 53 2.75 40 3.17 38 3.17 65 2.95 53 3.68 Philippines 44 51 35 3.14 2.99 3.29 68.8 54 2.67 64 2.57 20 3.40 47 2.95 44 3.29 42 3.83 Lithuania 45 56 32 3.13 2.89 3.38 68.5 48 2.79 54 2.72 38 3.19 56 2.85 46 3.27 35 3.92 Cyprus 46 52 36 3.13 2.97 3.29 68.4 42 2.92 46 2.94 45 3.13 58 2.82 32 3.51 75 3.44 India 47 51 41 3.12 3.02 3.21 67.9 52 2.70 47 2.91 46 3.13 40 3.16 52 3.14 56 3.61 Argentina 48 51 43 3.10 3.01 3.19 67.4 56 2.63 52 2.75 43 3.15 45 3.03 51 3.15 43 3.82 Chile 49 55 38 3.09 2.95 3.24 67.3 41 2.93 50 2.86 94 2.74 48 2.94 40 3.33 44 3.80 Mexico 50 55 44 3.05 2.95 3.15 65.7 62 2.55 44 2.95 77 2.83 44 3.04 45 3.28 54 3.66 Panama 51 64 39 3.02 2.82 3.23 65.0 49 2.76 61 2.63 71 2.87 57 2.83 47 3.26 47 3.76 Hungary 52 86 35 2.99 2.66 3.31 63.8 45 2.83 38 3.08 86 2.78 53 2.87 71 2.87 62 3.52 Vietnam 53 69 44 2.96 2.78 3.14 100.0 53 2.68 66 2.56 58 3.04 51 2.89 55 3.10 76 3.44 Greece 54 86 38 2.96 2.67 3.24 99.2 68 2.48 45 2.94 73 2.85 65 2.69 43 3.31 67 3.49 Qatar 55 88 37 2.95 2.65 3.25 98.8 99 2.25 51 2.75 63 2.92 81 2.57 57 3.09 22 4.09 Costa Rica 56 81 50 2.91 2.72 3.09 98.5 58 2.61 67 2.56 105 2.64 59 2.80 54 3.13 51 3.71 Slovenia 57 82 51 2.87 2.71 3.04 95.7 60 2.59 58 2.65 76 2.84 50 2.90 50 3.16 103 3.10 Senegal 58 112 39 2.86 2.50 3.23 63.1 70 2.45 59 2.64 90 2.75 63 2.73 58 3.08 63 3.52 Romania 59 101 48 2.84 2.58 3.11 62.8 85 2.36 99 2.25 34 3.24 66 2.68 66 2.90 73 3.45 Oman 60 111 44 2.84 2.52 3.16 62.6 24 3.38 40 3.06 138 2.31 108 2.37 145 2.04 32 3.94 Tunisia 61 118 41 2.84 2.46 3.21 61.3 73 2.43 65 2.56 22 3.36 109 2.36 102 2.56 58 3.57 Kazakhstan 62 99 50 2.83 2.59 3.08 60.2 79 2.38 57 2.66 29 3.29 73 2.60 85 2.70 86 3.25 Bulgaria 63 105 47 2.83 2.55 3.12 59.8 65 2.50 94 2.30 52 3.07 55 2.85 62 2.96 95 3.18 Malta 64 114 44 2.82 2.49 3.16 59.1 55 2.65 48 2.89 64 2.91 52 2.89 104 2.56 117 3.02 Dominican Republic 65 93 51 2.82 2.61 3.03 59.1 63 2.51 90 2.34 107 2.59 100 2.42 48 3.17 38 3.85 Uganda 66 88 52 2.82 2.64 3.00 58.9 44 2.84 89 2.35 60 3.02 76 2.59 114 2.45 60 3.52 Peru 67 87 56 2.80 2.66 2.94 58.9 64 2.50 56 2.66 93 2.75 71 2.61 70 2.89 79 3.38 Uzbekistan 68 94 53 2.79 2.60 2.98 58.8 107 2.20 70 2.54 83 2.79 89 2.50 63 2.96 50 3.72 Benin 69 111 50 2.79 2.52 3.05 58.6 80 2.38 73 2.48 103 2.65 70 2.64 60 3.07 66 3.49 Honduras 70 82 58 2.78 2.69 2.87 58.5 76 2.39 93 2.31 101 2.67 82 2.57 74 2.83 41 3.83 Ecuador 71 88 57 2.77 2.65 2.90 58.4 92 2.32 82 2.38 72 2.86 72 2.60 72 2.84 59 3.55 Colombia 72 94 56 2.77 2.60 2.95 57.9 66 2.50 62 2.59 112 2.54 61 2.75 82 2.75 64 3.52 Macedonia, FYR 73 90 56 2.77 2.62 2.93 57.5 61 2.55 68 2.55 79 2.83 60 2.76 76 2.82 105 3.10 Croatia 74 112 51 2.77 2.51 3.03 57.4 57 2.62 87 2.36 62 2.97 87 2.53 75 2.82 91 3.22 Indonesia 75 96 56 2.76 2.60 2.92 57.1 72 2.43 69 2.54 80 2.82 92 2.47 80 2.77 69 3.46 Paraguay 76 91 57 2.75 2.62 2.89 57.0 84 2.37 78 2.44 70 2.87 78 2.59 83 2.72 72 3.46 Uruguay 77 91 57 2.75 2.62 2.89 57.0 51 2.71 63 2.58 88 2.77 74 2.59 79 2.78 112 3.06 Bahamas, The 78 104 56 2.75 2.57 2.92 56.9 78 2.38 81 2.40 99 2.69 64 2.69 77 2.81 71 3.46 Bangladesh 79 94 57 2.74 2.60 2.88 56.8 90 2.33 72 2.49 61 2.99 96 2.44 92 2.64 70 3.46 Syrian Arab Republic 80 104 56 2.74 2.56 2.92 56.5 83 2.37 75 2.45 68 2.87 75 2.59 95 2.63 74 3.45 Jordan 81 104 56 2.74 2.57 2.91 56.3 93 2.31 55 2.69 49 3.11 90 2.49 133 2.33 78 3.39 Mauritius 82 131 48 2.72 2.34 3.10 56.3 50 2.71 96 2.29 33 3.24 97 2.43 100 2.57 127 2.91 Serbia 83 133 50 2.69 2.32 3.05 56.1 108 2.19 95 2.30 18 3.41 84 2.55 88 2.67 137 2.80 Venezuela, RB 84 105 67 2.68 2.54 2.81 56.0 133 2.06 76 2.44 56 3.05 85 2.53 73 2.84 116 3.05 Congo, Dem. Rep. 85 147 43 2.68 2.19 3.16 55.9 59 2.60 98 2.27 109 2.56 49 2.93 119 2.43 94 3.20 El Salvador 86 112 60 2.67 2.51 2.84 55.8 67 2.48 77 2.44 148 2.18 68 2.66 87 2.68 55 3.63 Bosnia and Herzegovina 87 125 56 2.66 2.40 2.93 55.3 89 2.33 105 2.22 51 3.10 116 2.30 86 2.68 96 3.18 C o n n E C T i n G T o C o m p E T E 2 0 10 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 Logistics International quality and Tracking and LPI rank LPI score Customs Infrastructure shipments competence tracing Timeliness % of Lower Upper Lower Upper highest Rank bound bound Score bound bound performer Rank Score Rank Score Rank Score Rank Score Rank Score Rank Score Madagascar 88 126 56 2.66 2.38 2.93 54.1 87 2.35 60 2.63 53 3.06 102 2.40 109 2.51 128 2.90 Azerbaijan 89 120 61 2.64 2.44 2.84 53.9 117 2.14 104 2.23 55 3.05 91 2.48 91 2.65 100 3.15 Guatemala 90 120 64 2.63 2.43 2.83 53.8 91 2.33 84 2.37 150 2.16 62 2.74 84 2.71 61 3.52 Kyrgyz Republic 91 127 59 2.62 2.38 2.86 53.7 71 2.44 118 2.09 39 3.18 107 2.37 132 2.33 106 3.10 Egypt, Arab Rep. 92 143 52 2.61 2.24 2.99 53.4 122 2.11 106 2.22 110 2.56 54 2.87 101 2.56 81 3.31 Georgia 93 115 78 2.61 2.48 2.75 53.2 81 2.37 109 2.17 95 2.73 83 2.57 89 2.67 111 3.08 Russian Federation 94 112 83 2.61 2.51 2.71 52.6 115 2.15 83 2.38 96 2.72 88 2.51 97 2.60 88 3.23 Tanzania 95 124 68 2.60 2.41 2.79 52.4 74 2.42 129 2.00 85 2.78 105 2.38 103 2.56 80 3.33 Togo 96 134 57 2.60 2.31 2.89 52.0 75 2.40 142 1.82 126 2.42 94 2.45 35 3.42 118 3.02 Guinea 97 147 52 2.60 2.17 3.02 51.8 88 2.34 116 2.10 124 2.43 67 2.68 68 2.89 104 3.10 Haiti 98 126 68 2.59 2.38 2.80 51.8 121 2.12 108 2.17 41 3.17 93 2.46 120 2.43 119 3.02 Kenya 99 126 68 2.59 2.39 2.79 51.6 103 2.23 113 2.14 75 2.84 122 2.28 69 2.89 113 3.06 Nigeria 100 124 74 2.59 2.40 2.77 51.4 109 2.17 80 2.43 74 2.84 95 2.45 116 2.45 107 3.10 Yemen, Rep. 101 152 43 2.58 2.01 3.16 51.4 69 2.46 88 2.35 142 2.24 110 2.35 94 2.63 68 3.48 Ukraine 102 140 57 2.57 2.26 2.89 51.2 135 2.02 79 2.44 84 2.79 77 2.59 112 2.49 114 3.06 Iran, Islamic Rep. 103 124 80 2.57 2.41 2.74 51.1 106 2.22 86 2.36 121 2.44 69 2.65 110 2.50 85 3.26 Moldova 104 120 83 2.57 2.43 2.71 51.0 124 2.11 123 2.05 78 2.83 132 2.17 61 3.00 97 3.17 Cameroon 105 140 59 2.55 2.25 2.84 49.7 123 2.11 115 2.10 100 2.69 86 2.53 98 2.60 99 3.16 Niger 106 140 66 2.54 2.26 2.82 49.4 132 2.06 97 2.28 102 2.66 98 2.42 115 2.45 83 3.28 Nicaragua 107 133 78 2.54 2.33 2.75 49.3 101 2.24 102 2.23 106 2.63 114 2.31 107 2.51 92 3.21 Jamaica 108 147 54 2.53 2.11 2.96 49.2 140 2.00 121 2.07 81 2.82 112 2.32 59 3.07 134 2.82 Côte d'Ivoire 109 138 69 2.53 2.28 2.79 49.2 114 2.16 85 2.37 122 2.44 80 2.57 64 2.95 140 2.73 Pakistan 110 131 83 2.53 2.34 2.72 49.1 134 2.05 120 2.08 66 2.91 120 2.28 93 2.64 110 3.08 Armenia 111 133 82 2.52 2.32 2.73 48.9 125 2.10 92 2.32 123 2.43 79 2.59 139 2.26 77 3.40 Bolivia 112 129 89 2.51 2.37 2.66 48.5 97 2.26 100 2.24 115 2.53 104 2.38 127 2.38 93 3.20 Gambia, The 113 143 79 2.49 2.24 2.74 48.0 77 2.38 110 2.17 113 2.54 106 2.37 137 2.27 101 3.15 Turkmenistan 114 140 83 2.49 2.26 2.72 47.9 119 2.14 101 2.24 137 2.31 111 2.34 126 2.38 65 3.51 Chad 115 147 67 2.49 2.18 2.80 47.9 96 2.27 126 2.00 91 2.75 145 2.04 96 2.62 102 3.14 Congo, Rep. 116 147 60 2.48 2.11 2.84 47.4 137 2.02 151 1.62 132 2.33 101 2.42 131 2.33 27 4.00 Ghana 117 147 68 2.47 2.15 2.79 47.3 86 2.35 71 2.52 129 2.38 99 2.42 108 2.51 142 2.67 Lao PDR 118 138 89 2.46 2.28 2.64 47.0 113 2.17 132 1.95 97 2.70 137 2.14 113 2.45 89 3.23 Albania 119 145 83 2.46 2.22 2.70 46.8 129 2.07 112 2.14 104 2.64 103 2.39 124 2.39 120 3.01 Comoros 120 147 82 2.45 2.16 2.73 46.5 142 1.96 146 1.76 108 2.56 124 2.26 78 2.79 90 3.23 Montenegro 121 147 88 2.43 2.20 2.66 45.9 112 2.17 74 2.45 114 2.54 113 2.32 117 2.44 145 2.65 Gabon 122 147 84 2.41 2.15 2.68 45.4 102 2.23 117 2.09 139 2.29 115 2.31 90 2.67 130 2.87 Ethiopia 123 149 82 2.41 2.10 2.73 45.4 120 2.13 145 1.77 89 2.76 136 2.14 67 2.89 144 2.65 Papua New Guinea 124 146 92 2.41 2.21 2.62 45.3 138 2.02 135 1.91 111 2.55 131 2.20 118 2.43 87 3.24 Maldives 125 147 91 2.40 2.19 2.62 45.1 98 2.25 111 2.16 125 2.42 117 2.29 121 2.42 133 2.83 Djibouti 126 147 91 2.39 2.17 2.62 44.8 100 2.25 91 2.33 116 2.50 133 2.17 123 2.42 143 2.67 Liberia 127 147 90 2.38 2.13 2.64 44.4 94 2.28 127 2.00 133 2.33 134 2.16 125 2.38 109 3.08 Bhutan 128 149 87 2.38 2.09 2.67 44.3 118 2.14 141 1.83 120 2.44 127 2.24 105 2.54 122 2.99 Cambodia 129 147 100 2.37 2.15 2.59 44.0 95 2.28 114 2.12 146 2.19 118 2.29 111 2.50 132 2.84 Algeria 130 144 116 2.36 2.23 2.49 43.7 141 1.97 122 2.06 98 2.70 129 2.24 138 2.26 136 2.81 Tajikistan 131 147 112 2.35 2.17 2.52 43.2 147 1.90 128 2.00 127 2.42 125 2.25 141 2.25 98 3.16 Libya 132 152 88 2.33 2.01 2.66 42.8 116 2.15 107 2.18 140 2.28 121 2.28 143 2.08 124 2.98 30 C o n n E C T i n G T o C o m p E T E 2 0 10 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 Logistics International quality and Tracking and LPI rank LPI score Customs Infrastructure shipments competence tracing Timeliness % of Lower Upper Lower Upper highest Rank bound bound Score bound bound performer Rank Score Rank Score Rank Score Rank Score Rank Score Rank Score Myanmar 133 149 105 2.33 2.09 2.56 42.7 146 1.94 134 1.92 131 2.37 148 2.01 129 2.36 82 3.29 Botswana 134 153 85 2.32 1.96 2.68 42.3 126 2.09 119 2.09 152 1.91 119 2.29 99 2.59 123 2.99 Solomon Islands 135 147 120 2.31 2.16 2.46 42.0 127 2.08 103 2.23 147 2.18 123 2.27 147 2.03 115 3.05 Mozambique 136 152 98 2.29 1.99 2.60 41.5 145 1.95 124 2.04 87 2.77 130 2.20 135 2.28 150 2.40 Sri Lanka 137 152 105 2.29 2.02 2.56 41.4 143 1.96 138 1.88 117 2.48 142 2.09 142 2.23 125 2.98 Zambia 138 153 67 2.28 1.76 2.81 41.2 111 2.17 140 1.83 128 2.41 149 2.01 130 2.35 131 2.85 Mali 139 153 92 2.27 1.92 2.62 40.7 128 2.08 125 2.00 149 2.17 138 2.13 134 2.31 129 2.90 Guyana 140 149 121 2.27 2.10 2.44 40.7 136 2.02 130 1.99 136 2.31 126 2.25 136 2.28 141 2.70 Mongolia 141 150 121 2.25 2.05 2.45 40.2 149 1.81 133 1.94 119 2.46 128 2.24 122 2.42 147 2.55 Angola 142 151 119 2.25 2.03 2.46 40.1 151 1.75 149 1.69 130 2.38 147 2.02 106 2.54 121 3.01 Afghanistan 143 150 122 2.24 2.06 2.42 39.9 104 2.22 139 1.87 141 2.24 141 2.09 128 2.37 146 2.61 Fiji 144 152 118 2.24 2.00 2.47 39.7 144 1.95 131 1.98 118 2.48 139 2.11 151 1.96 135 2.82 Burkina Faso 145 153 83 2.23 1.75 2.70 39.4 105 2.22 137 1.89 153 1.73 146 2.02 81 2.77 138 2.77 Sudan 146 153 105 2.21 1.84 2.57 38.7 139 2.02 144 1.78 151 2.11 135 2.15 148 2.02 108 3.09 Nepal 147 152 126 2.20 2.01 2.40 38.6 130 2.07 143 1.80 143 2.21 143 2.07 140 2.26 139 2.74 Iraq 148 153 132 2.11 1.87 2.34 35.5 131 2.07 147 1.73 144 2.20 140 2.10 150 1.96 148 2.49 Guinea-Bissau 149 154 112 2.10 1.69 2.52 35.4 148 1.89 153 1.56 92 2.75 153 1.56 153 1.71 126 2.91 Cuba 150 153 137 2.07 1.84 2.29 34.3 150 1.79 136 1.90 135 2.32 151 1.88 146 2.03 149 2.41 Rwanda 151 153 132 2.04 1.73 2.34 33.4 153 1.63 150 1.63 67 2.88 152 1.85 149 1.99 154 2.05 Namibia 152 154 125 2.02 1.63 2.41 32.8 152 1.68 148 1.71 145 2.20 144 2.04 144 2.04 151 2.38 Sierra Leone 153 153 148 1.97 1.75 2.19 31.2 110 2.17 152 1.61 134 2.33 154 1.53 152 1.73 152 2.33 Eritrea 154 155 151 1.70 1.34 2.06 22.4 154 1.50 155 1.35 154 1.63 150 1.88 154 1.55 153 2.21 Somalia 155 155 155 1.34 1.05 1.63 10.9 155 1.33 154 1.50 155 1.33 155 1.33 155 1.17 155 1.38 Note: The LPI index is a multidimensional assessment of logistics performance, rated on a scale from 1 (worst) to 5 (best). The six core dimensions captured by the LPI survey are rated by respondents on a scale of 1­5, 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. Source: Logistics performance survey data, 2009. C o n n E C T i n G T o C o m p E T E 2 0 10 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 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- Upper Lower Response Asia and Central and North South Saharan High middle middle Low Question categories Pacific Asia Caribbean Africa Asia Africa income income income income Question 16: Level of fees and charges Very high or high 61 40 49 33 40 53 49 40 50 51 Port charges Low or very low 8 16 7 20 2 16 7 13 11 15 Very high or high 55 54 42 39 39 43 50 45 45 47 Airport charges Low or very low 6 14 7 12 20 16 9 9 17 12 Very high or high 42 34 52 31 35 45 39 38 40 47 Road transport rates Low or very low 12 23 6 27 28 22 20 20 20 18 Very high or high 52 24 35 10 29 25 49 25 31 28 Rail transport rates Low or very low 17 25 22 53 9 34 14 27 33 25 Very high or high 49 27 39 20 14 40 46 29 35 37 Warehousing/transloading charges Low or very low 17 27 9 26 15 17 16 21 21 14 Very high or high 48 33 16 17 17 21 33 24 26 23 Agent fees Low or very low 16 34 11 18 15 26 22 18 24 23 Question 17: Quality of infrastructure Low or very low 37 57 34 47 36 42 28 43 43 44 Ports High or very high 13 16 19 9 9 23 46 25 13 12 Low or very low 42 41 25 48 47 41 20 39 35 46 Airports High or very high 19 18 27 6 11 21 50 23 17 15 Low or very low 51 57 50 45 64 50 8 54 49 52 Roads High or very high 11 19 19 8 6 20 55 18 15 16 Low or very low 69 49 86 61 65 81 39 64 67 79 Rail High or very high 2 17 3 0 11 3 29 11 5 2 Low or very low 49 33 20 48 37 28 13 25 35 40 Warehousing/transloading facilities High or very high 12 18 32 5 12 21 61 30 14 12 Low or very low 41 32 15 27 12 30 4 18 28 35 Telecommunications and IT High or very high 15 28 46 23 62 38 75 41 36 28 Question 18: Competence and quality of service Low or very low 32 23 32 21 29 30 11 20 38 26 Road High or very high 11 31 10 27 18 25 60 25 18 21 Low or very low 70 51 86 71 60 70 40 60 70 74 Rail High or very high 2 12 3 0 9 6 27 10 5 2 Low or very low 10 24 9 11 6 21 3 14 14 19 Air transport High or very high 33 29 46 41 54 38 74 41 43 32 Low or very low 27 22 4 11 14 18 3 7 18 25 Maritime transport High or very high 15 38 35 30 30 47 67 46 26 35 Warehousing/transloading Low or very low 26 18 21 33 20 20 4 17 23 27 and distribution High or very high 17 30 41 9 15 22 63 38 21 13 Low or very low 12 12 1 11 1 9 1 7 5 12 Freight forwarders High or very high 38 39 55 29 41 50 71 53 40 39 Low or very low 63 34 29 30 44 34 9 29 43 36 Customs agencies High or very high 5 23 27 22 16 37 59 30 22 25 Quality/standards Low or very low 46 47 32 24 31 26 12 32 43 25 inspection agencies High or very high 17 13 18 22 30 20 54 18 24 15 32 C o n n E C T i n G T o C o m p E T E 2 0 10 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 Region Income group Europe Latin Middle East and America East and Sub- Upper Lower Response Asia and Central and North South Saharan High middle middle Low Question categories Pacific Asia Caribbean Africa Asia Africa income income income income Health/sanitary and Low or very low 43 45 45 47 33 45 16 41 51 41 phytosanitary agencies High or very high 3 11 12 27 12 17 49 13 16 13 Low or very low 36 27 20 17 37 17 7 16 28 26 Customs brokers High or very high 23 25 24 20 18 28 57 32 19 22 Low or very low 42 34 30 38 25 38 15 33 36 37 Trade and transport associations High or very high 20 13 12 11 21 20 49 15 15 18 Low or very low 25 25 10 13 5 16 14 16 14 19 Consignees or shippers High or very high 22 19 14 27 20 27 47 22 22 22 Question 19: Efficiency of processes Hardly ever or rarely 12 15 9 19 11 17 7 13 12 18 Clearance and delivery of imports Often or nearly always 48 64 46 50 49 52 81 64 46 48 Hardly ever or rarely 0 6 9 23 9 8 1 7 11 8 Clearance and delivery of exports Often or nearly always 82 71 70 69 70 60 90 78 67 59 Hardly ever or rarely 33 38 11 38 30 27 11 20 30 36 Transparency of customs clearance Often or nearly always 24 33 54 36 30 52 77 42 44 37 Provision of adequate and timely Hardly ever or rarely 35 39 15 33 44 31 16 28 24 43 Information on regulatory changes Often or nearly always 25 36 53 47 15 40 72 47 37 33 Expedited customs clearance for Hardly ever or rarely 20 28 19 27 33 29 14 17 24 38 traders with high compliance levels Often or nearly always 38 38 57 37 26 37 63 48 43 29 Question 20: Sources of major delays Compulsory warehousing/ Often or nearly always 15 24 29 35 19 40 7 22 27 41 transloading Hardly ever or rarely 30 39 39 21 23 36 68 42 27 31 Often or nearly always 30 25 17 27 23 31 9 21 24 34 Preshipment inspection Hardly ever or rarely 28 34 32 29 35 23 73 37 31 21 Often or nearly always 27 19 28 39 36 22 5 25 26 28 Maritime transshipment Hardly ever or rarely 16 38 26 21 32 25 53 31 22 28 Criminal activities (such Often or nearly always 11 7 17 12 21 20 1 13 13 20 as stolen cargo) Hardly ever or rarely 56 71 49 65 53 49 81 62 57 52 Often or nearly always 41 28 29 36 34 37 2 20 40 39 Solicitation of informal payments Hardly ever or rarely 12 33 44 25 20 25 81 39 23 23 C o n n E C T i n G T o C o m p E T E 2 0 10 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 Region Income group Europe Latin Middle East and America East and Sub- Upper Lower Response Asia and Central and North South Saharan High middle middle Low Question categories Pacific Asia Caribbean Africa Asia Africa income income income income Question 21: Changes in the logistics environment since 2005 Much worsened 31 13 12 10 17 22 11 12 13 27 or worsened Customs clearance procedures Improved or much 41 57 59 49 43 56 62 56 59 44 improved Much worsened 23 14 18 8 16 21 12 14 12 26 or worsened Other official clearance procedures Improved or much 26 42 32 41 19 47 51 38 36 40 improved Much worsened 26 7 16 0 6 25 5 14 9 22 or worsened Trade and transport infrastructure Improved or much 30 52 49 48 51 43 55 50 50 38 improved Much worsened 7 1 3 0 0 9 1 4 1 7 Telecommunications and information or worsened technology infrastructure Improved or much 57 68 73 71 88 62 72 75 71 58 improved Much worsened 6 3 6 0 6 2 1 4 1 5 or worsened Private logistics services Improved or much 48 68 76 57 76 63 72 75 67 54 improved Much worsened 25 6 7 0 22 9 21 7 7 14 or worsened Regulation related to logistics Improved or much 26 23 17 36 43 58 34 29 36 43 improved Much worsened 38 21 19 14 23 33 1 14 23 39 or worsened Incidence of corruption Improved or much 19 33 32 33 24 30 35 34 27 28 improved Note: Responses are calculated at the country level and then averaged by quintiles. Source: Logistics performance survey data, 2009. 34 C o n n E C T i n G T o C o m p E T E 2 0 10 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 22: 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 Distance Lead time Costd Distance Lead time Coste Distance Lead time Costd Distance Lead time Coste (kilometers) (days) (US$) (kilometers) (days) (US$) (kilometers) (days) (US$) (kilometers) (days) (US$) Afghanistan 1,250.00 2.00 -- 1,250.00 4.42 1,914 300.00 4.00 1,500 750.00 3.16 1,712 Albania 75.00 1.73 1,000 75.00 3.00 250 75.00 2.00 500 300.00 4.00 1,500 Algeria 750.00 4.58 -- -- -- -- 750.00 7.07 1,500 -- -- -- Angola -- 6.00 150 -- -- -- -- 8.00 2,000 -- -- -- Argentina 214.31 3.73 1,070 306.19 2.83 1,000 269.48 3.79 743 1,250.00 2.00 1,000 Australia 388.90 2.64 955 268.14 1.84 881 277.22 2.83 869 428.63 2.93 2,178 Austria 237.17 2.00 474 612.37 3.00 1,500 237.17 3.74 474 889.22 3.00 2,000 Azerbaijan -- 7.00 1,414 750.00 5.00 2,000 -- 3.00 4,000 750.00 7.00 4,000 Bahrain -- 1.00 150 -- 1.00 150 -- 2.00 250 -- 2.00 250 Bangladesh 300.00 1.41 2,449 -- -- -- 150.00 1.41 2,000 -- -- -- Belarus -- -- -- 2,000.00 7.00 4,000 -- -- -- 2,000.00 8.00 3,000 Belgium 119.06 1.66 1,260 328.01 2.63 1,260 172.30 1.62 931 172.30 2.05 500 Bolivia 1,620.19 15.00 5,000 1,581.14 10.00 5,000 3,500.00 28.28 4,000 2,091.65 11.31 4,472 Bosnia and Herzegovina 300.00 2.00 -- 300.00 2.00 -- 300.00 2.00 -- 300.00 2.00 -- Brazil 222.06 2.80 1,614 491.95 3.39 1,024 202.97 3.88 1,570 212.13 3.48 1,414 Bulgaria 300.00 2.00 1,500 482.74 2.88 500 300.00 3.87 250 564.62 3.30 500 Burkina Faso 1,250.00 4.00 3,000 -- -- -- 1,250.00 14.00 5,000 -- -- -- Cambodia 188.99 1.32 1,000 -- -- -- 188.99 4.00 2,924 3,500.00 67.00 1,500 Cameroon 306.19 3.37 1,125 968.25 13.61 2,466 689.73 8.89 2,551 2,000.00 18.71 3,873 Canada 291.86 2.83 731 765.97 2.63 1,123 565.34 3.68 1,015 266.74 1.89 622 Central African Republic 1,581.14 7.07 3,873 2,000.00 12.00 5,000 -- -- -- 2,000.00 10.00 5,000 Chad 75.00 74.00 -- -- -- -- -- 300.00 5.00 1,500 Chile 196.03 3.48 1,587 75.00 9.00 1,000 512.35 3.04 1,225 -- -- -- China 163.74 2.77 419 150.00 2.00 371 155.68 2.56 376 564.62 3.56 658 Colombia -- -- -- 924.40 3.06 2,659 -- -- -- 2,070.41 6.96 4,309 Congo, Dem. Rep. -- 2.00 4,000 -- -- -- -- 3.00 4,000 -- -- -- Costa Rica 75.00 2.00 250 -- -- -- 75.00 2.00 150 -- -- -- Côte d'Ivoire -- 1.00 -- -- -- -- -- 1.00 -- -- -- -- Croatia 75.00 1.00 500 150.00 2.00 150 75.00 1.00 500 237.17 2.45 387 Czech Republic 474.34 2.45 1,500 75.00 1.00 -- 474.34 3.46 1,500 300.00 1.00 -- Denmark 75.00 1.00 500 -- -- -- 75.00 1.00 500 -- -- -- Dominican Republic 75.00 2.24 354 -- -- -- -- 3.46 354 -- -- -- Ecuador 300.00 2.06 608 -- -- -- 300.00 3.41 671 -- -- -- Egypt, Arab Rep. 188.99 1.26 315 1,024.70 6.48 707 188.99 3.11 274 1,024.70 8.37 707 Equatorial Guinea -- 10.00 5,000 -- -- -- -- 8.00 4,000 -- -- -- Eritrea 300.00 3.00 2,000 300.00 3.00 2,000 300.00 3.00 2,000 300.00 4.00 2,000 Estonia 300.00 4.00 2,000 150.00 1.00 194 300.00 4.00 2,000 150.00 1.41 194 Ethiopia 1,250.00 5.00 1,000 2,000.00 5.00 5,000 750.00 6.00 2,000 750.00 7.00 5,000 Finland 262.23 1.59 579 411.57 2.10 758 317.21 1.83 674 612.37 2.24 -- Gabon -- 4.28 -- -- 2.83 -- -- 13.01 -- -- -- -- Gambia, The -- 4.58 1,225 -- 3.00 1,500 -- 3.46 3,000 -- 3.00 1,000 C o n n E C T i n G T o C o m p E T E 2 0 10 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 Question 22: 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 Distance Lead time Costd Distance Lead time Coste Distance Lead time Costd Distance Lead time Coste (kilometers) (days) (US$) (kilometers) (days) (US$) (kilometers) (days) (US$) (kilometers) (days) (US$) Germany 972.15 3.63 612 407.16 1.41 354 -- -- -- 407.16 3.04 1,000 Ghana 256.37 2.89 1,626 256.50 3.50 1,030 396.34 6.76 2,542 119.06 3.16 2,060 Greece -- -- -- 1,250.00 7.00 1,500 -- -- -- 1,250.00 7.00 3,000 Guatemala 282.88 2.58 715 632.53 2.63 658 280.52 3.36 1,612 479.37 3.94 1,355 Hong Kong SAR, China 119.06 1.71 465 188.99 2.21 335 75.00 1.62 459 75.00 1.86 274 Hungary -- -- -- 750.00 -- 2,000 750.00 5.00 3,000 750.00 6.00 1,000 India 302.73 2.34 660 458.18 4.78 976 421.74 5.31 1,267 616.55 5.36 972 Indonesia 277.22 2.12 379 300.00 4.00 1,000 492.98 5.35 1,024 75.00 10.00 3,000 Iran, Islamic Rep. 1,250.00 2.62 707 1,250.00 2.00 1,000 3,500.00 28.28 2,739 2,091.65 9.17 5,000 Iraq -- -- -- 1,250.00 7.00 5,000 -- -- -- 1,250.00 4.00 5,000 Ireland -- 1.00 500 -- 1.00 500 -- 1.00 500 -- 1.00 500 Israel 75.00 2.00 500 75.00 1.00 250 75.00 2.00 500 75.00 1.00 500 Italy 303.69 2.60 641 700.57 2.78 707 311.37 2.97 831 680.41 4.58 500 Japan 75.00 1.00 500 75.00 1.00 -- 75.00 1.00 707 75.00 1.00 1,000 Jordan 300.00 3.16 1,000 1,024.70 7.75 707 300.00 4.58 1,225 300.00 5.00 -- Kazakhstan -- -- -- 1,620.19 7.42 1,807 -- -- -- 3,500.00 8.85 1,904 Kenya 371.62 2.96 1,236 428.63 2.21 1,554 486.69 5.92 2,460 680.41 7.00 2,466 Korea, Rep. 188.99 1.59 354 300.00 2.00 500 188.99 2.00 500 -- -- -- Kuwait 75.00 2.00 5,000 75.00 2.00 3,000 75.00 3.00 5,000 75.00 3.00 3,000 Kyrgyz Republic 3,500.00 2.00 -- 75.00 8.83 2,277 -- -- -- -- 11.97 2,122 Latvia 75.00 1.26 483 75.00 1.00 274 75.00 1.59 483 191.58 1.00 387 Lebanon 75.00 3.42 500 75.00 2.00 354 75.00 2.15 1,000 75.00 2.00 1,000 Libya 150.00 3.16 2,739 387.30 2.24 2,449 150.00 10.00 2,828 75.00 3.00 2,000 Lithuania 300.00 2.00 354 482.74 2.00 356 300.00 2.29 335 150.00 1.41 150 Luxembourg 313.69 1.70 1,351 407.16 1.59 1,817 224.30 1.59 1,000 300.00 2.70 1,732 Malaysia 172.30 2.64 354 188.99 2.29 266 212.13 2.75 330 150.00 3.46 354 Maldives -- 2.00 3,000 -- -- -- -- 2.00 4,000 -- -- -- Mali 1,250.00 5.00 3,000 -- -- -- 1,250.00 4.00 3,000 -- -- -- Mauritania 300.00 2.00 4,000 -- -- -- 300.00 3.00 5,000 -- -- -- Mexico 578.01 2.06 1,314 890.91 2.51 1,817 617.37 2.52 1,275 564.62 1.82 1,414 Mongolia 750.00 14.00 -- -- -- -- 750.00 12.00 1,000 750.00 14.00 1,500 Morocco 387.30 2.00 3,000 300.00 1.73 4,000 774.60 3.16 2,449 300.00 4.00 2,000 Mozambique -- -- -- 3,500.00 -- 3,000 -- -- -- -- -- -- Myanmar 75.00 4.58 150 -- 3.00 150 75.00 8.37 150 75.00 2.00 150 Namibia 1,620.19 3.00 2,000 750.00 1.00 2,000 1,024.70 3.00 2,236 1,250.00 5.00 3,000 Nepal 750.00 1.82 1,145 968.25 8.06 2,449 1,250.00 6.32 707 1,250.00 18.00 3,000 Netherlands 75.00 1.81 459 174.75 2.70 266 165.61 1.92 707 106.07 3.03 410 New Zealand 75.00 1.26 250 750.00 1.59 250 -- 1.59 194 -- 1.59 194 Nicaragua 612.37 3.16 1,225 750.00 2.00 250 300.00 3.16 866 75.00 2.00 150 Nigeria 237.17 2.51 2,289 968.25 3.04 2,289 270.02 4.09 2,621 412.74 5.24 2,621 Norway 75.00 1.00 500 75.00 1.00 500 75.00 2.00 500 75.00 2.00 500 Pakistan 387.30 2.30 729 612.37 3.11 931 75.00 1.59 335 968.25 3.87 1,732 Panama 150.00 1.44 500 75.00 1.00 274 75.00 1.41 194 75.00 1.41 274 Peru 75.00 2.03 500 983.99 6.34 2,866 179.30 3.80 944 300.00 4.00 1,500 Philippines 75.00 1.82 1,118 75.00 3.00 500 75.00 5.00 1,357 2.00 250 Poland 436.40 3.04 702 392.06 2.28 822 588.98 3.55 1,145 841.47 2.00 1,225 36 C o n n E C T i n G T o C o m p E T E 2 0 10 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 Question 22: 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 Distance Lead time Costd Distance Lead time Coste Distance Lead time Costd Distance Lead time Coste (kilometers) (days) (US$) (kilometers) (days) (US$) (kilometers) (days) (US$) (kilometers) (days) (US$) Qatar 270.02 3.83 855 75.00 2.00 531 75.00 2.29 721 75.00 2.29 354 Romania 774.60 2.00 2,236 300.00 2.00 500 300.00 2.00 1,000 1,024.70 6.35 1,357 Russian Federation 948.79 3.98 1,310 1,510.95 5.97 1,861 908.56 2.88 1,145 2,056.13 5.67 2,280 Saudi Arabia 75.00 2.29 250 1,250.00 3.00 1,500 -- 6.32 274 489.36 4.93 696 Senegal -- 1.41 -- -- 2.00 -- -- 2.65 1,000 -- -- -- Serbia 750.00 2.00 1,000 612.37 1.73 500 750.00 3.00 1,500 1,581.14 3.00 1,732 Sierra Leone 750.00 2.00 2,000 750.00 2.00 2,000 3,500.00 32.00 5,000 -- -- -- Singapore 224.07 2.17 422 119.06 2.38 298 75.00 1.78 335 241.03 2.51 409 Slovak Republic 750.00 3.00 1,500 968.25 2.45 1,500 1,250.00 5.00 1,500 968.25 2.45 1,225 Slovenia 300.00 1.00 500 300.00 1.00 250 300.00 2.00 500 300.00 1.00 250 South Africa 499.35 2.28 907 738.63 3.15 1,873 660.53 3.25 1,516 633.44 4.47 2,667 Spain 1,250.00 4.00 707 1,250.00 4.00 1,500 3,500.00 7.07 707 1,250.00 4.00 1,000 Sri Lanka 75.00 1.32 170 -- 1.73 194 75.00 2.45 150 -- -- -- Sudan 3,500.00 39.00 2,000 1,250.00 6.00 -- 2,000.00 5.00 5,000 2,000.00 18.00 5,000 Sweden 300.00 1.00 1,500 3,500.00 3.00 3,000 -- -- -- -- -- -- Switzerland 256.37 2.61 1,310 474.34 3.00 -- 119.06 2.62 1,500 237.17 2.00 -- Syrian Arab Republic 474.34 2.45 150 237.17 2.45 250 150.00 3.16 250 512.35 8.49 1,118 Taiwan, China 150.00 1.32 393 188.99 1.26 721 188.99 2.06 500 212.13 1.57 500 Tajikistan 75.00 7.00 1,000 -- 3.64 1,959 -- -- -- 2,000.00 3.54 2,269 Tanzania 300.00 3.16 2,000 1,062.66 4.00 5,000 300.00 7.07 3,000 774.60 3.17 3,162 Thailand 75.00 1.59 250 75.00 1.73 250 75.00 2.62 354 75.00 2.00 250 Togo 3,500.00 -- -- 1,250.00 8.00 3,000 -- -- -- 1,250.00 7.00 3,000 Tunisia -- 1.73 -- -- -- -- 1,250.00 7.00 1,732 -- -- -- Turkey 367.44 2.19 1,626 849.54 4.05 2,225 512.35 3.83 785 3,188.32 4.32 1,870 Turkmenistan 750.00 3.00 1,500 750.00 3.00 1,500 -- -- -- 3,500.00 3,000 Uganda 612.37 5.48 2,466 1,250.00 8.00 2,000 306.19 13.96 2,236 1,250.00 13.23 3,162 Ukraine 552.60 1.68 1,612 1,224.74 3.16 1,414 750.00 7.00 3,000 1,224.74 3.46 1,225 United Arab Emirates 428.63 2.46 649 428.62 2.53 551 482.74 2.03 960 536.14 3.45 1,170 United Kingdom -- -- -- 1,040.04 3.68 1,225 281.64 1.89 1,140 -- -- -- United States 434.10 2.82 1,145 483.84 4.78 1,249 783.57 4.04 1,482 633.32 3.82 1,133 Uruguay -- 3.00 500 -- -- -- -- 3.00 500 -- -- -- Uzbekistan 75.00 1.41 387 300.00 9.48 1,341 300.00 2.00 387 300.00 12.52 618 Venezuela, RB 1,024.70 9.44 3,347 3,500.00 -- -- 1,024.70 12.05 3,347 -- -- -- Vietnam 300.00 1.41 500 2,000.00 8.00 3,000 300.00 1.73 500 -- -- -- Yemen, Rep. 300.00 3.11 1,500 407.16 4.48 794 474.34 3.63 1,000 150.00 6.48 -- Zambia -- -- -- -- -- -- 2,000.00 4.00 5,000 -- -- -- -- 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 (for 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 (DES to DDP). d. Typical charge for a 40-foot dry container or a semi-trailer (total freight including agent fees, port, airport, and other charges). e. Typical charge for a 40-foot dry container or a semi-trailer (total freight including agent fees and other charges). Source: Logistics performance survey data, 2009. C o n n E C T i n G T o C o m p E T E 2 0 10 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 Question 31: Question 32: Question 27: Question 30: Physical Multiple % of shipments Clearance time (days)f inspection inspection meeting quality Question 28: Question 29: criteria Number of agencies Number of documents Without With % of % of shipments physical physical import physically % of shipments Imports Exports Imports Exports inspection inspection shipments inspected Afghanistan 84 4.91 5.09 4.54 4.71 3.04 1.75 6 4 Albania 93 1.00 1.00 4.00 3.50 0.50 1.41 37 9 Algeria 59 4.50 3.00 10.50 9.00 2.00 4.47 61 2 Angola 83 3.00 2.00 4.00 3.00 3.00 7.00 3 1 Argentina 93 3.57 2.33 4.14 3.67 2.10 3.85 34 4 Australia 85 2.57 2.57 3.15 3.17 0.48 1.76 5 1 Austria 92 1.00 1.00 3.00 3.33 0.66 1.32 2 1 Azerbaijan 88 2.00 2.00 8.00 8.00 4.00 4.00 75 75 Bahrain 88 4.00 3.00 4.00 3.00 1.00 2.00 6 1 Bangladesh 97 2.50 2.50 6.50 8.00 2.83 4.47 50 3 Belarus 83 3.00 5.00 6.00 8.00 1.00 3.00 35 18 Belgium 95 1.80 1.90 2.60 2.40 0.47 1.17 2 2 Bolivia 96 1.50 2.00 5.50 5.00 1.73 4.58 37 4 Bosnia and Herzegovina 40 3.00 3.00 6.00 6.00 1.00 1.00 35 1 Brazil 89 4.21 3.47 4.72 4.06 1.67 5.47 11 2 Bulgaria 91 1.50 1.50 3.00 3.25 0.59 1.00 5 2 Burkina Faso 40 5.00 5.00 4.00 4.00 2.00 3.00 75 35 Cambodia 69 6.50 6.00 6.75 5.50 1.39 5.92 29 11 Cameroon 51 4.00 3.83 4.80 5.00 2.64 3.31 12 4 Canada 79 2.67 2.06 2.42 1.80 0.52 2.16 3 1 Central African Republic -- 5.00 8.00 8.00 9.00 -- -- 50 -- Chad 88 4.00 5.00 3.00 6.00 1.00 15.00 18 18 Chile 95 2.00 2.60 3.20 3.60 0.50 1.32 2 4 China 70 4.20 4.06 5.36 4.87 1.70 3.38 9 2 Colombia 91 4.29 4.57 6.33 5.67 0.79 2.04 21 3 Congo, Dem. Rep. 97 3.00 3.00 -- -- -- -- -- -- Costa Rica 93 5.00 3.00 4.00 3.00 2.00 3.00 18 18 Côte d'Ivoire -- -- -- -- -- -- -- -- -- Croatia 62 3.50 3.50 2.50 2.50 0.50 0.50 3 18 Czech Republic -- 1.00 1.00 3.00 2.50 0.35 1.00 2 1 Denmark 92 2.00 1.50 3.00 2.00 0.50 1.41 2 1 Dominican Republic 88 1.50 2.50 2.00 1.50 1.00 2.00 37 1 Ecuador 91 2.25 1.75 3.75 2.25 1.86 3.13 27 2 Egypt, Arab Rep. 72 6.50 3.25 4.25 3.50 1.68 2.55 43 4 Equatorial Guinea 40 4.00 3.00 6.00 6.00 4.00 8.00 3 1 Eritrea 40 3.00 3.00 5.00 5.00 3.00 3.00 75 75 Estonia 94 1.67 1.67 2.67 2.67 0.31 1.00 1 1 Ethiopia 83 8.00 5.00 9.00 5.00 18.00 20.00 75 75 Finland 91 1.50 1.46 2.82 2.85 0.36 0.60 2 2 Gabon 48 3.00 2.60 6.20 5.00 5.89 9.12 55 3 Gambia, The 40 5.50 5.00 3.50 3.50 0.50 1.00 37 3 Germany 92 2.75 2.25 3.00 3.00 0.71 1.57 3 5 Ghana 69 5.50 5.20 4.80 3.90 2.41 3.41 36 9 Greece 97 1.00 1.00 1.00 2.00 1.00 2.00 1 1 Guatemala 78 3.25 3.63 4.38 4.25 1.25 2.34 33 6 38 C o n n E C T i n G T o C o m p E T E 2 0 10 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 Question 31: Question 32: Question 27: Question 30: Physical Multiple % of shipments Clearance time (days)f inspection inspection meeting quality Question 28: Question 29: criteria Number of agencies Number of documents Without With % of % of shipments physical physical import physically % of shipments Imports Exports Imports Exports inspection inspection shipments inspected Hong Kong SAR, China 81 1.88 1.75 2.14 2.14 0.32 0.55 2 1 Hungary 83 2.00 2.00 2.00 2.00 2.00 4.00 3 1 India 73 3.71 3.43 5.00 4.00 1.92 3.45 14 6 Indonesia 68 3.67 2.50 5.00 3.50 2.14 5.12 11 3 Iran, Islamic Rep. 83 8.00 8.00 8.00 5.50 3.00 4.90 61 4 Iraq 88 11.00 11.00 11.00 11.00 1.00 2.00 50 50 Ireland 100 1.00 1.00 1.00 1.00 0.25 1.00 1 1 Israel 88 5.00 3.00 5.00 3.00 0.50 2.00 3 1 Italy 79 1.36 1.31 2.60 2.40 0.86 2.35 5 2 Japan 92 1.67 2.00 3.67 3.33 0.79 1.26 3 2 Jordan 40 4.00 2.00 5.00 2.00 1.41 2.83 37 4 Kazakhstan 95 4.71 4.19 5.44 7.41 1.62 1.74 42 21 Kenya 81 5.38 4.50 5.50 3.38 1.36 3.05 29 7 Korea, Rep. 92 2.00 2.50 3.00 3.00 0.63 1.00 3 5 Kuwait 97 6.00 6.00 11.00 7.00 2.00 3.00 75 18 Kyrgyz Republic 76 4.38 4.64 5.21 5.90 0.80 0.56 12 2 Latvia 95 1.33 1.33 3.33 3.00 0.40 0.79 1 2 Lebanon 83 4.33 4.33 5.00 5.00 3.68 3.91 22 4 Libya 61 2.50 3.00 3.00 2.00 1.00 1.22 37 1 Lithuania 90 2.00 1.67 3.33 2.67 0.40 0.63 14 1 Luxembourg 89 1.71 1.81 4.14 2.81 0.39 0.64 5 2 Malaysia 71 3.00 2.86 3.17 2.67 0.74 2.08 6 3 Maldives 93 3.00 3.00 4.00 4.00 2.00 3.00 75 1 Mali 40 2.00 3.00 4.00 5.00 2.00 3.00 75 3 Mauritania 97 5.00 3.00 5.00 2.00 0.50 1.00 50 1 Mexico 86 2.57 2.57 4.14 3.00 0.87 2.32 26 2 Mongolia 40 5.00 8.00 5.00 9.00 2.00 2.00 50 50 Morocco 93 4.33 4.33 4.33 4.00 0.40 0.79 16 1 Mozambique 40 1.00 1.00 3.00 3.00 4.00 6.00 6 1 Myanmar 59 4.00 5.00 5.00 6.00 2.00 3.46 50 15 Namibia -- 2.50 3.00 5.00 4.50 1.00 1.41 4 1 Nepal 57 7.50 6.00 8.50 8.00 1.00 1.41 22 3 Netherlands 77 1.40 1.70 1.70 1.70 0.44 1.13 4 3 New Zealand 63 2.67 2.67 3.33 3.33 0.50 1.26 2 1 Nicaragua 87 2.50 2.00 3.50 3.50 0.50 1.00 18 3 Nigeria 68 7.75 8.00 7.75 6.75 3.81 6.40 61 9 Norway 93 2.00 2.00 2.00 2.00 0.25 2.00 1 1 Pakistan 83 3.80 4.20 5.40 7.60 3.58 6.75 64 6 Panama 97 2.00 2.00 3.00 3.00 1.00 1.71 8 4 Peru 91 1.83 2.00 4.80 4.00 1.74 3.65 12 5 Philippines 75 3.00 3.33 5.00 4.33 1.82 3.42 19 2 Poland 80 2.56 1.44 3.78 2.44 0.79 1.42 5 3 Qatar 95 2.33 2.00 4.33 4.67 1.00 1.44 41 1 Romania 88 1.67 2.00 4.00 4.33 1.00 1.59 7 1 Russian Federation 55 5.17 5.83 8.40 9.00 2.57 4.62 44 10 Saudi Arabia 87 3.00 3.50 5.50 4.00 3.98 7.61 66 3 C o n n E C T i n G T o C o m p E T E 2 0 10 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 Question 31: Question 32: Question 27: Question 30: Physical Multiple % of shipments Clearance time (days)f inspection inspection meeting quality Question 28: Question 29: criteria Number of agencies Number of documents Without With % of % of shipments physical physical import physically % of shipments Imports Exports Imports Exports inspection inspection shipments inspected Senegal 59 4.00 2.50 3.00 3.00 1.73 3.16 18 1 Serbia 93 2.50 1.00 3.00 2.00 1.00 1.41 15 1 Sierra Leone 88 6.00 6.00 4.00 4.00 2.00 3.00 75 1 Singapore 82 2.57 2.43 2.29 1.86 0.50 1.22 2 1 Slovak Republic 97 1.00 1.00 3.00 3.00 0.25 0.50 3 1 Slovenia 83 2.00 1.00 2.00 2.00 0.50 0.50 6 1 South Africa 90 3.08 3.20 3.18 3.70 0.50 2.67 5 2 Spain 90 3.00 3.00 2.67 2.33 0.50 2.83 4 1 Sri Lanka 51 3.00 3.33 4.33 4.00 0.79 1.59 16 1 Sudan 93 11.00 11.00 9.00 5.00 1.00 3.00 3 3 Sweden -- -- -- -- -- -- -- -- -- Switzerland 92 1.00 1.00 2.00 2.00 0.31 0.40 2 1 Syrian Arab Republic 97 3.00 2.50 5.50 4.00 1.73 2.45 51 3 Taiwan, China 91 1.40 1.20 3.20 2.40 0.57 1.25 5 1 Tajikistan 73 4.48 4.64 5.14 5.60 3.55 0.85 11 11 Tanzania 68 4.00 4.00 4.67 3.67 3.27 3.11 7 1 Thailand 91 2.25 1.75 3.33 2.67 0.71 1.41 9 1 Togo 100 4.50 4.00 3.00 2.50 0.71 2.45 9 18 Tunisia 57 5.50 2.50 5.50 3.00 2.00 4.47 50 3 Turkey 83 3.44 3.11 5.67 6.22 1.36 3.06 16 6 Turkmenistan 4.00 5.00 7.00 8.00 2.00 3.00 6 3 Uganda 59 6.00 3.50 5.00 3.00 3.87 7.48 75 11 Ukraine 89 6.33 5.00 7.33 6.00 1.26 2.52 51 8 United Arab Emirates 81 2.43 2.86 4.43 4.43 0.74 1.37 4 1 United Kingdom 90 2.20 2.40 4.80 3.80 0.87 2.05 2 2 United States 81 2.75 2.20 3.53 2.81 0.69 2.15 3 2 Uruguay 93 2.00 3.00 3.00 4.00 1.00 2.00 18 1 Uzbekistan 77 4.14 4.12 4.56 4.47 2.87 1.50 49 4 Venezuela, RB 61 4.00 4.67 6.00 5.00 6.30 12.81 39 2 Vietnam 89 5.50 3.00 6.50 5.50 1.41 3.46 42 4 Yemen, Rep. 87 3.33 3.67 5.00 3.33 1.71 2.41 66 4 Zambia 40 2.00 2.00 4.00 4.00 1.00 3.00 3 1 -- is not available. f. Time taken between the submission of an accepted customs declaration and notification of clearance. Source: Logistics performance survey data, 2009. 40 C o n n E C T i n G T o C o m p E T E 2 0 10 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 The Lpi methodology The multidimensional nature of logistics makes The LPI also includes the assessment of measuring and summarizing performance across large companies and small and medium-size countries a challenge. Information on time and enterprises from the logistics sector. Large cor- costs associated with some important logistics porations account for roughly 45 percent of processes--such as port processing time, time to the responses, including multinational freight clear customs, and transport--provides a good forwarders (34 percent) and global express car- starting point, and in many cases is readily avail- riers (11 percent). The remaining 55 percent of able. But this information, even when complete, the responses in this sample are from small and cannot be easily aggregated into a single, consis- medium-size freight forwarders. tent, cross-country dataset because of essential It is also important to stress the participa- differences in the supply chain structure among tion of knowledgeable senior members of these countries. Even more important, many critical companies in assessing the logistics environ- elements of good logistics performance--such ment in different countries. Survey responses as the transparency of processes and the qual- come from senior executives (35 percent), area ity, predictability, and reliability of services-- or country managers (25 percent), and depart- cannot be assessed using information on time ment managers (24 percent). Moreover, this and cost only. group of professionals is directly involved with day-to-day operations, not only from company Respondent demographics headquarters but also from country offices. Al- most 75 percent of respondents are in the coun- Because these vital aspects of logistics perfor- try branch offices (39 percent) or corporate or mance can best be assessed by operators on the regional headquarters (36 percent). Only 25 ground, the Logistics Performance Index (LPI) percent of the answers are from personnel from relies on a structured online survey of logistics local branch offices (11 percent) or independent professionals from the companies responsible firms (14 percent). for moving goods around the world: multina- The majority of respondents (54 percent) are tional freight forwarders and the main express involved in the provision of all or most logistics carriers. Nearly 1,000 logistics professionals services in their main line of work. These may from international logistics companies in 130 include warehousing and distribution, customer- countries participated in the 2009 LPI survey, tailored logistics solutions, courier services, bulk a 25 percent increase from 2007--and a testa- or break-bulk cargo transport, and less-than- ment to the interest the LPI has generated in the full or full containers or trailer load shipping. private sector. In contrast, 27 percent of responses come from In this context, the location of private oper- companies that base their business model on ators assessing the performance of logistics also full-container or full-trailer load transport (15 reflects the growing importance of trade facili- percent) or the provision of customer-tailored tation issues in the developing world: 55 percent logistics solutions (12 percent). of the respondents are located in middle-income By freight mode, almost 50 percent of the (45 percent) and low-income (10 percent) coun- logistics professionals typically deal with mul- tries, the rest in high-income economies. timodal transport operations. However, other C o n n E C T i n G T o C o m p E T E 2 0 10 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 modes of transport are also well represented, of countries rated by each respondent varies such as the maritime (19 percent) and air trans- according to the characteristics of the country portation (17 percent) services. Approximately in which the respondent is located (table A4.1). half of respondents usually oversee both do- The international LPI is a summary indica- mestic and international operations; another tor of logistics sector performance, in the sense 30 percent deal exclusively with international that it combines data on six core dimensions of shipping (both exports and imports). Almost 4 performance into a single, aggregate measure. of 10 respondents work in most of the regions in Since some respondents provide information the world, while the rest concentrate on Europe on some dimensions but not others, interpola- (21 percent), Asia (19 percent), and the Ameri- tion is used to fill in missing values. They are re- cas (13 percent). placed with the country mean response for each question, adjusted by the respondent's average Constructing the international LPI deviation from the country mean in the ques- tions that have been answered. The first part of the LPI survey (questions 9­15) The six core dimensions captured in the LPI provides the information used to construct the survey are: international LPI. Each survey respondent is · Efficiency of the clearance process, rated asked to rate eight overseas markets on six core from "very low" (1) to "very high" (5) in dimensions of logistics performance. The eight survey question 9. markets are chosen based on the most important · Quality of trade and transport related export and import markets of the country in infrastructure, rated from "very low" which the respondent is located, random selec- (1) to "very high" (5) in survey question tion, and, in the case of landlocked countries, 10. neighboring countries that form part of the · Ease of arranging competitively priced land bridge connecting them with international shipments, rated from "very difficult" (1) markets. The method used to select the group to "very easy" (5) in survey question 11. Table A4.1 Methodology for selecting country groups for survey respondents Respondents from low- Respondents from middle- Respondents from high- income countries income countries income countries Three most important export partner countries + The most important import Five most important export partner country partner countries + Respondents from + Four countries randomly, one coastal countries Three most important from each country group: partner countries Africa Two countries randomly out of one East Asia and Central Asia list of five most important export Latin America partner countries and five most OECD and Europe important import partner countries less Central Asia + Six countries randomly, one Three most important from each country group: export partner countries a. Africa + b. East Asia and One most important Central Asia Four most important export import partner country c. Latin America partner countries + d. OECD and Europe + Two land bridge countries less Central Asia Respondents from Two most important import + landlocked countries partner countries Two countries randomly, one + from each country group: Two land bridge countries a. Africa and East Asia and Central Asia and Latin America b. OECD and Europe less Central Asia Source: Logistics performance survey data, 2009. 42 C o n n E C T i n G T o C o m p E T E 2 0 10 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 · Competence and quality of logistics ser- Table A4.2 Results of principal component analysis for the international LPI vices, rated from "very low" (1) to "very high" (5) in survey question 12. Variance proportion · Ability to track and trace consignments, Component Eigenvalue Difference Individual Cumulative rated from "very low" (1) to "very high" 1 5.27 4.96 0.88 0.88 (5) in survey question 13. 2 0.31 0.11 0.05 0.93 · Frequency with which shipments reach 3 0.20 0.08 0.03 0.96 the consignee within the scheduled or ex- 4 0.12 0.06 0.02 0.98 pected delivery time, rated from "hardly 5 0.06 0.02 0.01 0.99 ever" (1) to "nearly always" (5) in survey 6 0.04 0.01 1.00 question 15. Source: Authors' analysis. The LPI is constructed from these six indica- tors using principal component analysis (PCA). Table A4.3 Component loadings for the international LPI PCA is a standard statistical technique used to reduce the dimensionality of a dataset. In the Dimension Weight LPI, the inputs for PCA are country scores on Customs 0.42 the six questions above, averaged across all re- Infrastructure 0.42 spondents providing data on a given overseas International shipments 0.37 market. Scores are normalized by subtracting Logistics quality and competence 0.42 the sample mean and dividing by the standard Tracking and tracing 0.41 deviation prior to conducting the PCA. The Timeliness 0.40 output from the analysis is a single indicator-- Source: Authors' analysis. the LPI--that is a weighted average of those scores. The weights are chosen to maximize the Confidence intervals percentage of variation in the original six indi- The LPI is a robust combination of the various cators accounted for by the LPI. dimensions from the international assessments, Full details of the PCA procedure are pro- built by standard econometric techniques. A vided in tables A4.2 and A4.3. The first line of vital part of the LPI dataset is the estimated table A4.2 shows that the first (principal) eigen- 80 percent confidence interval calculated for value of the correlation matrix of the six core in- each country's score. The confidence interval is dicators is greater than one and much larger than used to construct upper and lower bounds for any other eigenvalue. Standard statistical tests a country's LPI score. These bounds are then such as the Kaiser Criterion and the eigenvalue used to calculate lower and upper bounds on scree plot suggest that it is appropriate to retain country rankings. Together, these ranges are a single principal component to summarize the designed to take account of the fact that the LPI underlying data. This principal component is the is based on a survey and is therefore subject to international LPI. Table A4.2 shows that the in- sampling error.48 Confidence intervals and low- ternational LPI accounts for 88 percent of the high ranges for scores and ranks are larger for variation in the six original data series. small markets that have few respondents, which To construct the international LPI, normal- reflects the greater uncertainty to which these ized scores for each of the six component indica- estimates are subject. tors are multiplied by their component loadings To calculate the confidence interval, the in table A4.3 and then summed. The component standard error of LPI scores is estimated across loadings represent the weight accorded to each all respondents for a particular country. The of the component indicators in constructing the upper and lower bounds of the confidence in- international LPI. Since the loadings are simi- terval are then lar for all six indicators, the international LPI t(0.1, N­1)S LPI ± , is relatively close to a simple average of the six N component indicators. C o n n E C T i n G T o C o m p E T E 2 0 10 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 where LPI is a country's LPI score, N is the may capture access problems outside the coun- number of survey respondents for that country, try being assessed--for example, transit difficul- s is the estimated standard error of each coun- ties. The low rating of a landlocked country such try's LPI score, and t is Student's t-distribution. as Rwanda might not give full justice to its trade The high and low scores are also used to cal- facilitation efforts because they are dependent culate upper and lower bounds on country rank- on complex international transit systems. And ings. The upper bound is the LPI rank a country landlocked countries cannot address transit in- would receive if its LPI score were at the upper efficiencies through domestic reforms. bound of the confidence interval rather than the center. The lower bound is the LPI rank a Constructing the domestic LPI country would receive if its LPI score were at the lower bound of the confidence interval rather The second part of the LPI survey instrument than the center. In both cases, the scores of all is the domestic LPI, in which respondents pro- other countries are kept constant. vide detailed qualitative information on the The average confidence interval on the 1­5 logistics environment in the country where scale is 0.22, or about 7.5 percent of the average they work. country's LPI score. On average, this is equiva- For questions 16­21 of the LPI survey, re- lent to 10 places in the LPI ranking. It is there- spondents choose one of five categories, in in- fore necessary to be cautious in interpreting creasing order of performance. In question 16, small differences in LPI scores and rankings. for example, they can describe port charges in Jordan, for example, has a relatively low LPI their country as "very high," "high," "average," ranking (81) but a wide confidence interval due "low," or "very low." As in the international to a small number of respondents. At the high LPI, these options are coded from 1 through 5. point of its confidence interval, Jordan would Appendix 2 displays country averages of the per- have an LPI rank of 56. centage of respondents rating each aspect of the When comparing LPI results for 2010 and logistics environment as 1/2 or 4/5. 2007, it is important to pay attention to the With a few exceptions, questions 22­35 ask confidence intervals. The focus should be on respondents to provide quantitative informa- statistically significant changes as indicated by tion on particular aspects of international sup- nonoverlapping low-high ranges, rather than ply chains in their countries, choosing from a set on simple comparisons of individual scores. of responses in a dropdown menu in each case. Only when, for example, the lower bound of a When the response indicates a single value, the country's 2010 LPI score is higher than its 2007 answer is coded as the logarithm of that value. upper bound can it be concluded that there has When the response indicates a range, the an- been a statistically significant improvement in swer is coded as the logarithm of the midpoint performance. This approach takes account of of that range. For example, export distance can the influence of sampling error in both surveys. be indicated as fewer than 50 kilometers (km), Although representing the most compre- 50­100 km, 100­500 km, and so forth, so a re- hensive data source currently available on coun- sponse of 50­100 km is coded as log(75). Full try logistics and trade facilitation environments, details of the coding matrix are available on the LPI is also subject to important limitations. request. First, the experience of international freight for- To produce country scores, responses in log- warders may not represent the broader logistics arithms are averaged across all respondents for environment in poor countries, where they tend a given country and the result is exponentiated. to coexist with more traditional operators. The This method is equivalent to taking a geomet- two groups' interactions with government agen- ric average in levels. Scores for regions, income cies, as well as service levels, might differ. Sec- groups, and LPI quintiles are simple averages of ond, for landlocked or island countries, the LPI the corresponding country scores. 44 C o n n E C T i n G T o C o m p E T E 2 0 10 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 Comparing the international Lpi with other indicators A number of other indicators on trade facilita- trade to the LPI and then conducts simulations tion and logistics are now available. It is use- using the Global Trade Analysis Project model ful to highlight the similarities and differences of the world economy.50 The model shows that between the Logistics Performance Index reducing the gap between the logistics scores (LPI) and these indicators. While designed of countries in Sub-Saharan Africa and those for different purposes and measuring differ- of countries in South Asia and Latin America ent dimensions of performance, these indexes would require a very large increase in border- broadly correlate in their relative rankings of related capital investments (400 percent). But countries. the economic benefits far outweigh these costs, with Sub-Saharan African countries likely to Why logistics performance matters enjoy substantial increases in economic welfare from this kind of investment program. More- Extensive empirical evidence links logistics per- over, the nondiscriminatory nature of logis- formance, as measured by the World Bank's tics sector reforms means that they result in LPI, with important economic outcomes, such significant trade creation and very little trade as the level of trade integration. diversion. For example, Hoekman and Nicita use a One area that can be explored further is the standard gravity model of international trade potential for logistics upgrading to affect dif- to show that a higher LPI score is strongly as- ferent economic sectors in different ways. One sociated with increased bilateral trade.49 Both sector that might be particularly sensitive to the the LPI and the World Bank's Doing Business quality of logistics is trade in parts and compo- trade cost data are important determinants of nents. These products are traded within inter- international trade flows because they capture national production networks in which speed different aspects of the international supply and reliability of delivery are vital. Networked chain. Based on a counterfactual experiment, production relies heavily on efficient and cost- Hoekman and Nicita conclude that increasing effective logistics services to spread production logistics performance, as measured by the LPI, across multiple countries and reduce inventory in low-income countries to the middle-income carrying costs to a minimum. average would boost trade by about 15 percent. Figure A5.1 shows a strong, positive asso- Reducing the trade costs measured by Doing ciation between logistics performance and the Business in the same way would boost exports share of parts and components in total exports. by about half as much (7 percent). Both effects A higher trade share in parts and components are much greater than those from liberalizing indicates stronger involvement in international traditional trade barriers, however. Reducing production networks, as well as a higher degree tariffs to 5 percent would increase trade by only of specialization in that sector. Should more de- 6 percent, and reducing the tariff equivalent of tailed research confirm these associations, that nontariff measures to 10 percent would result in would provide another strong reason for coun- an 8 percent trade gain. tries to upgrade logistics performance: the wide- Mirza uses econometric methods to ob- spread desire for further and deeper integration tain an estimate of the sensitivity of bilateral in internationalized production. C o n n E C T i n G T o C o m p E T E 2 0 10 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 Figure A5.1 Relation of the share of parts and components in total exports and the LPI score Share of parts and components in total exports (%) 25 20 15 10 5 0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 LPI score Note: Export shares are constructed as the value of parts and components exports divided by the value of total exports. Data are for 2008, sourced from Comtrade via WITS. The parts and components sector is defined using the classification in appendix 1 of Kimura, Takahashi, and Hayakawa (2007). Source: Logistics performance survey data, 2009, and United Nations Commodity Trade Statistics Database (Comtrade), http://comtrade.un.org/db. The LPI and other business sophistication, and innovation. Several international indicators indicators are directly relevant to trade facilita- tion and logistics. The LPI is the first international benchmark- The World Economic Forum's Global En- ing tool focused specifically on measuring the abling Trade (GET) Index, like the LPI, is an trade and transport facilitation friendliness of aggregate indicator constructed from a range countries. It complements other international of original data but focuses not on logistics but data collection efforts and trade facilitation on the broader trading environment in a coun- benchmarking exercises by focusing exclusively try.52 Nonetheless, the association between the on logistics and assessing performance using LPI and GET Index is very strong (correla- a holistic approach grounded in global supply tion coefficient = 0.85; figure A5.2). The GET chain analysis. It measures some of the critical Index is based on more than 50 individual data factors of trade logistics performance, includ- series--the five drawn from the 2007 LPI in- ing the quality of infrastructure and logistics troduce some degree of correlation by construc- services, the security of property from theft and tion. But LPI data play a smaller role than other looting, the transparency of government pro- sources used to construct the GET Index. The cedures, macroeconomic conditions, and the strong correlation between the two cannot be underlying strength of institutions. explained solely by construction but instead The World Economic Forum's Global Com- suggests that logistics are vital to facilitating petitiveness Report features the Global Competi- trade. tiveness Index (GCI), a composite index based The World Bank and International Finance on macro and micro data as well as interviews Corporation's Doing Business project also col- with key business and societal stakeholders fea- lects extensive data on trade facilitation to pro- turing the 12 pillars of competitiveness.51 It vide objective measures of business regulations contains detailed profiles of 125 economies and and enforcement. Doing Business 2009 presents data tables with global rankings covering more quantitative indicators on business regulations than 100 indicators in nine areas: institutions, and the protection of property rights that can infrastructure, macroeconomy, health and pri- be compared across 175 economies and over mary education, higher education and train- time.53 For example, the Doing Business Trad- ing, market efficiency, technological readiness, ing across Borders topic focuses on red-tape 46 C o n n E C T i n G T o C o m p E T E 2 0 10 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 A5.2 Relationship of Global Enabling Trade Index 2009 and 2010 LPI GET index 2009 7 6 5 4 3 2 1 0 0 1 2 3 4 5 LPI 2010 Source: Logistics Performance Index, 2010, and World Economic Forum 2009b. Figure A5.3 Doing Business trade facilitation data and LPI 2010 Trading Across Borders rank (average) 200 150 100 50 0 0 50 100 150 200 LPI rank Note: Trading Across Borders rank is calculated as the average rank across the six indicators: number of documents (export and import), time (export and import), and cost (export and import). Source: Logistics Performance Index, 2010, and World Bank and International Finance Corporation 2010. obstacles to the movement of goods across bor- significant overall association, as shown by a ders and the ease of export and import for small plot of 2010 LPI ranks against average country and medium-size enterprises by looking at such rankings across the six Doing Business trade fa- things as the number of documents and signa- cilitation indicators (figure A5.3). tures for imports and exports. Unlike the LPI, Another important difference between the Doing Business collects only objective measures two datasets is how they define time to import of the trade facilitation environment, such as or export, resulting in values differing by almost the number of documents and days required for an order of magnitude (figure A5.4). The LPI export and import transactions and the cost of concept of time is that of the lead time between each transaction. two events in the supply chain (for example, Even though the data collection approaches from factory to free carrier at port of loading). are very different, the two datasets have a Doing Business aggregates the time spent on C o n n E C T i n G T o C o m p E T E 2 0 10 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 Figure A5.4 Doing Business import time versus LPI lead import time (median) for port/airport LPI 2010--lead import time (median) for port/airport, days Doing Business 2009--import time, days 50 40 30 20 10 0 Bottom quintile Fourth quintile Third quintile Second quintile Top quintile (lowest performance) (low performance) (average performance) (high performance) (highest performance) Source: Logistics performance survey data, 2009, and World Bank and International Finance Corporation 2010. Table A5.4 Correlation matrix of Doing Business and LPI time data Doing Doing LPI export LPI export LPI import LPI import Business Business LPI score time (port) time (land) time (port) time (land) export time import time LPI score 1 LPI export ­0.22 1 time (port) LPI export ­0.39 0.30 1 time (land) LPI import ­0.09 0.20 0.26 1 time (port) LPI import ­0.48 0.50 0.79 0.32 1 time (land) Doing Business ­0.66 0.16 0.48 0.05 0.48 1 export time Doing Business ­0.62 0.22 0.48 0.08 0.48 0.96 1 import time Source: Logistics performance survey data, 2009, and World Bank and International Finance Corporation 2010. red tape and other procedures, including before concepts underlying the two datasets are very or after the actual movement of goods captured different, meaning that individual data points in lead time. can vary considerably from one to the other. For A more detailed comparison of the two data- example, table A5.4 shows a much stronger asso- sets discloses significant associations between ciation between Doing Business time data and them in some important areas of trade facilita- the corresponding figures from the port/airport tion. For instance, their respective measures of supply chain portion of the LPI data. The same import and export documents have a correlation is true for export and import cost data, with coefficient of around 0.50. But the transactional very similar coefficients of correlation. 48 C o n n E C T i n G T o C o m p E T E 2 0 10 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. Authors can be reached by email: Arvis, Jarvis1@worldbank.org; distance is meant to capture the typical distance from the point Mustra, Mmustra@worldbank.org; Ojala, Lauri.ojala@tse.fi; of origin (the seller's factory, typically located either in the capital Shepherd, ben@developing-trade.com; and Saslavsky, dsaslavski@ city or in the largest commercial center) to the port of loading or worldbank.org. equivalent (for port/airport), and excluding international shipping, 2. The web-based survey questionnaire was offered in five or to the buyer's warehouse (for land). For imports, this distance languages--English, French, Spanish, Chinese, and Russian-- is meant to capture the typical distance from the port of discharge enabling respondents to provide their assessment in their most or equivalent to the buyer's warehouse (for port/airport) or from familiar language. 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 3. For example, air freight, container shipping, and contract logistics warehouse (for land). or so-called third/fourth party logistics providers. 13. Hallward-Driemeier and Aterido 2009. 4. Ojala 2009. 14. Only Belgium, Norway, and Luxembourg were outside the top 5. Paul Makillie characterizes this network as "the physical internet" ten in 2007, but the first two were in the top 20 in 2007 and (The Economist, June 15). Luxembourg in the top 25. 6. World Bank 2009c. 15. These counterfactuals are based on an OLS regression with 7. These new concerns are particularly important in a world of low import lead time, export lead time, and percentage of shipments inventories, just-in-time management, and global value chains that are physically inspected as the dependent variables and the (see Memedovic and others 2008). LPI score as the independent variable. 8. The methodology developed by Murphy, Daley, and Dalenberg 16. The best performing landlocked country (countries marked (1993)--using a survey format, a 2-point scale, and open-ended with a ** are also least developed countries) is Kazakhstan questions--measured the perceived importance and influence of (second quintile), followed by Uganda**, Uzbekistan, Macedonia, different component attributes affecting the logistical friendliness Paraguay, Serbia, Azerbaijan and Kyrgyz Republic (all belonging of countries. In a follow-up study by Ojala and Queiroz (2001 and to the third quintile). The rest of the landlocked countries are 2004), only those characteristics identified as best encapsulating located in the two lowest quintiles: Moldova, Niger**, Armenia, logistics performance were included for evaluation. Bolivia, Turkmenistan, Chad**, Lao PDR, and Ethiopia** (fourth 9. These interviews were conducted in the context of the Trade and quintile); and Bhutan**, Tajikistan, Botswana, Zambia**, Mali**, Transport Facilitation Audits performed by the World Bank and Mongolia, Afghanistan**, Burkina Faso**, Nepal** and Rwanda** others (Raven 2001) and contributed substantially to refining the (fifth quintile). methodology. 17. World Bank 2009a. 10. In both the 2007 and 2010 versions of the LPI, statistical 18. For the Democratic Republic of Congo, the finding represents aggregation has produced an overall index that is very close to income and not logistics performance because the country has the simple average of country scores across the six dimensions of the lowest gross national income per capita in the sample. logistics performance. 19. The different size of the two samples--150 countries in 2007 11. This was made possible by expanding the country selection and 155 in 2009--can have a modest influence on changes in matrix to include new countries, such as the Bahamas, Botswana, country rankings. But it does not change any conclusions related Central African Republic, Congo Democratic Republic, Congo to the statistical significance of changes in LPI scores from one Republic, Cuba, Equatorial Guinea, Fiji, Georgia, Iceland, Iraq, year to the other. Libya, Maldives, Malta, and Turkmenistan. But ten countries 20. The only backslider is Somalia. later had to be excluded from the international LPI sample due to insufficient number of responses or other data reliability 21. The improvers in the lower middle-income group are China, concerns: Belarus, Burundi, Central African Republic, Equatorial Djibouti, Honduras, Philippines, and Syria. Guinea, Lesotho, Malawi, Mauritania, Morocco, São Tomé and 22. The improvers in the upper middle-income group are Brazil, Principe, and Zimbabwe. Serbia and Montenegro, treated as Colombia, Costa Rica, Dominican Republic, Kazakhstan, one country in the 2007 edition, were evaluated as separate Lebanon, Mexico, Poland, Russian Federation, and Uruguay. countries in 2010. And one country covered in the 2007 edition, 23. The improvers in the low-income group are Afghanistan, Chad, Timor-Leste, could not be assessed in this edition because of the Haiti, Myanmar, Niger, Tajikistan, Tanzania, and Uzbekistan. absence of survey data. 24. The improvers in the higher income group (OECD and non-OECD) 12. For the questions on lead time to export (Q22) and lead time to are Saudi Arabia and the Czech Republic. import (Q25), the respondents also provided the typical distance (in km) for each leg of the supply chain they identified as best 25. Upper bounds for LPI ranks are calculated by increasing a country's LPI score to its upper bound while maintaining all other describing their work (port, airport, or land). For exports, this C o n n E C T i n G T o C o m p E T E 2 0 10 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 country scores constant and then recalculating LPI ranks. An depend on roll-on/roll-off shipping, score low in LSCI. The LPI analogous procedure is adopted for the lower bounds. transshipment question, however, includes transshipment by all 26. Sarley, Allain, and Akkihal 2009. types of liner shipping as well as by road and rail. In container shipping connections covered by LSCI, only 17.2 percent of pairs 27. EWEC 2009. of countries are serviced by direct liner shipping services. For 62 28. ECLAC 2008. percent of pairs of countries, shippers can find container shipping 29. APEC Secretariat 2009. connections that require only one transshipment, and for 20.8 percent of routes two or more container shipping transshipments 30. Helble, Shepherd, and Wilson 2009. would be necessary (UNCTAD 2009). Containers can also be 31. World Economic Forum 2009a. transshipped by road, rail, or roll-on/roll-off shipping, which may 32. Raballand and Macchi 2008. reduce the actual number of interchanges. 33. Ikenson 2008, p. 20. 40. World Bank 2008a. 34. The relative LPI is obtained by normalizing the LPI score, so that 41. For more information on the Malaba project, see the World Bank the Relative LPI=100 x [ LPI ­ 1 ]/[LPI highest ­1]. In this way, East Africa Trade and Transport Facilitation Project, which aims to the best performer (Germany) reaches the maximum score of interconnect revenue authorities' information systems along the 100% (Germany), and the worst performer reaches the minimum northern corridor (www.worldbank.org/projects). with 11% (Somalia) for the 2010 version. 42. Arvis, Raballand, and Marteau 2007. 35. It is important to note that although the respondents in the LPI 43. World Bank 2009b. survey are freight forwarders and express carriers, the quality and 44. World Bank 2006. competence of service providers is assessed by their competitors. 45. Raballand and Teravaninthorn 2008. 36. The most visible initiatives in this area include compulsory regulatory requirements such as the implementation in 2003 of 46. Arvis, Raballand, and Marteau 2007; World Bank 2008a. the "24h advance manifest rule" and similar Advance (electronic) 47. Solakivi and others 2009. Cargo Information requirements for shipments to US ports; 48. Kaufmann, Kraay, and Mastruzzi (2009) apply an analogous the "100% scanning" program, mandating overseas radiation approach to the analysis of governance indicators and are scanning and non-intrusive inspection of 100% of all cargo similarly cautious in their interpretation of differences across containers destined for the U.S. by 2012 (these requirements countries and through time. became U.S. law in 2007). 49. Hoekman and Nicita 2008. 37. Donner and Kruk 2009. 50. Mirza 2008, 2009. 38. All figures are obtained by first calculating responses at the country level and then averaging the results by quintiles. 51. World Economic Forum 2009b. 39. LSCI data cover only container shipping. This means that 52. World Economic Forum 2009c. countries such as Albania, Finland, Ireland, and Norway, which 53. World Bank and International Finance Corporation 2009. 50 C o n n E C T i n G T o C o m p E T E 2 0 10 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 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 155 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. Technological progress and worldwide trade and investment liberalization are presenting new opportunities for countries to harness global markets for growth and poverty reduction. But with the advent of global supply chains, a new premium is being placed on being able to move goods rapidly, reliably, and cheaply. 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 report presents the findings of the second edition of Connecting to Compete, a report on the new dataset for the 2010 Logistics Performance Index (LPI) and its component indicators. The 2010 LPI also provides a snapshot of selected performance indicators in nearly 130 countries, including expanded information on the time, cost, and reliability of import and export supply chains, infrastructure quality, performance of core services, and the friendliness of trade clearance procedures. The 2010 LPI and its indicators encapsulate the firsthand knowledge of movers of international trade, collected amid the economic turmoil of 2009. This information is relevant for policymakers and the private sector seeking to identify priorities for reform agendas. Findings include: · Except in high-income countries, the availability and quality of trade-related infrastructure is a major constraint to performance--but the specific priorities tend to vary across countries. · Efficient border management and coordination of the various agencies involved in border clearance is increasingly important. · A major challenge for the international community is how to help the lowest performing countries benefit from an increasingly open global trading system.