The World Bank has released its Logistics Performance Index and Indicators 2010 (LPI), a ranking of 155 countries by their capacity to move goods and connect manufacturing and consumers in international markets. Germany tops the ranking this year. Of the top ten countries, eight are wealthy northern European economies, and two – Singapore and Japan – are wealthy Asian economies. Singapore is ranked second and Japan is ranked seventh.

The LPI is carried out every two years and is probably the most comprehensive global logistics study undertaken on a regular basis. Some 5000 individual country assessments are made by 1000 international freight forwarders who answer questions related to the quality of customs and border agencies, infrastructure, costs, application of IT in logistics, and lead times for imports and exports.

The findings are often predictable, but the study says some very interesting things about trade logistics and how the industry is developing in Asia compared with the rest of the world.

High income economies dominate the rankings. The data show a big logistics gap between rich and developing countries. It is not all about income, however. Government policy can have a big positive effect (generally a case of the more liberal the policy the better) and can allow countries to punch above their income weight.

Asian economies do well in this regard, with several --  China, India, Vietnam, Thailand and The Philippines -- performing better than their income level suggests.

The study provides some insight into the extent of the link between better trade logistics and overall economic performance. Of countries with the same per capita income, those with the best logistics performance experience additional growth of one percent in GDP and two percent in trade.

On a more micro level, having a lower LPI by one point – for example a level of 3.5 instead of 4.5 – implies an extra two to four days to move imports and exports between the port and a company’s warehouse. Logistics operators in high performance countries generally deal with half the number of government agencies compared with low performance countries and require half the number of documents for a typical transaction.

When national income levels are factored in, Asian countries do well in logistics. Vietnam tops the low-income group; China tops the lower-middle income group  (Thailand, India and The Philippines also rank highly here). Malaysia is number two in the upper middle-income group, and Singapore is number two in the high-income group and overall study.

China’s score and ranking at number 27 is far higher than its income level suggests. The report cautions this may be a consequence of the fact respondents to the survey were more focused on operating in the country’s main gateways.

As a region, East Asia and the Pacific is viewed as expensive for supply chain and logistics services. A higher proportion of respondents than in any other global region said port; airport, road, rail, warehousing and agent charges were high or very high. Some 41 percent of respondents in East Asia and the Pacific said there was ‘often or nearly always’ solicitation of informal payments for shipments -- also a higher percentage than any other region.

Significantly more respondents than not said customs clearance, transport and IT infrastructure, and private logistics services in East Asia and the Pacific had improved over the past five years. Only slightly more than not (26 percent over 25 percent) said regulation had improved; while 38 percent said ‘incidences of corruption’ were worse or much worse than five years ago.

Turloch Mooney