LOGISTICS PERFORMANCE INDEX CONNECTING TO COMPETE 2012

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1 WORLD BANK GROUP LOGISTICS PERFORMANCE INDEX CONNECTING TO COMPETE 2012 Jean-François ARVIS INTERNATIONAL TRADE DEPARTMENT ISEL November Douane

2 How does the World Bank help? Advise governments on reforms Border management Trade Infrastructure Improvement in border management in a broad sense: integration of customs, product standards, tax, rules of origin, etc. Improvement in the management of key trade related infrastructure, especially gateways and multimodal facilities Logistics services Improvement of the quality/professionalism of private logistics services, through technical/economic regulation and capacity building Regional Regional trade facilitation including transit systems Indicators Action plan Performance monitoring and indicators: e.g., data on time, cost, and reliability along corridors Development and implementation of comprehensive action plan addressing all of the above

3 Where does the World Bank come in? Logistics providers increase level of services as they will operate in better, faster and more reliable environments Countries FIATA World Bank Indicators essential for reforms Governments Advice on reforms Become more competitive Carry private sector voice to governments! 3

4 The Logistics Performance Index 4

5 The Logistics Performance Index Measures the trade logistics efficiency of a country Fundamental premise: Efficient logistics drives economic performance and competitiveness 5

6 The Logistics Performance Index First report 2007, every 2 years Source of data: online survey of logistics service firms (freight forwarders, express carriers) Rate logistics performance for up to 8 markets on a 1-5 scale LPI a weighted average of scores (using principal component analysis) Domestic LPI data reported by firms for own country 6

7 The Logistics Performance Index Partnership with the private sector Built on more than 6,000 country assessments by over 1000 logistics professionals worldwide Primary data gathered for 155 countries (143 for domestic LPI indicators) 69% of respondents based in developing countries; 82% have less than 250 employees

8 LPI Questionnaire Structure International LPI Evaluate 8 overseas markets Domestic LPI Evaluate Country of work General module International Qualitative Performance Domestic Qualitative Performance Domestic Quantitative Performance Country 1 Country 2 Country 3 Country 4 Country 5 Country 6 Country A Country 7 Country 8

9 LPI Questionnaire Structure General module International LPI Evaluate 8 overseas markets International Qualitative Performance Six dimensions of country performance: Efficiency of the clearance process Quality of trade and transport infrastructure Ease of arranging competitively priced shipments Logistics competence and quality of logistics services Ability to track and trace consignments Timeliness of shipment delivery Country 1 Country 2 Country 3 Country 4 Country 5 Country 6 Country 7 Country 8 Country A

10 LPI Results 10

11 Good News: All countries performing better Percent With the right investment and policies, lower income countries can also be high performers Bottom quintile Fourth quintile Third Second quintile quintile Top quintile LPI score as percentage of highest LPI score by LPI quintile, 2007, 2010, and

12 Percentage change in LPI scores over , by LPI component and income group 12 Customs Infrastructure Quality of logistics services 10 Percentage change Low income Lower middle income Upper middle income High income non-oecd High income OECD

13 LPI 2012 Logistics friendly Consistent performers Partial performers Logistics unfriendly Countries are improving around the world

14 More than income: the logistics gap 100% 90% 80% 20% of LICs are in the 3 rd quintile Percent 70% 60% 50% 40% 30% 20% Top quintile Second quintile Third quintile Fourth quintile Bottom quintile 15% of LMICs are in the 2 nd 10% of UMICs are in the 1st tier, but another 10% are in the bottom tier 10% 0% Low income Lower middle income Upper middle income High income non-oecd High income OECD 14

15 LPI Ranks TOP 10 COUNTRIES UPPER MIDDLE INCOME TOP 10 COUNTRIES LOWER MIDDLE INCOME TOP 10 COUNTRIES LOW INCOME Country LPI Rank Country LPI Rank Country LPI Rank South Africa 23 China 26 Turkey 27 Malaysia 29 Bulgaria 36 Thailand 38 Chile 39 Tunisia 41 Brazil 45 Mexico 47 India 46 Morocco 50 Philippines 52 Vietnam 53 Egypt, Arab Rep. 57 Indonesia 59 Yemen, Rep. 63 Ukraine 66 Pakistan 71 Guatemala 74 Benin 67 Malawi 73 Madagascar 84 Niger 87 Tanzania 88 Guinea-Bissau 94 Togo 97 Central African Republic 98 Cambodia 101 Zimbabwe 103

16 Improvements can be obtained with the right investment and engagement % of Highest Performer 2012 % of Highest Performer 2010 % of Highest Performer Turkey Bulgaria Tunisia Morocco Vietnam Egypt Indonesia Pakistan Malawi Tanzania

17 LPI Questionnaire Structure Domestic LPI Evaluate Country of work Domestic Qualitative Performance Domestic Quantitative Performance Country A

18 Domestic logistics environement Environment, Processes, Institutions, Time and Cost Logistics environment, Core logistics processes, Institutions and Performance time and cost data: Quality data for infrastructure, Service providers and processes Customs administration, Border procedures and time Time/cost data for import and export transactions Domestic LPI

19 Customs ahead of other border agencies 70% 60% Customs Other border agencies 50% 40% 30% Percentage of respondents indicating the quality and competence of customs and other border agencies is high or very high 20% 10% 0% Logistics friendly Consistent performers Partial performers Logistics unfriendly 19

20 Median import lead time and average clearance time (days), by LPI quintile , , , ,5 0 Bottom quintile (lowest performance) Fourth quintile (low performance) Third quintile (average performance) Second quintile Top quintile (highest (high performance) performance) 0 Lead time (port/airport) - import Clearance time without physical inspection Lead time (land) - import Clearance time with physical inspection

21 Doing Business Important initiative by the IFC (10 years) Measure red tape is several areas: starting a business, payments one section trading across border Three dimensions for each areas number of days, cost, and number of documents Tries to focus on information that is objective and not too variable (ideally single respondent)

22 LPI and DB separate but complementary Source of data Concept LPI 3 rd country providers of logistics services Performance outcomes DB In-country entities with knowledge of business regulations Analytic breakdown in component procedures Frequency Every 2 years, since 2007 Yearly, since 2003 Significance Several indices of performance Metric of broader business regulatory environment Questionnaire Short online Detailed Countries Both indices provide basic input for policy makers. Neither are in-depth analysis. 22

23 Red tape affecting import and export transactions, by LPI quintile 5 4,5 4 3,5 3 2,5 2 1,5 1 0,5 0 Bottom quintile (lowest performance) Fourth quintile (low performance) Third quintile (average performance) Second quintile (high performance) Top quintile (highest performance) No. of import agencies No. of export agencies No. of import documents No. of export documents

24 The Logistics Performance Index MERCI 24

Logistics Performance and trade facilitation?

WORLD BANK GROUP Logistics Performance and trade facilitation? Jean-François ARVIS, The World Bank ISEL Douane française Le Havre Novembre 2012 FROM BUSINESS TO MACRO LOGISTICS Semantic Logistics = art