WORLD BANK GROUP

UNESCAP Regional Forum and Chief Executives Meeting

June 23 –24, 2011

LOGISTICS PERFORMANCE INDEX CONNECTING TO COMPETE 2010

Monica Alina MustraTrade Facilitation and Logistics Specialist

INTERNATIONAL TRADE DEPARTMENT

6/29/2011 2

Early Bank Projects

hydroelectric in Chile

bullet train in Japan

Where We Work

Fiscal Year HighlightsFiscal Year Highlights

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THE WORLD BANK ANNUAL REPORT 2010

Focus Areas for the World Bank

Border management

Improvement in border management in a broad sense: integration of customs, product standards, tax, rules of origin, etc.

TradeInfrastructure

Improvement in the management of key trade related infrastructure, especially gateways and multimodal facilities

Logisticsservices

Improvement of the quality/professionalism of private logistics services, through technical/economic regulation and capacity building

Regional Regional trade facilitation including transit systems

Indicators Performance monitoring and indicators: e.g., data on time, cost,and reliability along corridors

Action plan Development and implementation of comprehensive action plan addressing all of the above

Partnerships

Strategic Strategic AlliancesAlliances

UN

WCO

WTO

WEF

FIATA

GEA

MNCs

ACADEMIA

Regional Banks

A Changing TF Agenda

Cross-cutting issues:

• Making transit work

• Collaborative border management

Quality and efficiency of service providers

•Freight forwarders• Customs brokers• Truckers

Trade Related infrastructure

• Roads• Ports• Railways

Old agenda

New agenda

Customs reform and modernization

• Fiscal focus• IT orientation

Both the old and new agendas needed Both the old and new agendas needed 7

A Changing TF Agenda

Historically trade facilitation reform focused on Customs reform and infrastructure development – Reflected in donor supportCustoms reform increasingly seen as only one element of the problem – Customs only responsible for a third of delays New data available – time, cost and reliability all important for competitivenessIncreased focus on performance measurementDriving a new and more comprehensive agenda Much demand for Single Window, One Stop Border Posts, and wider trade and transport logistics improvementRegional integration high on the new agenda

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Agenda

3. Want to learn more?3. Want to learn more?

1. LPI 20101. LPI 2010

2. LPI Data – EAP countries2. LPI Data – EAP countries

Data.worldbank.org

1. LPI 20101. LPI 2010

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Key messages

• Trade logistics is an important element of national competitiveness

• A country’s performance is only as good as its weakest link

• The LPI dataset can be used to identify key bottlenecks in your own country and therefore

• Help frame your needs and priorities in the trade facilitation and logistics area reform

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LPI 2010

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www.worldbank.org/lpi

Broad indication of where problems areAwareness raising to stimulate public-private dialogue on priorities for reformTrigger fresh impetus for reforms Monitor progress over time

Most comprehensive data on country performance

Built on:

more than 5,000 country assessments by over 1000 logistics professionals worldwide

Primary data gathered for 155 countries

Partnership with the private sector

Role of LPI

Most comprehensive data on country performanceBroad indication of where problems areAwareness raising to stimulate public-private dialogue on priorities for reformTrigger fresh impetus for reforms Monitor progress over time

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Logistics broadly defined matters most

Effects of convergence by low income countries to middle income averageIndicator/policy area Increase in trade

(%)Logistics Performance Index 15.2

Doing Business, cost of trading 7.4

Tariffs for low income countries reduced to 5%

5.7

All trade barriers for low income countries reduced to 10%

8.4

Note: LPI = Logistics Performance Index; Tariffs = TTRI = Trade Restrictiveness Index; All barriers = OTRI = Overall Trade Restrictiveness Index.

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LPI Questionnaire Structure

Generalmodule

InternationalQualitative

Performance

Anonymous, web-based questionnaire, in 5 languages with input from logistics professionals

DomesticQualitative

Performance

DomesticQuantitativePerformance

International LPI Domestic LPIEvaluate 8 overseas markets Evaluate Country of work

Questionnaire available from worldbank.org/lpi

Country A

Country 1

Country 2

Country 4

Country 3

Country 5

Country 6

Country 8

Country 7

How it works?

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International LPIInternational LPI Evaluate 8 overseas markets

Efficiency of the clearance processQuality of trade and transport infrastructureEase of arranging competitively priced shipmentsLogistics competence and quality of logistics servicesAbility to track and trace consignmentsTimeliness of shipment delivery

The LPI measures six dimensions of country performance:

What are efficient logistics?

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LPI 2010 – performance varies around the world

Countries are improving around the worldNo dataLogistics friendly

Logistics unfriendlyPartial performersConsistent performers

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Customs ahead of other border agencies

0%

10%

20%

30%

40%

50%

60%

70%

Logistics friendly Consistent performers

Partial performers Logistics unfriendly

Customs Other border agencies

Percentage of respondents indicating the quality and competence of customs and other border agencies is high or very high

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More than income: the “logistics gap”

With the right investment and policies, lower income countries can also be high performers

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Overperformers and underperformers

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Country LPI Rank

South Africa 28Malaysia 29Poland 30Lebanon 33Latvia 37Turkey 39Brazil 41Lithuania 45Argentina 48Chile 49

TOP 10 COUNTRIESLOWER MIDDLE INCOME

Country LPI Rank

China 27Thailand 35Philippines 44India 47Tunisia 61Honduras 70Ecuador 71Indonesia 75Paraguay 76Syrian Arab Republic 80

TOP 10 COUNTRIESLOW INCOME

Country LPI Rank

Vietnam 53Senegal 58Uganda 66Uzbekistan 68Benin 69Bangladesh 79Congo, Dem. Rep. 85Madagascar 88Kyrgyz Republic 91Tanzania 95

TOP 10 COUNTRIESUPPER MIDDLE INCOME

LPI 2010 Ranks

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25 countries achieved significant improvement in LPI

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25 countries achieved significant improvement in LPI

LICs: Afghanistan, Chad, Haiti, Myanmar, Niger, Tajikistan, Tanzania, and UzbekistanLMICs: China, Djibouti, Honduras, Philippines, and SyriaUMICs: Brazil, Colombia, Costa Rica, Dominican Republic, Kazakhstan, Lebanon, Mexico, Poland, Russian Federation, and UruguayHICs: Saudi Arabia and the Czech Republic

Source: Logistics performance survey data, 2010 and 2007

25 countries improved between 2007 and 2010

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LPI DataLPI 2010 LPI 2007

Rank Score % of highest performer Rank Score % of highest

performer

Singapore 2 4.09 99.2 1 4.19 100.0

Japan 7 3.97 95.2 6 4.02 94.8Korea, Rep. 23 3.64 84.7 25 3.52 79.0

China 27 3.49 79.9 30 3.32 72.8

Malaysia 29 3.44 78.4 27 3.48 77.7

Thailand 35 3.29 73.6 31 3.31 72.5

Philippines 44 3.14 68.8 65 2.69 52.9

Vietnam 53 2.96 63.1 53 2.89 59.2

Indonesia 75 2.76 56.5 43 3.01 63.0

Lao PDR 118 2.46 47.0 117 2.25 39.3

Cambodia 129 2.37 44.0 81 2.50 47.0

Myanmar 133 2.33 42.7 147 1.86 27.0

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% of the highest performer

LPI 2010

Highest performer Germany 100%

Lowest performer Somalia 11%

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East Asia & Pacific

APEC & ASEAN

ASEAN Average

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6 LPI International Components

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Key Policy Implications

Expand the traditional reform agenda beyond customs reform and infrastructure developmentImprove the quality of logistics services and increase border agency coordination Embark on comprehensive reform—processes, services, and infrastructure—with broad public and private supportTransit corridors: regional coordination and cooperation is vital for landlocked developing countriesInfrastructure remains high on the agendaTailor reform to each country’s circumstances

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Domestic LPIDomestic LPI Evaluate Country of work

Logistics environmentTrade infrastructureService providers and Processes

Core logistics processes Customs and border management institutionsBorder procedures

Time and cost data for import and export transactions

Domestic LPI measures

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In-country logistics: main findings

Broadly positive trends in customs, ICTs, and private logistics servicesOther border agencies often lag behind customs in terms of efficiencyImporters in low performing countries face nearly twice as many border agencies and documents as in high performing countriesUncertainty of clearance procedures and quality problems impact supply chain reliability and performance

Inefficient regulation of core logistics services increases prices and reduces qualityPhysical infrastructure remains a major constraint in many countries

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Positive trends in logistics performance since 2005

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Clearance Times

Infrastructure quality

40

Services Quality

41

Efficiency of processes

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Time and Cost Indicators

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Lead Times

APEC ASEAN High income

Export

Best lead time 1.9 2 1.7

Median lead time 2.8 2.8 2.7

Cost $849 $651 $980

Import

Best lead time 1.9 6.9 2.3

Median lead time 2.9 8.3 3.3

Cost $884 $858 $1,024

Typology of countries

LPI 2010 Products

Connecting to Compete 2010World Bank website

Logistics Performance Index 2010: The Asia-Pacific Region

Electronic copies availableLogistics Performance Index 2010:

IndonesiaWorld Bank website

Additional Contacts

Web site with data www.worldbank.org/lpiAvailability of Trade Department for regional presentations, and discussions.For further questions, please contact main authors:

Jean Francois Arvis; jarvis1@worldbank.orgMonica Alina Mustra; mmustra@worldbank.org

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3. Want to learn more?3. Want to learn more?

Contact Us

www.worldbank.org/tradewww.worldbank.org/tradefacilitationwww.worldbank.org/tradelogisticswww.worldbank.org/lpiwww.worldbank.org/tradestrategy

Washington Office1818 H Street NW

Washington DC 20433

Contact: tradefacilitation@worldbank.org

The World Bank GroupInternational Trade Department

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Additional slides

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Forthcoming

Flagship products Transit and Land-Locked Developing Countries

New knowledge and approaches to deal with the critically important area of transit

New TTFA toolkitHelps assess the inefficiencies of supply chains and identify competitiveness constraints

Corridor Management Toolkit: Trade and Transit Facilitation on Trade Corridors Border Management Modernization: A Practical Guide for Reformers

New knowledge products Trade Facilitation in Lagging Regions Logistics servicesLogistics costs and competitiveness (assessments at country level)Performance Metrics (e.g. port facilitation performance)

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TTFA 2010

52A toolkit for policy makers and remedial action

Our next contribution ….

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Upcoming:

Corridor Management

toolkit

©This page is promotional material

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Respondents Demographics

Nearly 1,000 logistics professionals from international logistics companies in 130 countries55 percent of the respondents are located in middle-income (45%) and low-income (10%) countriesLarge corporations account for 45% of the responses: multinational freight forwarders (34%) and global express carriers (11%). Survey responses come from senior executives (35%), area or country managers (25%) and department managers (24%).The majority are located in country branch offices (39%) or corporate or regional headquarters (36%).54% of the respondents typically provide all or most logistics services. Others provide full-container or full-trailer load transport (15%) or customer-tailored logistics solutions (12%).50% typically deal with multimodal transport, maritime (19%) or air (12%). Half of respondents usually oversee both domestic and int’l operations.Almost 40% works in most of the regions. Others are mainly involved with operations in Europe (21%), Asia (19%) and the Americas (13%).

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Complementarities LPI/DB

LPI DBSource of data As many respondents as

possible Few by country

Concept Performance outcomes Analytic breakdown in component procedures

Questionnaire Short online Detailed

Significance Several indices of performance

Metric of red tape applicable to trade operations (time export, import

Comparisons and overlaps• Limited correlation (at least with stringent tests: rank, partial) of main indicators (LPI

and DB time X/M) • Different concepts of time to import and export, with huge discrepancies 57