Germany topped the rankings of 155 countries rated in the World Bank’s ‘Logistics Performance Index’ (LPI), a report published this week based on more than 5,000 individual country assessments made by around 1,000 international freight forwarders. (Read the full report here
The report highlights a range of categories of logistics expediency, such as transport infrastructure, customs, import and export time, service and more. It suggests that countries that recognise the importance of transport investment and planning at a national level perform better than those that do not.
Close behind Germany, which had a ranking of 4.11 out of 5, were Singapore, Sweden and the Netherlands, while the US was placed 15th (with a score of 3.86), China 27th and India 47th. African countries including Rwanda, Sierra Leone and Somalia ranked at the bottom. The rankings are broadly aligned with income levels, and as such there is a 45% gap in the performance score between the wealthier and poorer countries.
There was not major change in rankings since they were last released in 2007, however the LPI does suggest surprising slack in some developed infrastructures, such as the US, which not only ranked 15th behind Canada and Hong Kong, but came a mediocre 36th with its rating for ‘international shipments’. However, as the report itself notes, the differences between the top rankings should not be overemphasised, as there is a tight band of relatively high scores in the top 20. Also, the size of the US means that it has longer, costlier lead times, particularly for import and export distribution.
Perhaps more surprising to some logistics companies and experts would be the high ranking of China, which placed in the top quintile with a score of 3.49. Brazil and India also had relatively high scores of 3.20 and 3.12, respectively, which relative to their average income puts them among the most significant over performers (others include South Africa, Thailand and Vietnam). These scores are comparable to wealthier Central European countries such as the Czech Republic (3.51), Poland (3.44) and Slovakia (3.24).
On the other hand, the worst performing countries relative to their income include Greece, Croatia, Montenegro, Slovenia and Russia, which ranked 94th with a 2.61 rating.
While these ratings confirm the progress that has been made, particularly as a result of ongoing public and private investment in East Asia, the report notes some caveats. The international freight forwarders surveyed have much more experience in China or India with main port or border crossing, rather than the vast, underdeveloped hinterlands where most problems exist. Likewise, landlocked countries in Central Europe or Central Asia, or those with limited port gateways, like Russia, are often subject to delays that are not always within their control.
Therefore it would appear that the survey overemphasises the capabilities of freight forwarders rather than the country’s infrastructure, in some ways. This is perhaps further reflected in that ratings for the infrastructure of most transport modes and warehousing ranked below the ratings for the services provided on those modes, suggesting that customers (which include the freight forwarders themselves) are happier with the companies operating the service than with the physical infrastructure itself. The exception here is rail, which received equally low ratings in both categories.
If this rating system might seemed biased in the providers’ favour, the report’s authors note that although the respondents are freight forwarders and express carriers, “the quality and competence of service providers is assessed by their competitors.”
The report ultimately suggests that logistics performance is improving, and one of the most important factors to this success is policy at national levels, particularly where policymakers “clearly recognise the importance of trade facilitation and logistics”. The reports highlights the positive results found in countries that have made national plans to make their transport sectors more competitive, which has included public investiture as well as liberalisation of areas such as customs clearance. Germany has led the way with this in 2008 with a “Logistics Masterplan”, but other programmes at a national level have also been followed in Brazil, Columbia and Morocco, all of which have shown improvements.
This recognition of the importance of transport and logistics at the national level is facing a difficult time, however, with the economic crisis making it more difficult for both governments and private companies to continue the necessary investments.