South Africa has been rated 28th out of 155 countries surveyed on speed of trade practices by the World Bank. According to the new World Bank Group survey on trade logistics, the capacity of countries to efficiently move goods and connect manufacturers and consumers with international markets is improving around the world.
Germany is the top performer among the 155 economies ranked in the Logistics Performance Indicators (LPI), which are included in the report Connecting to Compete 2010: Trade Logistics in the Global Economy.
Many countries performed better than what their income level would suggest. The ten most significant over-performers include China (27), South Africa (28), India (47), Uganda (66), Vietnam (53), Thailand (35) and the Philippines (44).
“Economic competitiveness is relentlessly driving countries to strengthen performance, and improving trade logistics is a smart way to deliver more efficiencies, lower costs and added economic growth,” said World Bank Group President Robert B. Zoellick. “Streamlining the connections among markets, manufacturers, farmers and consumers offers tremendous growth and investment opportunities and should be a top focus for developing country growth strategies.”
Although the study shows a substantial “logistics gap” between rich countries and most developing countries, it finds positive trends in some areas essential to logistics performance and trade. Some of them include the modernization of customs, use of information technology, and development of private logistics services.
“Following our first survey in 2007, many developing countries have improved their capacity to connect to international markets, which is a key ingredient for competitiveness and economic growth,” said Otaviano Canuto, World Bank Vice President for Poverty Reduction and Economic Management. “But, if developing countries want to come out of the crisis in a stronger and more competitive position, they need to invest in better trade logistics.”
“Countries with better logistics performance can grow faster, become more competitive and increase their level of investment,” said Bernard Hoekman, World Bank Trade Department Director. “Our research shows that increasing logistics performance in low income countries to the middle-income average could boost trade by around 15 per cent and benefit all firms and consumers through lower prices and better quality services.”
The report is headed by World Bank Group economists Jean Francois Arvis and Monica Alina Mustra and is based on the most comprehensive world survey of international freight forwarders and express carriers.
The countries with significant improvement in performance between the two surveys (the 2007 and 2010 LPI) are often those which implemented comprehensive logistics and trade facilitation reforms earlier, such as Colombia, Brazil, and Tunisia.
In terms of how developing countries are doing per region, South Africa (28) is the top performer from Africa; China (27) from East Asia; Poland (30) from Central and Eastern Europe; Brazil (41) from Latin America; Lebanon (33) from the Middle East; and India (47) from South Asia.
According to the study, logistics performance is heavily influenced by the quality of public sector institutions and the effective coordination of border clearance processes among all border management agencies. In this area, customs performs better than many other agencies, pointing to the need for border management reforms. In low performing countries, on average, half of the containers are physically inspected and one container out of seven at least twice.
Other areas for improvement include better transport policies, increasing competition in trade-related services such as trucking, freight forwarding and railways; and better trade-related infrastructure. For many low-income countries the most binding constraints are often in logistics services and international transit systems. Given they perform better on many other indicators, improving trade infrastructure is often reported to be a priority for middle-income countries.
The World Bank Group has a number of projects designed to improve trade logistics in developing countries. The US$250 million East Africa Trade and Transport Facilitation Project improved the corridor infrastructure and upgraded the main border crossing between Uganda and Kenya at Malaba, reducing border crossing times from three days to three hours.
In addition, the Bank is working with IBM, Microsoft and the Global Express Association as part of a public-private partnership on “Aid for Trade Facilitation.” The objective is to develop pilot projects in developing countries that apply innovative IT solutions to streamline border procedures.
