World Bank Presentation Logistics Morocco

CONNECTING TO COMPETE
The 2014 Logistics Performance Index

Transport Business Summit 2014
Brussels
Dr. Jean-Franois Arvis
Senior Economist, The World Bank
Prof. Lauri Ojala
University of Turku, Finland
March 27, 2014
Outline
1. Why care about logistics?
2. What is the Logistics Performance Index?
3. LPI 2014 Results

4. Key messages
5. The LPIs role in the policy dialogue
6. How the World Bank supports countries in
logistics pollicy-making
World Bank LPI, Transport Business Summit 2014, Brussels
Why care about logistics?
Average trade costs of goods value
Why Logistics Matters

Country trade costs of goods value vs. LPI score
250%
230%
210%
190%
170%
150%
130%
110%
90%
70%
50%
2
2,5
3,5
4,5
LPI score (2010)
Supply chain bottlenecks are the primary cause of

friction in trade (trade costs). Reducing them by half
would raise trade by 15% and production by 5% globally.
Logistics Performance and Connectivity

Exchange Rate
Cost of Starting Business
Logistics Performance
Air Connectivity
Shipping Connectivity
Tariffs
Same RTA
Common Language
Common Border
Distance
0
Elasticity of trade costs
Domestic
Costs
Bilateral
Costs
0,1
0,2
0,3
0,4
0,5
Geography and
(most of) shipping
connectivity are
out of a countrys
control, but policy
decisions are not.
0,6
Besides distance, connectivity and logistics performance

matter more than other trade barriers in boosting trade.
Source: World Bank, Trade Costs in the Developing World 2013.
(RTA = Regional Trade Agreement)
Logistics costs impact productivity

Firm-level logistics expenditures as % of sales in 2011-2012
Transport cost
Germany
5%
4%
Other logistics costs
Finland
5%
Estonia
7%
Kazakhstan
7%
0%
7%
9%
13%
5%
10%
15%
20%
Reliability is often more important than freight costs

Logistics costs increase with decreasing logistics performance. Most of this increase
comes from lower reliability and the need to increase inventory (other costs).
Sources: Authors, for Germany: TU Berlin, for Brazil: ILOS, for Finland: Turku School of Economics
What is the
Logistics
Performance
Index
(LPI)?
Supply Chain Framework & the six LPI dimensions

Timeliness
International
shipments
Customs
Tracking and Tracing

Infrastructure
Delivery Alongside
Vessel
to Dock
Unloaded
on Dock
Point of Origin
Sellers Factory
Services
Quality
Frontier/
Border
Delivered to
Buyers
Warehouse
Importing Country
Exporting Country
LPI outline
Partnerships
Built on > 5,000 country assessments

by over 1,000 freight forwarders &
logistics professionals worldwide
Survey in cooperation with partners
Respondents rate logistics performance
of own country and 8 other countries on
a scale of 1 to 5
Coverage: 160 countries in LPI 2014
Published every 2 years
LPI editions: 2007, 2010, 2012 & 2014
What do we measure?
Heres a sample question of the Domestic LPI:
Source: LPI 2013/2014 Survey
The LPI survey is based on expert

assessments of logistics professionals
(perception-based)
10
LPI 2014 Results
11
LPI data and report at:
lpi.worldbank.org
12
Good News: All countries performing better

Percentage of highest LPI score
2014
2012
2010
2007
90
80
70
60
With the right

investment and
policies, lower income
countries can also be
high performers.
50
40
30
Bottom
quintile
Fourth
quintile
Third quintile
Countries in
bottom quintile
saw the largest
improvements
(2007-2014).
Second
quintile
Top quintile
LPI score as percentage of highest LPI score by LPI quintile;

2007, 2010, 2012 and 2014
13
Income level helps little without aligned policies

Countries by LPI 2014 overall score and GDP/capita
14
LPI 2014: Top 10 European performers

0
Germany
Netherlands
Belgium
United Kingdom
5
1
10
15
20
4,1
LPI rank
4,0
LPI score
4,0
4,0
Sweden
4,0
Luxembourg
3,9
Ireland
3,9
France
3,8
Denmark
3,8
Spain
3,7
6
8
11
13
17
18
LPI 2014 rank out of 160 economies

15
LPI is a surveyscores are Confidence Intervals

4,5
EU 28 sorted by LPI 2014 score
4,3
4,1
3,9
3,7
3,5
3,3
3,1
Score 2014
2,9
2,7
DEU
NLD
BEL
GBR
SWE
LUX
IRL
FRA
DNK
ESP
ITA
AUT
FIN
PRT
POL
CZE
HUN
LVA
SVN
EST
ROM
SVK
GRC
LTU
BGR
MLT
HRV
CYP
2,5
LPI score range: 1 = lowest; 5 = highest

16

4,5
4,3
4,1
3,9
3,7
3,5
3,3
Score 2014
3,1
2,9
2,7
Score 2012
DEU
NLD
BEL
GBR
SWE
LUX
IRL
FRA
DNK
ESP
ITA
AUT
FIN
PRT
POL
CZE
HUN
LVA
SVN
EST
ROM
SVK
GRC
LTU
BGR
MLT
HRV
CYP
2,5

17

4,5
4,3
4,1
3,9
3,7
3,5
3,3
Score 2014
3,1
Lower bound 2014
2,9
2,7
Upper bound 2014

DEU
NLD
BEL
GBR
SWE
LUX
IRL
FRA
DNK
ESP
ITA
AUT
FIN
PRT
POL
CZE
HUN
LVA
SVN
EST
ROM
SVK
GRC
LTU
BGR
MLT
HRV
CYP
2,5

18

4,5
4,3
4,1
3,9
3,7
3,5
3,3
Score 2014
3,1
Score 2012
2,9
Lower bound 2014
2,7
Upper bound 2014
DEU
NLD
BEL
GBR
SWE
LUX
IRL
FRA
DNK
ESP
ITA
AUT
FIN
PRT
POL
CZE
HUN
LVA
SVN
EST
ROM
SVK
GRC
LTU
BGR
MLT
HRV
CYP
2,5

19

4,5
4,3
4,1
3,9
3,7
3,5
3,3
3,1
Score 2014
Score 2012
Score 2007-2014
2,9
2,7
Lower bound 2014

Upper bound 2014
DEU
NLD
BEL
GBR
SWE
LUX
IRL
FRA
DNK
ESP
ITA
AUT
FIN
PRT
POL
CZE
HUN
LVA
SVN
EST
ROM
SVK
GRC
LTU
BGR
MLT
HRV
CYP
2,5

20
HRV
MLT
CYP
GRC
LTU
BGR
ROM
EST
SVK
LVA
SVN
HUN
CZE
POL
PRT
ITA
ESP
AUT
IRL
FIN
FRA
DNK
LUX
SWE
GBR
BEL
NLD
DEU
Aggregated data for 2007-2014 less volatile

0
EU 28 sorted by weighted*
10
LPI 2007-2014 rank

20
30
40
50
Rank 2014 out of 160
60
Rank 2012 out of 155

70
80
Weighted rank 2007-2014 out of 166

*) Weights: 2014 = 53.3%; 2012 = 26.7%; 2010 = 13.3%; 2007 = 6.7 %
21
LPI 2014: Top 10 performers by income group

Top 10 overall
Top 10 upper middle-income
By overall LPI score

2,4
2,4 2,6 2,8 3,0 3,2 3,4 3,6 3,8 4,0 4,2
2,8
3,0
3,2
3,4
3,6
3,8
4,0
4,2
4,0
4,2
Malaysia
China
Turkey
Hungary
South Africa
Thailand
Romania
Panama
Bulgaria
Mexico
Germany
Netherlands
Belgium
United Kingdom
Singapore
Sweden
Norway
Luxembourg
United States
Japan
Top 10 lower middle-income

2,4 2,6 2,8 3,0 3,2 3,4 3,6 3,8 4,0 4,2
Vietnam
Indonesia
India
Philippines
Ukraine
Egypt, Arab Rep.
El Salvador
Pakistan
Nigeria
Guatemala
2,6
Top 10 low-income
2,4
2,6
2,8
Malawi
Kenya
Rwanda
Cambodia
Burkina Faso
Liberia
Ethiopia
Nepal
Burundi
Bangladesh
3,0
3,2
3,4
3,6
3,8
22
Key messages
23
Key messages from the LPI 2014

The gap between the best and worst logistics performers is
slowly narrowing, confirming trends from LPI 2007-2012 reports.
Although a country's level of development plays an important role
in its logistics performance, policies do matter. Over-performing
countries such as Indonesia have carried out targeted reforms to
improve the efficiency of their logistics.
In terms of trade facilitation, customs show a steady improvement
across the board but other border control agencies lag behind.
Weakest link paradigm: The challenge is to get right a number
of reforms in parallel and in several areas. This explains a lot of
churning in scores and rank in the middle of the sample.
24
The Services Gap

Customs
12
Infrastructure
Quality of logistics and services
Supply chain efficiency depends

on the quality of private services
moving the goods.
10
If logistics service delivery is

poor, even good physical
connectivity is not enough.
%-change 8
in LPI
component
as measured
6
against
the highest
performer,
2007-2014 4
Low income
Lower middle Upper middle

income
income
25
Persistent & large differences in border process efficiency

Import lead time in days (port/airport)
by LPI quintile
7
The import lead

time for
port and airport
supply chains is
more than twice
as long in
low-performing
countries as in
high-performing
ones.
Import Lead Time (Days)
6
5
4
3
2
1
0
Bottom
Fourth quintile Third quintile
Second
Top quintile
quintile
(low
(average
quintile (high
(highest
(lowest
performance) performance) performance) performance)
performance)
26
Key LPI messages for different income levels

Key message for low-income countries:
Progress in logistics performance is driven by improvement in
infrastructure and basic border management reforms.
Key message for middle-income countries:
Focus moves from infrastructure and border management to
development of logistics services with growing demand for
outsourced logistics.
In more sophisticated logistics environments, the low hanging
fruits have largely been reaped. The new generation of reforms is
more complex, involves many stakeholders, and takes time.
Key message for high-income countries:
The demand for environmentally friendly logistics services is
growing in advanced economies.
27
Percentage of respondents looking for

green shipping alternatives
Looking for environmental logistics solutions

40%
35%
30%
2014
2012
25%
20%
15%
10%
5%
0%
Low income
Middle Income
High income:
nonOECD
High income:
OECD
The percentage of respondents looking for

environmentally friendly shipping alternatives is
growing, and is the highest in advanced economies.
28
The LPIs role in the policy dialogue
29
What is the role of the LPI?

The LPI
Is an overall metric of supply chain efficiency.

Provides information of where a country stands
and a broad indication of problem areas.
Is not a diagnostic tool and needs to be supported
by specific tools designed to perform that function.
The LPI has had a significant impact in raising
awareness and pushing for comprehensive
connectivity and logistics policies, e.g. in
the EU, Kazakhstan, APEC and Indonesia.
30
Policies matter to Logistics Performance

Infrastructure
Ports
Road/rail corridors
Airports
PPP
Procedures and
Trade Facilitation
Customs, payments etc.:

Simplification & automation
Harmonization & standardization
Modernization & governance of border agencies
Services
Forwarders, truckers, brokers etc.

Regulation of entry
Market structure and competition
Competence and quality of service
Sustainable
Logistics
Green Logistics
City Logistics
Food security
Regulations (customs, services) are increasingly

regional (e.g. EU), but implementation national.
31
How the World Bank supports countries

in Logistics policy-making
32
World Bank lending projects in logistics

World Bank Group lending in FY 2013 USD 52.6 bn
7-8% of the lending portfolio is logistics-related, e.g. in:
International Trade corridors:

Eastern Europe, Central Asia, Central Africa, India, Nepal, Central
America, East & South Africa
Internal corridors, ports:

Brazil, China, Argentina, Indonesia
Customs & fiscal reforms:

Kazakhstan, Russia, Laos, Philippines, Cambodia
Export development:
Tunisia, Latin America
33
World Bank advisory work in logistics

Advisory services to national governments and
increasingly to regions, for example, in:
Greece, Eastern Europe, Central Asia

Morocco, Tunisia
Western Africa, East Africa, Zambia, Zimbabwe
Colombia, Argentina, Brazil, Uruguay, Peru, Central America
Indonesia, Vietnam, Philippines, Cambodia, Laos
Increasingly fee for service
Concept: Exploit synergies between institutional

reforms and infrastructure investment.
34
World Banks related indicators

Doing Business Report
Trading across Borders Indicator, a red tape metric

e.g. number of document vs. Supply Chain efficiency
Bilateral Trade Costs Database
Since 2013 with trade division of UNESCAP
New cross-country indicators:

1.
2.
Aggregated trade costs by countries

Air Connectivity Index (with FAA and IATA)
35
Thank you!
36

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CONNECTING TO COMPETE

The 2014 Logistics Performance Index

3. LPI 2014 Results

Why care about logistics?

World Bank LPI, Transport Business Summit 2014, Brussels

Average trade costs of goods value

Why Logistics Matters

LPI score (2010)

Supply chain bottlenecks are the primary cause of

Logistics Performance and Connectivity

Besides distance, connectivity and logistics performance

(RTA = Regional Trade Agreement)

World Bank LPI, Transport Business Summit 2014, Brussels

Logistics costs impact productivity

Reliability is often more important than freight costs

World Bank LPI, Transport Business Summit 2014, Brussels

World Bank LPI, Transport Business Summit 2014, Brussels

Supply Chain Framework & the six LPI dimensions

Tracking and Tracing

Built on > 5,000 country assessments

Coverage: 160 countries in LPI 2014

Published every 2 years

LPI editions: 2007, 2010, 2012 & 2014

World Bank LPI, Transport Business Summit 2014, Brussels

Source: LPI 2013/2014 Survey

The LPI survey is based on expert

LPI 2014 Results

World Bank LPI, Transport Business Summit 2014, Brussels

LPI data and report at:

World Bank LPI, Transport Business Summit 2014, Brussels

Good News: All countries performing better

With the right

LPI score as percentage of highest LPI score by LPI quintile;

Income level helps little without aligned policies

World Bank LPI, Transport Business Summit 2014, Brussels

LPI 2014: Top 10 European performers

LPI 2014 rank out of 160 economies

LPI is a surveyscores are Confidence Intervals

EU 28 sorted by LPI 2014 score

LPI score range: 1 = lowest; 5 = highest

LPI is a surveyscores are Confidence Intervals

EU 28 sorted by LPI 2014 score

LPI score range: 1 = lowest; 5 = highest

LPI is a surveyscores are Confidence Intervals

EU 28 sorted by LPI 2014 score

Upper bound 2014

LPI score range: 1 = lowest; 5 = highest

LPI is a surveyscores are Confidence Intervals

EU 28 sorted by LPI 2014 score

Lower bound 2014

Upper bound 2014

LPI score range: 1 = lowest; 5 = highest

LPI is a surveyscores are Confidence Intervals

EU 28 sorted by LPI 2014 score

Lower bound 2014

LPI score range: 1 = lowest; 5 = highest

Aggregated data for 2007-2014 less volatile

LPI 2007-2014 rank

Rank 2014 out of 160

Rank 2012 out of 155

Weighted rank 2007-2014 out of 166

LPI 2014: Top 10 performers by income group

Top 10 upper middle-income

By overall LPI score