In today’s modern world, international trade contributes significantly to the growth of the global economy that promotes progress and prosperity across countries, down to communities. The success of seamless trade activities between nations depends greatly on uninterruptible flow of goods within and across borders. In this matter, the need for improved logistics infrastructure cannot be overemphasized.
“Logistics plays a crucial role in today’s economy. Improved trade logistics infrastructure such as roads and highways, ports, railways, airports including dry ports, warehousing infrastructure and labs and testing facilities are necessary for sustainable and balanced economic development of all parts of the country,” market research company Export Genius said on its Web site.
According to a report, “Connecting to Compete 2018: Trade Logistics in the Economy”, prepared by the World Bank’s Global Trade and Regional Integration Team in the Macroeconomics, Trade and Investment Global Practice, good logistics services reduce the cost of trade.
Compared from 10 years ago, the role of logistics in the global economy is better recognized today, the report said. “The growing scope of logistics performance and increasing recognition of its contribution to growth and economic integration call for holistic policies. More and more countries, especially emerging economies, see logistics as a sector of the economy requiring consistent policy making that cuts across traditional logistics areas,” it added.
Logistics has become one of the most important sectors in the world. It is recognized as one of the core enablers of development, ensuring rapid economic growth, bridging the gap between demand and supply, and cutting business costs.
Export Genius said that the expansion in trade and logistics infrastructure creates demand in economic system for different products, such as iron and steel, cement and manpower. For instance, India, it said, has to make its logistical infrastructure better to not only grow its economy but also help its companies to accomplish a sustained superior performance in international markets through enhanced trade supply chain process.
In terms of demand and supply, Export Genius said that more efficient transportation of goods from one place to another guarantees timely supply of products, thus, meeting the demand from the market at a given time.
“For example, China with main economic clusters on the east coast results to transporting commodities at far-away regions in the western and remote northern parts of the country. This creates the problem of demand and supply in the country’s economic system. Better connectivity from road, rail network, airstrips and sea helps companies to distribute their resources between places where there are abundant resources and where there are scarce,” Export Genius said.
Moreover, the market research company said that improved logistics infrastructure helps cut the cost of doing business by means of providing uninterrupted flow of goods. It said that any delay in the transportation of goods not only extends trade cycle, the quality of certain goods also get poor and fetches lower prices in markets.
“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. The toll can be particularly heavy for developing countries trying to compete in the global marketplace,” the World Bank report said.
Given the utmost importance of logistics, it has become an elevated priority for many member countries of the International Transport Forum (ITF), an intergovernmental organization with 59 member countries, said ITF Secretary-General Young Tae Kim.
“Because facilitating trade and transport is at the core of stimulating economic development, several countries have developed comprehensive national logistics strategies. Well-functioning domestic and international logistics is a precondition of national competitiveness,” Mr. Kim was quoted as saying in the same report.
Of all the countries, Germany has taken the top spot in terms of logistics performance, measured against benchmarks like logistics competence and skills, the quality of trade-related infrastructure and the price of international shipments. It was followed by Sweden, Belgium, Austria, and Japan.
“High-income countries occupied the top 10 rankings in 2018, eight in Europe plus Japan and Singapore — countries that have traditionally dominated the supply chain industry,” the World Bank report revealed.
Meanwhile, mostly low-income and lower-middle-income countries in Africa or isolated areas fell to the bottom of the list. These are Afghanistan, Angola, Burundi, Niger, Sierra Leone, Eritrea, Libya, Haiti, Zimbabwe, and Central African Republic.
Among the lower-middle-income countries, large economies such as India and Indonesia and emerging economies such as Vietnam and Côte d’Ivoire stand out as top performers, the report said, noting that most of these countries either have access to sea or are located close to major transportation hubs.
“The composition of the top-performing upper-middle-income economies has changed marginally, with China, Thailand, and South Africa leading the group. Romania, Croatia, and Bulgaria also improved their rankings. Among low-income countries, those in East and West Africa lead in this year’s edition,” the report said. — Mark Louis F. Ferrolino