CONNECTING TO COMPETE The 2014 Logistics Performance Index

Transcription

1 CONNECTING TO COMPETE The 2014 Logistics Performance Index Transport Business Summit 2014 Brussels Dr. Jean-François Arvis Senior Economist, The World Bank Prof. Lauri Ojala University of Turku, Finland March 27, 2014

2 Outline 1. Why care about logistics? 2. What is the Logistics Performance Index? 3. LPI 2014 Results 4. Key messages 5. The LPI s role in the policy dialogue 6. How the World Bank supports countries in logistics pollicy-making 2

3 Why care about logistics? 3

4 Average trade costs of goods value 250% 230% 210% 190% 170% 150% 130% 110% 90% 70% 50% Why Logistics Matters Country trade costs of goods value vs. LPI score 2 2,5 3 3,5 4 4,5 LPI score (2010) Supply chain bottlenecks are the primary cause of friction in trade (trade costs). Reducing them by half would raise trade by 15% and production by 5% globally. 4

5 Logistics Performance and Connectivity Exchange Rate Cost of Starting Business Logistics Performance Air Connectivity Shipping Connectivity Tariffs Same RTA Common Language Common Border Distance Domestic Costs Bilateral Costs Geography and (most of) shipping connectivity are out of a country s control, but policy decisions are not. 0 0,1 0,2 0,3 0,4 0,5 0,6 Elasticity of trade costs Besides distance, connectivity and logistics performance matter more than other trade barriers in boosting trade. Source: World Bank, Trade Costs in the Developing World (RTA = Regional Trade Agreement) 5

6 Logistics costs impact productivity Firm-level logistics expenditures as % of sales in Germany 5% 4% Transport cost Other logistics costs Finland 5% 7% Estonia 7% 9% Kazakhstan 7% 13% 0% 5% 10% 15% 20% Reliability is often more important than freight costs Logistics costs increase with decreasing logistics performance. Most of this increase comes from lower reliability and the need to increase inventory ( other costs ). Sources: Authors, for Germany: TU Berlin, for Brazil: ILOS, for Finland: Turku School of Economics 6

7 What is the Logistics Performance Index (LPI)? 7

8 Supply Chain Framework & the six LPI dimensions Timeliness Customs International shipments Tracking and Tracing Infrastructure Delivery to Dock Alongside Vessel Unloaded on Dock Point of Origin Seller s Factory Services Quality Frontier/ Border Delivered to Buyer s Warehouse Exporting Country Importing Country 8

9 Partnerships LPI outline Built on > 5,000 country assessments by over 1,000 freight forwarders & logistics professionals worldwide Survey in cooperation with partners Respondents rate logistics performance of own country and 8 other countries on a scale of 1 to 5 Coverage: 160 countries in LPI 2014 Published every 2 years LPI editions: 2007, 2010, 2012 &

10 What do we measure? Here s a sample question of the Domestic LPI: Source: LPI 2013/2014 Survey The LPI survey is based on expert assessments of logistics professionals (perception-based) 10

11 LPI 2014 Results 11

12 LPI data and report at: lpi.worldbank.org 12

13 Percentage of highest LPI score Good News: All countries performing better With the right investment and policies, lower income countries can also be high performers. Bottom quintile Fourth quintile Third quintile Countries in bottom quintile saw the largest improvements ( ). Second quintile Top quintile LPI score as percentage of highest LPI score by LPI quintile; 2007, 2010, 2012 and

14 Income level helps little without aligned policies Countries by LPI 2014 overall score and GDP/capita 14

15 LPI 2014: Top 10 European performers 1 Germany 2 Netherlands Belgium 3 United Kingdom Sweden Luxembourg Ireland France Denmark Spain ,1 4,0 4 4,0 4,0 4,0 3,9 3,9 3,8 3,8 3,7 LPI rank LPI score LPI 2014 rank out of 160 economies 15

16 DEU NLD BEL GBR SWE LUX IRL FRA DNK ESP ITA AUT FIN PRT POL CZE HUN LVA SVN EST ROM SVK GRC LTU BGR MLT HRV CYP LPI is a survey scores are Confidence Intervals 4,5 4,3 EU 28 sorted by LPI 2014 score 4,1 3,9 3,7 3,5 3,3 3,1 2,9 Score ,7 2,5 LPI score range: 1 = lowest; 5 = highest 16

17 DEU NLD BEL GBR SWE LUX IRL FRA DNK ESP ITA AUT FIN PRT POL CZE HUN LVA SVN EST ROM SVK GRC LTU BGR MLT HRV CYP LPI is a survey scores are Confidence Intervals 4,5 4,3 EU 28 sorted by LPI 2014 score 4,1 3,9 3,7 3,5 3,3 3,1 2,9 2,7 2,5 Score 2014 Score 2012 LPI score range: 1 = lowest; 5 = highest 17

18 DEU NLD BEL GBR SWE LUX IRL FRA DNK ESP ITA AUT FIN PRT POL CZE HUN LVA SVN EST ROM SVK GRC LTU BGR MLT HRV CYP LPI is a survey scores are Confidence Intervals 4,5 4,3 EU 28 sorted by LPI 2014 score 4,1 3,9 3,7 3,5 3,3 3,1 2,9 2,7 2,5 Score 2014 Lower bound 2014 Upper bound 2014 LPI score range: 1 = lowest; 5 = highest 18

19 DEU NLD BEL GBR SWE LUX IRL FRA DNK ESP ITA AUT FIN PRT POL CZE HUN LVA SVN EST ROM SVK GRC LTU BGR MLT HRV CYP LPI is a survey scores are Confidence Intervals 4,5 4,3 EU 28 sorted by LPI 2014 score 4,1 3,9 3,7 3,5 3,3 3,1 2,9 2,7 2,5 Score 2014 Score 2012 Lower bound 2014 Upper bound 2014 LPI score range: 1 = lowest; 5 = highest 19

20 DEU NLD BEL GBR SWE LUX IRL FRA DNK ESP ITA AUT FIN PRT POL CZE HUN LVA SVN EST ROM SVK GRC LTU BGR MLT HRV CYP LPI is a survey scores are Confidence Intervals 4,5 4,3 EU 28 sorted by LPI 2014 score 4,1 3,9 3,7 3,5 3,3 3,1 2,9 2,7 2,5 Score 2014 Score 2012 Score Lower bound 2014 Upper bound 2014 LPI score range: 1 = lowest; 5 = highest 20

21 DEU NLD BEL GBR SWE LUX DNK FRA FIN IRL AUT ESP ITA PRT POL CZE HUN SVN LVA SVK EST ROM BGR LTU GRC CYP MLT HRV Aggregated data for less volatile EU 28 sorted by weighted* LPI rank Rank 2014 out of 160 Rank 2012 out of 155 Weighted rank out of 166 *) Weights: 2014 = 53.3%; 2012 = 26.7%; 2010 = 13.3%; 2007 = 6.7 % 21

22 LPI 2014: Top 10 performers by income group Germany Netherlands Belgium United Kingdom Singapore Sweden Norway Luxembourg United States Japan Vietnam Indonesia India Philippines Ukraine Egypt, Arab Rep. El Salvador Pakistan Nigeria Guatemala Top 10 overall 2,4 2,6 2,8 3,0 3,2 3,4 3,6 3,8 4,0 4,2 Top 10 lower middle-income 2,4 2,6 2,8 3,0 3,2 3,4 3,6 3,8 4,0 4,2 By overall LPI score Malaysia China Turkey Hungary South Africa Thailand Romania Panama Bulgaria Mexico Malawi Kenya Rwanda Cambodia Burkina Faso Liberia Ethiopia Nepal Burundi Bangladesh Top 10 upper middle-income 2,4 2,6 2,8 3,0 3,2 3,4 3,6 3,8 4,0 4,2 Top 10 low-income 2,4 2,6 2,8 3,0 3,2 3,4 3,6 3,8 4,0 4,2 22

23 Key messages 23

24 Key messages from the LPI 2014 The gap between the best and worst logistics performers is slowly narrowing, confirming trends from LPI reports. Although a country's level of development plays an important role in its logistics performance, policies do matter. Over-performing countries such as Indonesia have carried out targeted reforms to improve the efficiency of their logistics. In terms of trade facilitation, customs show a steady improvement across the board but other border control agencies lag behind. Weakest link paradigm: The challenge is to get right a number of reforms in parallel and in several areas. This explains a lot of churning in scores and rank in the middle of the sample. 24

25 The Services Gap Customs Infrastructure Quality of logistics and services 12 %-change in LPI component as measured against the highest performer, Supply chain efficiency depends on the quality of private services moving the goods. If logistics service delivery is poor, even good physical connectivity is not enough. 2 0 Low income Lower middle income Upper middle income 25

26 Import Lead Time (Days) Persistent & large differences in border process efficiency Import lead time in days (port/airport) by LPI quintile Bottom quintile (lowest performance) Fourth quintile (low performance) Third quintile (average performance) Second quintile (high performance) Top quintile (highest performance) The import lead time for port and airport supply chains is more than twice as long in low-performing countries as in high-performing ones. 26

27 Key LPI messages for different income levels Key message for low-income countries: Progress in logistics performance is driven by improvement in infrastructure and basic border management reforms. Key message for middle-income countries: Focus moves from infrastructure and border management to development of logistics services with growing demand for outsourced logistics. In more sophisticated logistics environments, the low hanging fruits have largely been reaped. The new generation of reforms is more complex, involves many stakeholders, and takes time. Key message for high-income countries: The demand for environmentally friendly logistics services is growing in advanced economies. 27

28 Percentage of respondents looking for green shipping alternatives Looking for environmental logistics solutions 40% 35% 30% % 20% 15% 10% 5% 0% Low income Middle Income High income: nonoecd High income: OECD The percentage of respondents looking for environmentally friendly shipping alternatives is growing, and is the highest in advanced economies. 28

29 The LPI s role in the policy dialogue 29

30 The LPI What is the role of the LPI? Is an overall metric of supply chain efficiency. Provides information of where a country stands and a broad indication of problem areas. Is not a diagnostic tool and needs to be supported by specific tools designed to perform that function. The LPI has had a significant impact in raising awareness and pushing for comprehensive connectivity and logistics policies, e.g. in the EU, Kazakhstan, APEC and Indonesia. 30

31 Policies matter to Logistics Performance Infrastructure Procedures and Trade Facilitation Services Ports Road/rail corridors Airports PPP Customs, payments etc.: Simplification & automation Harmonization & standardization Modernization & governance of border agencies Forwarders, truckers, brokers etc. Regulation of entry Market structure and competition Competence and quality of service Sustainable Logistics «Green Logistics» City Logistics Food security Regulations (customs, services) are increasingly regional (e.g. EU), but implementation national. 31

32 How the World Bank supports countries in Logistics policy-making 32

33 World Bank lending projects in logistics World Bank Group lending in FY 2013 USD 52.6 bn 7-8% of the lending portfolio is logistics-related, e.g. in: International Trade corridors: Eastern Europe, Central Asia, Central Africa, India, Nepal, Central America, East & South Africa Internal corridors, ports: Brazil, China, Argentina, Indonesia Customs & fiscal reforms: Kazakhstan, Russia, Laos, Philippines, Cambodia Export development: Tunisia, Latin America 33

34 World Bank advisory work in logistics Advisory services to national governments and increasingly to regions, for example, in: Greece, Eastern Europe, Central Asia Morocco, Tunisia Western Africa, East Africa, Zambia, Zimbabwe Colombia, Argentina, Brazil, Uruguay, Peru, Central America Indonesia, Vietnam, Philippines, Cambodia, Laos Increasingly fee for service Concept: Exploit synergies between institutional reforms and infrastructure investment. 34

35 World Bank s related indicators Doing Business Report Trading across Borders Indicator, a red tape metric e.g. number of document vs. Supply Chain efficiency Bilateral Trade Costs Database Since 2013 with trade division of UNESCAP New cross-country indicators: 1. Aggregated trade costs by countries 2. Air Connectivity Index (with FAA and IATA) 35

36 Thank you! 36