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Focus: Global Supply Chain and Logistics

Our Weekly Feature Article on Topics Related to Global SupplyChain Logistics

From SCDigest's On-Target e-Magazine

- July 18, 2012 -

 

Global Logistics News: Third Logistics Performance Index from the World Bank Puts Singapore at Top of Rankings, While US Jumps to 9th Place


European Countries Dominate the Top 20; Growing Recognition of Tie Between Logistics Competence and Economic Growth

 

SCDigest Editorial Staff

 

For the third time, the World Bank has released a study of logistics effectiveness across more than 150 countries across the globe, in its recently released "Connect to Compete 2012" report.

SCDigest Says:

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Interestingly, the US actually came in at number four in terms of logistics infrastructure, an area that often comes under criticism here from many logistics observers.

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The 2012 ranking sees the logistics-focused city-nation of Singapore jump past Germany, the leader in 2010, to take the number one spot, while the US makes a strong move from number 15 globally in the 2010 report to the number 9 spot in 2012.

The first World Bank Logistics Performance Index (LPI) report was released in late 2007, followed by a similar effort in 2010. The reports are noteworthy both for their attempt to rank total logistics performance by country, and the strong recognition of the role that logistics plays in a country's overall economic performance and competitiveness.

"The LPI measures logistics efficiency, now widely recognized as vital for trade and growth. A country’s ability to trade globally depends on its traders' access to global freight and logistics networks," the report notes. "And the efficiency of a country's supply chain (in cost, time, and reliability) depends on specific features of its domestic economy (logistics performance)."

The LPI compares the trade logistics profiles of 155 countries and rates them on a scale of 1 (worst) to 5 (best). The ratings are based on 6,000 individual country assessments by nearly 1,000 international freight forwarders, who rate the eight foreign countries their company's serve most frequently. There is also some assessment by logistics service providers as to logistics conditions in their home countries. That seems like a pretty good methodology to us.

The LPI’s six components are:

• The efficiency of the clearance process (speed, simplicity, and predictability of formalities) by border control agencies, including customs.

• The quality of trade- and transport-related infrastructure (ports, railroads, roads, information technology).

• The ease of arranging competitively priced shipments.

• The competence and quality of logistics services (transport operators, customs brokers).

• The ability to track and trace consignments.
• The frequency with which shipments reach the consignee within the scheduled or expected delivery time.

Each of the 155 countries than receives as composite score by averaging the 1-5 ranking across each of the six criteria.

Singapore Takes the Global Honors

As mentioned above, Singapore moved from number 2 in 2010 to the top spot in 2012, with an average score of 4.13 across the six categories. Another city-nation, Hong Kong, was again rated separately even though it is obviously part of China, and came in at number 2 this year, a substantial rise from a 13 rank in 2010.

The rest of the top 10 is shown in the graphic below.

 

 

 

Source: World Bank 2012

 

The US made a strong move from number 15 in 2010 to cracking the top 10 this year, with an average score of 3.93.

Twelve of the top 20 nations are from Europe. Four are from Asia, joined by Canada, the United Arab Emirates (home of logistics hub Dubai City), and Australia, in addition to the US, in the top 20.


(Global Supply Chain Article Continued Below)


CATEGORY SPONSOR: SOFTEON

Learn More about Softeon's Innovative Supply Chain Solutions

 

 

China, by the way, came in at number 26, with an average score of 3.52.

Interestingly, the US actually came in at number four in terms of logistics infrastructure, an area that often comes under criticism here from many logistics observers. Besides that, the US global rankings for the other five categories are:

Customs Clearance: 13

International Shipments: 17

Logistics Quality/Competence: 10

Track and Trace: 3

Timeliness: 8

In somewhat negative news, the 2012 LPI found that the convergence trend seen from the 2007 LPI to the 2010 LPI did not continuing this year. From 2007 to 2010, lower performing countries improved their overall LPI scores more than did higher performing countries. But from 2010 to 2012, they were not able to further narrow the gap.

The reasons for this are not clear. The report blames the generally weak global economy, but we're not sure that makes much sense, as the gap closure seen in 2010 came after the worst two years for the global economy.

The report notes the growing attention many countries are paying to improving logistics capabilities, calling out Morocco's recent creation of a public-private charter on logistics development, South Africa joining the US in publishing a yearly state-of-logistics report, and Indonesia and Malaysia creating national logistics strategies. It also notes China is among the few countries with a bureau for logistics development, and the United States launched a Supply Chain Competitiveness Council, in cooperation with the Chamber of Commerce, in fall 2011.

The full report is available here: Logistics Performance Index: Connecting to Compete 2012

What's your reaction to the results from this year's Logistics Performance Index? Do the rankings make sense to you? Do they have it wrong for any specific countries? Let us know your thoughts at the Feedback section below.


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