CONNECTING TO COMPETE - European Commission€¦ · 27-03-2014 · LPI is a survey scores are...
Transcript of CONNECTING TO COMPETE - European Commission€¦ · 27-03-2014 · LPI is a survey scores are...
March 27, 2014
Dr. Jean-François Arvis
Senior Economist, The World Bank
Prof. Lauri Ojala
University of Turku, Finland
CONNECTING TO COMPETE The 2014 Logistics Performance Index
Transport Business Summit 2014
Brussels
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 World Bank LPI, Transport Business Summit 2014, Brussels
Why care about logistics?
3 World Bank LPI, Transport Business Summit 2014, Brussels
4
50%
70%
90%
110%
130%
150%
170%
190%
210%
230%
250%
2 2,5 3 3,5 4 4,5
LPI score (2010)
Country trade costs of goods value vs. LPI score
Why Logistics Matters
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.
World Bank LPI, Transport Business Summit 2014, Brussels
Ave
rag
e t
rad
e c
osts
of
go
od
s v
alu
e
Logistics Performance and Connectivity
Elasticity of trade costs
0 0,1 0,2 0,3 0,4 0,5 0,6
Distance
Common Border
Common Language
Same RTA
Tariffs
Shipping Connectivity
Air Connectivity
Logistics Performance
Cost of Starting Business
Exchange Rate
Domestic
Costs
Bilateral
Costs
Source: World Bank, Trade Costs in the Developing World 2013. (RTA = Regional Trade Agreement)
5
Besides distance, connectivity and logistics performance
matter more than other trade barriers in boosting trade.
Geography and
(most of) shipping
connectivity are
out of a country’s
control, but policy
decisions are not.
World Bank LPI, Transport Business Summit 2014, Brussels
Logistics costs impact productivity
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”).
6
Firm-level logistics expenditures as % of sales in 2011-2012
Sources: Authors, for Germany: TU Berlin, for Brazil: ILOS, for Finland: Turku School of Economics
7%
7%
5%
5%
13%
9%
7%
4%
0% 5% 10% 15% 20%
Kazakhstan
Estonia
Finland
GermanyTransport cost
Other logistics costs
World Bank LPI, Transport Business Summit 2014, Brussels
What is the
Logistics
Performance
Index
(LPI)?
7 World Bank LPI, Transport Business Summit 2014, Brussels
Point of Origin
Seller’s Factory
Alongside
Vessel Delivery
to Dock
Exporting Country
Delivered to
Buyer’s
Warehouse Frontier/
Border
Supply Chain Framework & the six LPI dimensions
Unloaded
on Dock
Importing Country
Customs
Infrastructure
Services
Quality
Timeliness
International
shipments
Tracking and Tracing
8 World Bank LPI, Transport Business Summit 2014, Brussels
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 & 2014
Partnerships
9 World Bank LPI, Transport Business Summit 2014, Brussels
What do we measure?
Here’s a sample question of the Domestic LPI:
Source: LPI 2013/2014 Survey
10
The LPI survey is based on expert
assessments of logistics professionals
(perception-based) World Bank LPI, Transport Business Summit 2014, Brussels
LPI 2014 Results
11 World Bank LPI, Transport Business Summit 2014, Brussels
12
LPI data and report at: lpi.worldbank.org
World Bank LPI, Transport Business Summit 2014, Brussels
Good News: All countries performing better
13
With the right
investment and
policies, lower income
countries can also be
high performers.
30
40
50
60
70
80
90
Bottomquintile
Fourthquintile
Third quintile Secondquintile
Top quintile
Perc
en
tag
e o
f h
igh
est
LP
I sco
re
2014 2012 2010 2007
Countries in
bottom quintile
saw the largest
improvements
(2007-2014).
LPI score as percentage of highest LPI score by LPI quintile;
2007, 2010, 2012 and 2014 World Bank LPI, Transport Business Summit 2014, Brussels
Income level helps little without aligned policies
Countries by LPI 2014 overall score and GDP/capita
14 World Bank LPI, Transport Business Summit 2014, Brussels
LPI 2014: Top 10 European performers
15
1
2
3
4
6
8
11
13
17
18
4,1
4,0
4,0
4,0
4,0
3,9
3,9
3,8
3,8
3,7
0 5 10 15 20
Germany
Netherlands
Belgium
United Kingdom
Sweden
Luxembourg
Ireland
France
Denmark
Spain
LPI rank LPI score
World Bank LPI, Transport Business Summit 2014, Brussels
LPI 2014 rank out of 160 economies
LPI is a surveyscores are Confidence Intervals
16
2,5
2,7
2,9
3,1
3,3
3,5
3,7
3,9
4,1
4,3
4,5
DE
U
NL
D
BE
L
GB
R
SW
E
LU
X
IRL
FR
A
DN
K
ES
P
ITA
AU
T
FIN
PR
T
PO
L
CZ
E
HU
N
LV
A
SV
N
ES
T
RO
M
SV
K
GR
C
LT
U
BG
R
ML
T
HR
V
CY
P
Score 2014
World Bank LPI, Transport Business Summit 2014, Brussels
EU 28 sorted by LPI 2014 score
LPI score range: 1 = lowest; 5 = highest
LPI is a surveyscores are Confidence Intervals
17
2,5
2,7
2,9
3,1
3,3
3,5
3,7
3,9
4,1
4,3
4,5
DE
U
NL
D
BE
L
GB
R
SW
E
LU
X
IRL
FR
A
DN
K
ES
P
ITA
AU
T
FIN
PR
T
PO
L
CZ
E
HU
N
LV
A
SV
N
ES
T
RO
M
SV
K
GR
C
LT
U
BG
R
ML
T
HR
V
CY
P
Score 2014
Score 2012
World Bank LPI, Transport Business Summit 2014, Brussels
EU 28 sorted by LPI 2014 score
LPI score range: 1 = lowest; 5 = highest
LPI is a surveyscores are Confidence Intervals
18
2,5
2,7
2,9
3,1
3,3
3,5
3,7
3,9
4,1
4,3
4,5
DE
U
NL
D
BE
L
GB
R
SW
E
LU
X
IRL
FR
A
DN
K
ES
P
ITA
AU
T
FIN
PR
T
PO
L
CZ
E
HU
N
LV
A
SV
N
ES
T
RO
M
SV
K
GR
C
LT
U
BG
R
ML
T
HR
V
CY
P
Score 2014
Lower bound 2014
Upper bound 2014
World Bank LPI, Transport Business Summit 2014, Brussels
EU 28 sorted by LPI 2014 score
LPI score range: 1 = lowest; 5 = highest
LPI is a surveyscores are Confidence Intervals
19
2,5
2,7
2,9
3,1
3,3
3,5
3,7
3,9
4,1
4,3
4,5
DE
U
NL
D
BE
L
GB
R
SW
E
LU
X
IRL
FR
A
DN
K
ES
P
ITA
AU
T
FIN
PR
T
PO
L
CZ
E
HU
N
LV
A
SV
N
ES
T
RO
M
SV
K
GR
C
LT
U
BG
R
ML
T
HR
V
CY
P
Score 2014
Score 2012
Lower bound 2014
Upper bound 2014
World Bank LPI, Transport Business Summit 2014, Brussels
EU 28 sorted by LPI 2014 score
LPI score range: 1 = lowest; 5 = highest
LPI is a surveyscores are Confidence Intervals
20
2,5
2,7
2,9
3,1
3,3
3,5
3,7
3,9
4,1
4,3
4,5
DE
U
NL
D
BE
L
GB
R
SW
E
LU
X
IRL
FR
A
DN
K
ES
P
ITA
AU
T
FIN
PR
T
PO
L
CZ
E
HU
N
LV
A
SV
N
ES
T
RO
M
SV
K
GR
C
LT
U
BG
R
ML
T
HR
V
CY
P
Score 2014
Score 2012
Score 2007-2014
Lower bound 2014
Upper bound 2014
EU 28 sorted by LPI 2014 score
World Bank LPI, Transport Business Summit 2014, Brussels
LPI score range: 1 = lowest; 5 = highest
Aggregated data for 2007-2014 less volatile
21 World Bank LPI, Transport Business Summit 2014, Brussels
0
10
20
30
40
50
60
70
80
DE
U
NL
D
BE
L
GB
R
SW
E
LU
X
DN
K
FR
A
FIN
IRL
AU
T
ES
P
ITA
PR
T
PO
L
CZ
E
HU
N
SV
N
LV
A
SV
K
ES
T
RO
M
BG
R
LT
U
GR
C
CY
P
ML
T
HR
V
Rank 2014 out of 160
Rank 2012 out of 155
Weighted rank 2007-2014 out of 166
EU 28 sorted by weighted*
LPI 2007-2014 rank
*) Weights: 2014 = 53.3%; 2012 = 26.7%; 2010 = 13.3%; 2007 = 6.7 %
LPI 2014: Top 10 performers by income group
22
2,4 2,6 2,8 3,0 3,2 3,4 3,6 3,8 4,0 4,2
Malaysia
China
Turkey
Hungary
South Africa
Thailand
Romania
Panama
Bulgaria
Mexico
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
Vietnam
Indonesia
India
Philippines
Ukraine
Egypt, Arab Rep.
El Salvador
Pakistan
Nigeria
Guatemala
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
Malawi
Kenya
Rwanda
Cambodia
Burkina Faso
Liberia
Ethiopia
Nepal
Burundi
Bangladesh
Top 10 low-income
2,4 2,6 2,8 3,0 3,2 3,4 3,6 3,8 4,0 4,2
Germany
Netherlands
Belgium
United Kingdom
Singapore
Sweden
Norway
Luxembourg
United States
Japan
Top 10 overall By overall LPI score
World Bank LPI, Transport Business Summit 2014, Brussels
Key messages
23 World Bank LPI, Transport Business Summit 2014, Brussels
Key messages from the LPI 2014
• The gap between the best and worst logistics performers is
slowly narrowing, confirming trends from LPI 2007-2012 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 World Bank LPI, Transport Business Summit 2014, Brussels
The “Services Gap”
25
0
2
4
6
8
10
12
Low income Lower middleincome
Upper middleincome
%-change in LPI
component as measured
against the highest performer, 2007-2014
Customs Infrastructure Quality of logistics and services
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.
World Bank LPI, Transport Business Summit 2014, Brussels
Persistent & large differences in border process efficiency
26
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.
Import lead time in days (port/airport)
by LPI quintile
0
1
2
3
4
5
6
7
Bottomquintile(lowest
performance)
Fourth quintile(low
performance)
Third quintile(average
performance)
Secondquintile (highperformance)
Top quintile(highest
performance)
Imp
ort
Lead
Tim
e (
Days)
World Bank LPI, Transport Business Summit 2014, Brussels
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 World Bank LPI, Transport Business Summit 2014, Brussels
Looking for environmental logistics solutions
28
0%
5%
10%
15%
20%
25%
30%
35%
40%
Low income Middle Income High income:nonOECD
High income:OECD
2014 2012
The percentage of respondents looking for
environmentally friendly shipping alternatives is
growing, and is the highest in advanced economies.
Perc
en
tag
e o
f re
sp
on
den
ts l
oo
kin
g f
or
‘gre
en
’ sh
ipp
ing
alt
ern
ati
ves
World Bank LPI, Transport Business Summit 2014, Brussels
The LPI’s role in the policy dialogue
29 World Bank LPI, Transport Business Summit 2014, Brussels
What is the role of the LPI?
30
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.
World Bank LPI, Transport Business Summit 2014, Brussels
Policies matter to Logistics Performance
• Ports
• Road/rail corridors
• Airports
• PPP
Infrastructure
• Customs, payments etc.:
• Simplification & automation
• Harmonization & standardization
• Modernization & governance of border agencies
Procedures and
Trade Facilitation
• Forwarders, truckers, brokers etc.
• Regulation of entry
• Market structure and competition
• Competence and quality of service
Services
• «Green Logistics»
• City Logistics
• Food security
Sustainable Logistics
31
Regulations (customs, services) are increasingly
regional (e.g. EU), but implementation national.
World Bank LPI, Transport Business Summit 2014, Brussels
How the World Bank supports countries
in Logistics policy-making
32 World Bank LPI, Transport Business Summit 2014, Brussels
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 World Bank LPI, Transport Business Summit 2014, Brussels
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”
34
Concept: Exploit synergies between institutional
reforms and infrastructure investment.
World Bank LPI, Transport Business Summit 2014, Brussels
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 World Bank LPI, Transport Business Summit 2014, Brussels
Thank you!
36 World Bank LPI, Transport Business Summit 2014, Brussels