Logistics Performance Index: what do indicators tell us? Virginia Tanase Sr. Transport Specialist Transport, Water and Information and Communication Technology Department The World Bank 6th IRU Euro-Asian Road Transport Conference Tbilisi, Georgia 16-17 June 2011

This presentation 1. LPI 2010 2. LPI Data for selected countries 3. Transport considerations 4. Key topics ahead 5. Want to learn more?

1. LPI 2010

LPI 2010 www.worldbank.org/lpi Broad indication of where problems are Awareness raising to stimulate public-private dialogue on priorities for reform Trigger fresh impetus for reforms Monitor progress over time Reference for policy makers, in all groups of countries One of the first steps in the World Bank’s country engagement strategy with client countries The most comprehensive data on country performance

What makes logistics efficient? The six dimensions of country performance measured by the LPI 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 Qualitative data from international freight forwarders outside country A, but trading with it Efficiency of the clearance process (i.e. speed, simplicity and predictability of formalities) by border control agencies, including Customs; Quality of trade and transport infrastructure (e.g. ports, railroads, roads, information technology); Ease of arranging competitively priced shipments (i.e. availability of affordable international transport connections available in that country. This includes also elements of the no. of available frequencies on various modes of transport as well as the scope of related services on offer. Competence and quality of logistics services (e.g., transport operators, customs brokers); Ability to track and trace consignments Timeliness (i.e. frequency with which shipments reach the consignee within the scheduled or expected delivery time) Jan. 15, 2010 - Worldwide media coverage; Ranking and component; Logistics business environment and institutions; Performance data Available as rankings, maps, scorecards Partnership with the private sector Built on more than 5,000 country assessments by over 1000 logistics professionals worldwide Primary data gathered for 155 countries

Where is LPI originating from? Country 1 Country 2 Country 3 Country 4 Country 5 Country A Country 6 Country 7 Country 8

LPI 2010 – performance varies around the world Overall LPI 2010 scores on a World map www.worldbank.org/lpi Typology of countries according to impediments in logistics performance: Logistics friendly • (top quintile)—high performers, for the most part high- income countries. Consistent performers • (second quintile)—typically emerging economies with a strong logistics constituency. Partial performers • (third and fourth quintile)—typically low or middle-income countries that have not yet consistently addressed all the factors of nonperformance. Logistics unfriendly • (bottom quintile)—severely logistically constrained (least developed countries). Logistics unfriendly Partial performers Consistent performers Logistics friendly No data Countries are improving around the world

LPI 2010 ranks TOP 10 COUNTRIES UPPER MIDDLE INCOME TOP 10 COUNTRIES LOWER MIDDLE INCOME TOP 10 COUNTRIES LOW INCOME Country LPI Rank South Africa 28 Malaysia 29 Poland 30 Lebanon 33 Latvia 37 Turkey 39 Brazil 41 Lithuania 45 Argentina 48 Chile 49 Country LPI Rank China 27 Thailand 35 Philippines 44 India 47 Tunisia 61 Honduras 70 Ecuador 71 Indonesia 75 Paraguay 76 Syrian Arab Republic 80 Country LPI Rank Vietnam 53 Senegal 58 Uganda 66 Uzbekistan 68 Benin 69 Bangladesh 79 Congo, Dem. Rep. 85 Madagascar 88 Kyrgyz Republic 91 Tanzania 95

25 countries achieved significant improvement in LPI 25 countries improved between 2007 and 2010 LICs: Afghanistan, Chad, Haiti, Myanmar, Niger, Tajikistan, Tanzania, and Uzbekistan LMICs: China, Djibouti, Honduras, Philippines, and Syria UMICs: Brazil, Colombia, Costa Rica, Dominican Republic, Kazakhstan, Lebanon, Mexico, Poland, Russian Federation, and Uruguay HICs: Saudi Arabia and the Czech Republic Proactive and comprehensive policies Countries with significant improvement in performance between the two surveys implemented proactive and comprehensive logistics and trade facilitation reforms early on (e.g. national logistics/facilitation programs) Examples: Colombia, Brazil, and Tunisia Pre-conditions for positive results in logistics All top performers have developed and maintained: Long tradition of strong public-private partnership and dialogue Good cooperation between policymakers, practitioners, administration and academia Comprehensive approach in the development of services, infrastructure and efficient logistics Consistent policies in transport and logistics When comparing LPI results for 2010 and 2007, it is important to pay attention to the confidence intervals. Only when, for example, the lower bound of a country’s 2010 LPI score is higher than its 2007 upper bound can it be concluded that there has been a statistically significant improvement in performance. Source: Logistics performance survey data, 2010 and 2007

LPI: Key messages Trade logistics is an important element of national competitiveness A country’s performance is only as good as its weakest link The LPI dataset can be used to identify key bottlenecks in your own country and therefore Helps frame your needs and priorities in the trade facilitation and logistics area reform

2. LPI Data – selected countries

LPI scores by region

LPI scores for selected countries

Sub-region’s % of the highest performer LPI 2010 Highest performer Germany 100% Lowest performer Somalia 11% LPI 2007 Highest performer Singapore 100 Lowest performer Afghanistan 7% Countries are improving in this region and around the world! Subregion: Caucasus & Central Asia

Performance in the six areas of the LPI Subregion 2010 Average LPI Score

Infrastructure quality Subregion

Costs structure and infrastructure * return to Romania at 45 days Source: InterBiz Romania

Quality of services I Subregion TRANSPORT SERVICES

Quality of services II Subregion

Border clearance procedures incl. corruption Subregion ….

3. Transport considerations

WB - Transport Lending in the last 10 years (USD millions)

WB - Transport Lending by Subsector Roads and highways: 4651 MUSD

WB - Regional Transport Lending by Subsector (FY10) (USD millions)

Global infrastructure investment trends by sector 2009-2019 Percentage of total investment in infrastructure Sources: http://www.cg-la.com/ http://www.ey.com/Publication/vwLUAssets/Infrastructure_report_2010/$File/Infrastructure_report_shows_conflicting_trends.pdf Source: CG/LA Infrastructure, 2009.

Who invests in Infrastructure? Sources: http://www.cg-la.com/ http://www.ey.com/Publication/vwLUAssets/Infrastructure_report_2010/$File/Infrastructure_report_shows_conflicting_trends.pdf

The World Bank Group’s Transport Strategy “Safe, Clean, and Affordable…Transport for Development”, The World Bank Group’s Transport Business Strategy for 2008-2012 The objective of the business strategy, consistent with Sustainable Transport and aligned with the principle of country ownership, remains: to help partner countries to establish the governance, strategies, policies and services that will deliver transport for development in a way that is economically, financially, environmentally and socially sustainable. In both national and regional programs we will encourage client countries to adopt corridor approaches to investing in transport infrastructure and improving transport services, especially along multicountry regional routes. The Bank Group will pursue a broader agenda in the roads subsector to meet principles of environmental and social sustainability, in ways that give increasing attention to four main issues including the performance, affordability, and inclusivity of transport services that use road infrastructure and that deliver the ultimate benefits of roads to people and goods. Good freight transport services integrate developing countries into longer, more complex, and more demanding supply chains that facilitate trade.

4. Key topics ahead

Climate Change – the questions Event: Copenhagen CC summit= agreement that developed countries should raise funds to help developing countries adapt to CC and “green” their economies Transport and Climate Change: Some BIG Questions What future use of energy and what GHG emissions? What impact of CC on the infrastructure? How can developing countries afford a clean transport? What is the total long-term cost of a transport mode use? The most concrete part of the Copenhagen Accord is an agreement that richer countries should raise funds to help poorer nations adapt to climate impacts and "green" their economies. United Nations Secretary-General Ban Ki-moon says, “We sealed the deal. And it is a real deal. And we will try to have legally binding as soon as possible — in 2010.” Climate Change Mitigation policies and tools for curbing/measuring transport emissions Adaptation in new project designs

Affordability (focus on food prices) Economic distance to markets Goods prices Logistical cost Administration costs, documentation, procedures etc Handling costs Packing, palletizing, labeling Profit, occasional payments, informal etc. Inventory (incl. warehouse) Direct costs

A changing Trade and Transport Facilitation approach New agenda Cross-cutting issues: Making transit work Collaborative border management Quality and efficiency of service providers Customs brokers Road transport operators Freight forwarders Trade Related infrastructure Roads Ports Railways Customs reform and modernization Fiscal focus IT orientation Historically trade facilitation reform focused on Customs reform and infrastructure development – Reflected in donor support Customs reform increasingly seen as only one element of the problem – Customs only responsible for a third of delays New data available – time, cost and reliability all important for competitiveness Increased focus on performance measurement Driving a new and more comprehensive agenda Much demand for Single Window, One Stop Border Posts, and wider trade and transport logistics improvement Regional integration high on the new agenda Old agenda Both the old and new agendas needed

Key policy issues Expanding the traditional reform agenda beyond customs reform and infrastructure development Improving the quality of logistics services and increase border agency coordination Embarking on comprehensive reform—processes, services, and infrastructure—with broad public and private support Transit corridors: regional coordination and cooperation is vital for landlocked developing countries Infrastructure: high on the agenda Tailoring reform to each country’s circumstances

5. Want to learn more?

Logistics Performance Index (LPI) contacts Web site with data www.worldbank.org/lpi Availability of Trade Department for regional presentations, and discussions. For further questions, please contact main authors: Jean Francois Arvis; jarvis1@worldbank.org Monica Alina Mustra; mmustra@worldbank.org

International Trade Department: contacts The World Bank Group International Trade Department www.worldbank.org/trade www.worldbank.org/tradefacilitation www.worldbank.org/tradelogistics www.worldbank.org/lpi www.worldbank.org/tradestrategy Washington Office 1818 H Street NW Washington DC 20433 Contact: tradefacilitation@worldbank.org

Transport Anchor: main contacts Web site with resources www.worldbank.org/transport Availability for support and technical assistance For further questions, you may wish to contact Marc Juhel-Sector Manager, mjuhel@worldbank.org Virginia Tanase vtanase@worldbank.org

Thank you ! Virginia Tanase E-mail: vtanase@worldbank.org www.worldbank.org/transport