India Improves Logistics Performance, Some Apparel Exporting Countries Fall Behind

Market Intelligence

India Improves Logistics Performance, Some Apparel Exporting Countries Fall Behind

India has improved its global logistics performance ranking, according to the World Bank Logistics Performance Index 2016 report. From a ranking of 54 in 2014, India now ranks 35 in the 2016 report. The country tops the list of lower middle income economies in the LPI.

India's ranking in logistics performance had been falling since 2010. In 2007, India ranked 39th in logistics performance, this went down to 47 in 2010, 46 in 2012, and 54 in 2014. So the present ranking of 35 is quite commendable.

The logistics performance (LPI) is the weighted average of the country scores on six key dimensions:

1. Customs - Efficiency of the clearance process (i.e., speed, simplicity and predictability of formalities) by border control agencies, including customs;

2. Infrastruture - Quality of trade and transport related infrastructure (e.g., ports, railroads, roads, information technology);

3. International shipments - Ease of arranging competitively priced shipments;

4. Logistics competence - Competence and quality of logistics services (e.g., transport operators, customs brokers);

5. Tracking and tracing - Ability to track and trace consignments;

6. Timeliness - Timeliness of shipments in reaching destination within the scheduled or expected delivery time.

India has improved its score in customs efficiency from 2.70 in 2014, to 3.17 in 2016. Infrastructure scoring has improved to 3.34 (2.91) in 2016. International shipments have improved to 3.36 (3.13) in 2016, logistics competence has improved to 3.39 (3.16), tracking and tracing competence has improved to 3.52 (3.14) and timeliness to 3.74 (3.61).

China ranks 27th in LPI

Surprisingly, China is just a few ranks ahead of India at 27th position in the LPI. In contrast, in the ease of doing business ranking, China at 84, is way ahead of India at 130 position. While India has made perceptible improvements on all six fronts, China has not been able to do so. In customs efficiency China has scored 3.32 (3.21) in 2016, in trade related infrastructure 3.75 (3.67). Not surprisingly, in international shipments its score has improved perceptibly to 3.70 (3.50). In logistics competence, China scores 3.62 (3.46), in tracking and tracing 3.68 (3.50) and in timeliness 3.90 (3.87).

Bangladesh moves up 21 places

Bangladesh has improved its LPI ranking to 87 in 2016, from 108 in 2014. However, on the six dimensions, the performance has been mixed. In terms of timeliness of shipments, Bangladesh has lost out with a score of 2.90 in 2016. In 2014, Bangladesh had scored 3.18, and in 2010, 3.46. In international shipments too, the country's scoring has come down to 2.73 (2.82), even as it remains the lowest cost economy in the world. In customs efficiency, Bangladesh scores 2.57 (2.09) in 2016, in infrastructure 2.48 (2.11), logistics competence 2.67 (2.64), tracking and tracing 2.59 (2.45).

Vietnam's ranking drops 16 places

Vietnam is posing stiff competition in apparel exports. However, its LPI ranking has fallen 16 places in 2016 to 64. This is the country's lowest ranking since 2007. In customs efficiency, the country scored 2.75 (2.81) in 2016. In trade related infrastructure, Vietnam's score was 2.70 (3.11), in international shipments 3.12 (3.22), in logistics competence 2.88 (3.09), in tracking and tracing 2.84 (3.19), and in timeliness 3.50 (3.49). Clearly, Vietnam's infrastructure has not kept pace with its fast growing exports. To sustain exports, the country will need to invest in these areas.

Cambodia too needs to improve logistics performance

Cambodia, another upcoming apparel exporter, has improved its LPI ranking 10 places to 73 in 2016. But performance on the various criteria are not quite encouraging for sustainable export growth.

The country's customs efficiency has come down a few points to 2.62 (2.67) in 2016, trade related infrastructure scoring is 2.36 (2.58), international shipments 3.11 (2.83), logistics competence 2.60 (2.67), tracking and tracing 2.70 (2.92), and timeliness 3.30 (2.75).

Performance of the TPP signatories

Malaysia, a signatory to the TPP, an important textile and apparel supplier, has surprisingly not performed quite well in the LPI. The country that ranks 18th in ease of doing business, ranks 32nd in LPI 2016, coming down seven positions, since 2014.

Malaysia has not fared well on any of the criteria. In customs efficiency, the country scored 3.17 (3.37) in 2016, in infrastructure 3.45 (3.56), international shipments 3.48 (3.64), logistics competence 3.34 (3.47), tracking and tracing 3.46 (3.58) and timeliness 3.65 (3.92).

Chile, an important supplier of apparel to the US market, and a TPP signatory has also not performed well on the LPI. Chile ranks 46th in 2016, down from 42nd in 2014. The country has improved its performance in customs efficiency to 3.19 (3.17), international shipments 3.30 (3.12), logistics competence 2.97 (3.19), tracking and tracing 3.50 (3.30) and timeliness 3.71 (3.59). Its score in trade related infrastructure is down to 2.77 (3.17).

Mexico, which is also a signatory to NAFTA, ranks 54th in LPI 2016, down four positions. The country has lower rankings in 2016 in infrastructure, international shipments and timeliness, even as customs efficiency and logistics competence have improved. Peru ranks 69th in LPI 2016, moving up two places since 2014. The country's customs efficiency scoring has improved noticeably to 2.76 (2.47). Infrastructure scoring is down 2.62 (2.72), as is international shipments at 2.91 (2.94). Logistics competence has improved. But the country is down on timely shipments.