The FINANCIAL — Progress in logistics performance has slowed for the first time since 2007 for least developed countries, while ASEAN economies displayed a mixed trend, with some countries backsliding in their overall logistics performance and others performing above the regional average, according to the latest edition of the Logistics Performance Index, part of the bi-annual report published by the World Bank Group, “Connecting to Compete 2016: Trade Logistics in the Global Economy.”
Top performing countries have remained relatively consistent since 2010, and include dominant players in the supply chain industry. Germany ranked first for the second time in a row, followed by Luxembourg, Sweden, the Netherlands and Singapore. Singapore was among the world’s Top 10 performers, ranking 5th overall, and topped the list of ASEAN countries.
“Moving and delivering goods is not only a private endeavor, but also a public policy concern. It is more than a service. It connects firms and people to markets. Efficient logistics and connectivity of international supply chains has a very high potential, to reduce trade costs and boost integration in regional and global value chains,” World Bank Group Trade & Competitiveness Global Practice Director Cecile Fruman said during a presentation of the report, held at the World Bank Group’s Singapore Hub for Infrastructure and Urban Development.
Singapore, Malaysia, Thailand and Indonesia all outperformed the East Asia & Pacific regional average; and Indonesia, Vietnam and the Philippines ranked among the top 10 in lower middle-income countries. However, all ASEAN countries except Singapore, Myanmar and Cambodia back slid in their 2016 rankings compared to two years ago.
On timeliness, the frequency with which shipments reach their destination within the scheduled or expected time, a key criteria impacting a country’s LPI performance, ASEAN countries scored higher than the overall average. Singapore had the largest improvement in the timeliness indicator, in 2016 compared to 2014, a testament to the service delivery performance in the sector here.
“Singapore’s strong ranking in the Logistics Performance Index can be attributed to our robust ecosystem comprising of major logistics firms operating their regional and global functions here, and our consistent efforts to drive operations excellence through public-private collaborations. These factors put Singapore in good stead to maintain our position as a leading global logistics hub. However, we cannot rest on our laurels. We will need to continue to encourage the growth of supply chain innovation and to strengthen our logistics capabilities, so that Singapore remains a strategic choice for companies to navigate the increasingly complex supply chains in intra and inter region trade,” said Lee Eng Keat, Director, Logistics, Singapore Economic Development Board.
The report, which is based on survey date from more than 1,200 logistics professionals, ranks 160 countries and captures critical information about the complexity of international trade. The index scores countries on key criteria of logistics performance, including infrastructure, quality of service, shipment reliability, timeliness and border clearance efficiency.
The report found that the “logistics gap” between more and less developed countries persists – high income countries on average score 45% higher on the LPI than low income countries. While low performers appeared to be closing this gap in past surveys, this trend has reversed in 2016, and the gap between top ranked countries and those at the bottom of the list has widened.
But income alone does not explain performance – countries such as Cambodia and Myanmar improved their performance, which shows that the willingness to reform and implement good practices and policies directly impact fluidity of cross border trade.
Infrastructure continues to play a big role in assuring basic connectivity and access to gateways for most developing countries. In all income groups, survey respondents reported that infrastructure was improving. However, in all ASEAN countries except Singapore and Malaysia, the scores for infrastructure were lower than the overall scores.
“Beyond freight forwarders, shippers and carriers, those who benefit from well performing logistics and connectivity are producers and consumers, particularly small firms and the poor. Tracking connectivity through a nation’s logistics performance is a critical measurement of a nation’s ability to export competitively, import efficiently and improve productivity,” said Jordan Schwartz, Director of the World Bank Group’s Singapore Hub for Infrastructure and Urban Development.
Since its inception, the LPI and the Connecting to Compete report have been prepared by the World Bank Group’s Trade team with the participation of the Turku School of Economics and the support of the International Association of Freight Forwarders (FIATA).