The World Bank Logistics Performance Index 2010 and Transformational Logistics

The World Bank LPI (Logistics Performance Index) 2010 has just been released. This snapshot of selected performance indicators in nearly 130 countries demonstrates clearly the correlation between logistics performance and sustainable economic growth. This year, the analysis of this bi-annual Report has been expanded to include information on the time, cost and reliability of supply chains. Detailing several major advances since 2007 in places like Brasil, Columbia and Tunisia the report highlights clear potential for low and middle income countries to boost trade performance by 15% through faster, cheaper and more reliable trade logistics – if the analysis is acted upon. Here, we build from the LPI 2010 Report to explore potential to develop a Transformational Logistics perspective to sharpen the analysis of logistics relevant to the emerging and developing world.

The missing link?

 

 

History is written by the winners and, similarly, many Retail and Logistics textbooks are written from the perspective of developed economies and, as the LPI highlights, key segments of the global logistics industry are dominated by no more than 25 large corporations – especially in the maritime, port and air freight segments. This contrasts starkly with the fact that 85% of jobs in the USA and 65% in the EU are generated by small to medium sized companies and in the majority world – that is 75% of world population – few jobs are even formal or covered by regulatory and welfare schemes. Few workplaces are even covered by legal title and health and safety is a pipedream. Conventional Logistics analysis just does not grasp the essential asymmetrical (informal / formal) nature of global sourcing, value addition, distribution and points of purchase. We see Transformational Logistics (and retail) being a better way to describe reality in the emerging and developing world.

 

The World Bank, the Logistics Performance Index and the informal economy

We have touched on the MDGs and asked the question whether enough is done to integrate Logistics into the effort. The World Bank’s Logistics Performance Index has many of the answers and the LPI framework is a clear indication that improving logistics performance has become an important development policy objective and, the LPI is providing a valuable benchmark from which priorities can be agreed and delivered upon. See: Connecting to Compete: Trade Logistics in the Global Economy (2007).

 

The United Nations MDGs and Logistics …

In 2000, 189 countries adopted the United Nations Millenium Development Goals (MDGs). The idea was that developed and developing nations alike would work together to reduce global poverty by 2015. Eight key goals were agreed. We are now halfway towards the target date and despite some significant achievements, most of the MDGs are way off track. Over the next few weeks we’d like to take a closer look at how Logistics plays and can play a part in accelerating MDG progress; looking at the structure and not just the symptoms of these issues. Especially in the context of the current crisis …