TRADE LOGISTICS AND COMPETITIVENESS Henry Sandee Trade Economist World Bank Office Indonesia

The Challenge ilklkkl

The Challenge

Dom shipping costly Corridors CY/CY (USD/TEU) JAKARTA-SINGAPORE 180 – 245 SEMARANG-SINGAPORE 205 – 265 SURABAYA-SINGAPORE 200 – 215 JAKARTA – PORT KLANG 135 – 190 SURABAYA-PORT KLANG 175 – 240 SEMARANG-JAKARTA 270 – 300 SURABAYA-JAKARTA 300 – 480 BELAWAN-SINGAPORE 205 - 210 BELAWAN-PORT KLANG 160 - 170 JAKARTA-BELAWAN 250 - 350 JAKARTA-PADANG 600

Flow of Cargo Import Raw Material – Export The Finished Goods CFS Flow of Sea Cargo Movement: Port to/from Factory Inbound Cargo Movement Stevedoring Terminal Handling CFS Trucking Factory LCL Transport Transport Overbrengen W/H Raw Material W/H Finsihed Goods FCL YOR >85% Transport 1st Line Perimeter 2nd Line Perimeter Out bound Cargo Movement Stevedoring Terminal Handling Factory FCL Konsolidasi CFS LCL Trucking W/H Raw Material W/H Finsihed Goods FCL Transport 1st Line Perimeter 2nd Line Perimeter

What the LPI does … Trading behind, at and across borders Helps countries to formulate a logistics strategy

www.worldbank.org/lpi Ranking of countries: Logistics business environment Performance data Data gathered in more than 150 countries

The LPI measures seven dimensions of country logistics performance: Efficiency of the clearance process Quality of trade and transport infrastructure Ease of arranging shipments Quality of logistics services Tracking and tracing Timeliness (tepat waktu) Domestic costs (trucking and shipping)

Key Findings Performance often influenced by the weakest link in the supply chain Reliability as important as transport costs and speed Do not directly associate good logistics systems with low costs

LPI Ranks TOP 10 COUNTRIES UPPER MIDDLE INCOME TOP 10 COUNTRIES LOWER MIDDLE INCOME TOP 10 COUNTRIES LOW INCOME Country LPI Rank South Africa 24 Malaysia 27 Chile 32 Turkey 34 Hungary 35 Czech Republic 38 Poland 40 Latvia 42 Argentina 45 Estonia 47 Country LPI Rank China 30 Thailand 31 Indonesia 43 Jordan 52 Bulgaria 55 Peru 59 Tunisia 60 Brazil 61 Philippines 65 El Salvador 66 Country LPI Rank India 39 Vietnam 53 Sao Tome and Principe 57 Guinea 62 Sudan 64 Mauritania 67 Pakistan 68 Kenya 76 Gambia, The 77 Cambodia 81

Key Policy Implications Expand the traditional reform agenda beyond customs reform and infrastructure development Embark on comprehensive reform—value chain approach Need for broad public and private support: there should be quick wins Tailor reform to the each country’s circumstances

Changes in logistics performance New survey: May first results in May-June 2009 New improved questionnaire inclusion of a Customs module Assessment of changes in logistics performance will be possible

Logistics reform in Indonesia The Government of Indonesia prepared a logistics blueprint and action plan LPI helped to identify and quantify bottlenecks (weakest link) Choke points identified (e.g.Cikarang – Tanjung Priok) Collaboration with the Thai logistics council Grand strategy versus quick wins

SME and logistics Small amounts, can afford poor transport services only, poor service providers Less than one container loads 60 percent of Indonesian SME exports do not arrive at their final destination on time and/or with agreed quality How to solve this problem: any role to play for the government?

SME and logistics - clusters Standardization – learning by seeing Easier to export full container loads Easier to involve (foreign) buyers in handling the export trade process

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