International Transport Forum - 2014 annual summit Transport for a Changing World | 21-23 may 2014 - Leipsig, Germany | France presidency

How logistics friendly are you?

7 April 2014
Dilay Celebi, ITF Research Centre

International differences in logistics efficiency determine to a large extent the efficiency and resilience of economies. The comparative efficiency of a country’s logistics chain has vital importance in attracting investment and enhancing industrial competitiveness. In this context, the World Bank’s Logistics Performance Index (LPI) provides the most comprehensive international comparison tool to measure the trade and transport facilitation friendliness of countries.

The results of the 2014 edition of the index, published in March, show that though there is a slightly converging trend on scores since 2007, there is a huge gap between best and worst performing countries. Similar to results of previous reports, top 10 rankings are dominated by high-income countries, while all 10 economies at the bottom of the ranking are low-income.

However, the change in global economic balance raises the need for debate on additional issues behind this figure of imbalance. Over the last 20 years, economic and political power has shifted towards developing economies. Asia and the emerging markets represent evolving economic powerhouses which will drive and shape the direction and future of global transport corridors. A country’s competitiveness which is based on low labour costs or abundant natural resources can be easily lost through high transportation costs, inefficient border administration or insufficient communication and transportation infrastructure. Today, the biggest obstacles to international trade are physical, administrative and informal restrictions on the movement of goods. Highlights of LPI 2014 demonstrate that one distinctive feature of high-performing countries is the presence of a mature logistics services market.

Increasingly respected by policy makers, the LPI has helped significantly in enhancing the dialogue between policy makers and the private sector for determining priorities in trade and transportation facilitation. Collectively and individually, the private and public sector stakeholders have an interest in improving logistics performance and keeping industry profitable and competitive. In “logistics friendly” countries, the government’s role in planning for improved transport and logistics has evolved from infrastructure investments and basic border management to strategic plans for improving international competitiveness, including design of better sectoral policies to boost sustainable development, facilitation of international trade and proper regulation of markets, reinforcement of logistics security and improvement of logistics service efficiency.

In a changing world, new trade corridors will develop around the countries which can outperform their peers by effective and innovative policies for ensuring competitive logistics services and strengthening transportation infrastructure through strategic restructuring and reinforcement of related services. Further discussions on these issues will take place at the International Transport Forum’s Annual Summit session “Constructing Supply Chains of the Future: How Shifts in Global Economic Balance Affect Transport”, to be held 22 May 2014 in Leipzig, Germany.

ITF’s Research Centre team, working with international experts including Lauri Ojala, Professor and Chair of Logistics at the Turku School of Economics, Finland, is currently conducting research to understand the performance determinants “Behind the LPI”. The team aims to demonstrate the relationship between specific policy actions and national road and transport performance as the basis of the LPI, and to develop a generic toolkit to support countries managing policy change and to achieve results from performance-boosting opportunities.

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