Industrial Engineering

What Countries are Tops in Logistics 2018?

https://vietnaminsider.vn/vietnam-listed-in-the-top-10-countries-according-to-agility-emerging-markets-logistics-index-2019/

Supply Chain Flagship Newstletter December 17, 2018

By Dan Gilmore

Every couple of years, the folks at the World Bank (which is headquartered in Washington DC, if you didn’t know) publish a report analyzing the logistics competencies of most nation’s across the globe – 160 of them this year, the same as in the last report issued in 2016.

The 2018 report was released in late June. For whatever reason, the excellent report does not receive much press coverage in the US – try Googling it to see – so at this late date I am going to summarize it here anyways, since I suspect few readers have seen anything much about it.

This is the sixth such effort. And let’s just agree that it is good the big thinkers and high rollers at the World Bank recognize logistics is a critical element of a country’s competitiveness.

The report notes, for example, that “For individual countries, logistics performance is key to economic growth and competitiveness. Inefficient logistics raises the cost of doing business and reduces the potential for both international and domestic integration.”

Later, it notes that “the logistics sector is now recognized almost everywhere as one of the core enablers of development.”

We all know that, but it’s good to see the World Bank say it too.

The core of the report is a ranking of those 160 nations from top to bottom based on what is called the Logistics Performance Index (LPI), based on a combination of six different attributes.

There is a bit of a change here, with this year’s report emphasizing a normalized score based on yearly results from 2012, 2014, 2016 and this year, albeit in a weighted fashion, so 2018 counts more than 2016, etc.

The World Bank gives a good rationale as to why this makes sense, related primarily to vagaries in scoring from year to year, as clearly occurs. However, that approach also doesn’t per se fully recognize country improvements in recent years.

Fortunately, the ratings for just 2018 are included in an appendix, and that is what I am going to concentrate on here.

Before explaining how the scores are determined, let’s get right to the results.

This year, Germany remains the top spot for the third report in a row, while Sweden moves from 3 to 2. The US fell from the 10 spot in 2016 to a rank of 14 in 2018, continuing a downward trend that is worrisome.

Afghanistan, Angola, and Burundi took the bottom three spots, only because North Korea was not included in the rankings. Syria was a bottom three finisher in 2016, was also not evaluated this year.

The six attributes that go into the LPI are as follows:

• The efficiency of customs and border clearance (“Customs”).
• The quality of trade and transport infrastructure (“Infrastructure”).
• The ease of arranging competitively priced shipments (“Ease of arranging shipments”).
• The competence and quality of logistics services – trucking, forwarding, and customs brokerage (“Quality of logistics services”).
• The ability to track and trace consignments (“Tracking and tracing”) .
• The frequency with which shipments reach consignees within scheduled or expected delivery times (“Timeliness”).

 In the end, using some standard statistical methods, every country included in the Index is given a score between 1 and 160 for each attribute, with that score ultimately translated to a number between 0 and 5 (to two decimal places), which are then averaged to produce a final score.

How does the World Bank acquire such data? The results are obtained from an elaborate survey of freight forwarders and 3PLs worldwide, which seems like a reasonable approach to me. The surveying is quite sophisticated, with respondents rating logistics competence in their own countries and then also a limited number of other countries they know best.

The survey is also conducted in two phases, with results from the first phase used to target respondents for the second phase to get enough data for the results to be significant for each country.

European countries as usual dominated the rankings, holding the top four spots, 8 of the top 10, and 13 of the top 20. China came in at number 26, up one spot from 27 in 2016. Mexico was number 51.

Interestingly, for all the handwringing relative to US logistics infrastructure challenges, the US actually ranked number 7 in the world on that attribute, up from the 8th spot in 2018. But also as in the last report, the US would have been near the top ranking overall except for a relatively poor rating of number 23 on ease of international shipments.

Top ranked Germany also rated as having the best logistics infrastructure, I’ll note.

Five countries have been in the top 10 overall for the last four reports, dating back to 2012: Germany, Netherlands, Belgium, United Kingdom, and Singapore. Sweden would be on that list too except for oddly falling to 15 in 2012, almost certainly a statistical aberration.

There has been some change but not a lot in the rankings over time. Below is a table SCDigest created to show how this year’s top 10 ranked in previous reports dating back to 2012. Obviously there is some “noise” in the data – we doubt Finland’s logistics performance really fell from a 3 ranking to 24 between 2012 and 2014, so we also average out the scores of this year’s top 10 over the past four reports in the last column for some additional perspective. Clearly Germany, Sweden, Singapore and the Netherlands have been dominant over time.

The WTO continues to hinting that it may start rating the logistics capabilities of major cities around the globe before too long, the report says “The World Bank is thus increasingly involved in urban logistics projects in Brazil, China, Kenya, Morocco, and other countries.”