Sri Lanka ranks 89th in the world in logistics performance

Monday, 16 June 2014 00:00 - - {{hitsCtrl.values.hits}}

By C. Akalanka Samarasena http://blog.ciltsl.com/: World Bank has ranked Sri Lanka in the 89th position according to the logistics performance index, with a score of 2.70. Germany topped the rankings with an impressive score of 4.12. World Bank recognises developments in logistics as a key economic indicator and has developed the Logistics Performance Index (LPI) to measure and compare logistics performances across the world. LPI has six dimensions and the weighted average of them is calculated as the LPI of a country.

The logistics performance (LPI) is the weighted average of the country scores on the following six key dimensions: 1) Efficiency of the clearance process (i.e., speed, simplicity and predictability of formalities) by border control agencies, including customs; 2) Quality of trade and transport related infrastructure (e.g., ports, railroads, roads, information technology); 3) Ease of arranging competitively priced shipments; 4) Competence and quality of logistics services (e.g., transport operators, customs brokers); 5) Ability to track and trace consignments; 6) Timeliness of shipments in reaching destination within the scheduled or expected delivery time.

Sri Lankan score on LPI is distributed as follows Sri Lanka has come out increasing all dimensions from 2007 to 2012. LPI has risen from 2.4 in 2007 to 2.70 in 2014. The slight drop of rank and score from 2012 is because 2014 is yet to be completed and once it is done, the rating for international shipments and infrastructure can be higher. Average LPI of the South Asian region was 2.61 in 2014 with India overtaking other countries by a mile by scoring a rating of 3.08. Timeliness of logistics operations and high number of international shipments contributed to the high ranking of India. Learnings from LPI LPI report named Connecting to Compete by Word Bank identifies fact based policy making as one of the key changes needed to be adopted by governments. Logistics performance of the country and its economic footprint should be measured and understood. Establishing and associating professional and academic institutions to generate the factual understanding of a country’s logistics function is indeed of paramount importance to Sri Lanka as well. One of the key things to ponder from the LPI and its corresponding report is that Sri Lanka and similar non-high income countries can outperform their peers in high income category by focusing on logistics improvement in identified critical areas.

LPI can be used to benchmark a country’s logistics performance against the best in class performers in the world and the Asian region. In Sri Lanka’s case, the most critical areas for development are the customs, infrastructure and tracking and tracing related to logistics.