South Africa falls in 2014 global logistics rankings

March 23, 2014 — Leave a comment

jll_year_of_the_distribution_center_wide_imageSouth Africa has been ranked number 34 out of 160 countries in the World Bank’s 2014 Logistics Performance Index (LPI), which is topped by Germany, with Somalia ranked lowest. Africa’s largest economy remained the continent’s highest placed LPI participant, but South Africa’s position was well off its 2012 ranking of 23 and its position of 28 in 2010.

In February, the World Bank argued in a separate report on South Africa that the country’s high logistics costs and price distortions were an impediment to export competitiveness. That report noted, for instance, that South Africa’s port tariffs on containers were 360% above the global average in 2012, while on bulk commodities they were 19% to 43% below the global average. Similar commodity biases existed in the area of rail freight.

But the new report, titled ‘Connecting to Compete 2014: Trade Logistics in the Global Economy’, still clustered South Africa as an “over-performing non-high-income” economy along with Malaysia (25), China (28), Thailand (35), Vietnam (48) and India (54).

The report draws on data arising from a survey of more than 1 000 logistics professionals and bases its LPI rankings on a number of trade dimensions, such as customs performance, infrastructure quality, and timeliness of shipments. Besides China, South Arica also performed above its ‘Brics’ counterparts of Brazil (65),Russia (90) and India.

Germany was followed in the top 10 by other developed economies, namely Netherlands, Belgium, the UK, Singapore,Sweden, Norway, Luxembourg, the US and Japan. Among low-income countries, Malawi, Kenya and Rwanda showed the highest performance.

The report warns that the gap between the countries that perform best and worst in trade logistics remains large, despite a slow convergence since 2007. The gap persists, the study asserts, because of the complexity of logistics-related reforms and investment in developing countries. This, despite strong recognition that poor supply-chain efficiency is the main barrier to trade integration.

However, senior transport economist and founder of the LPI project Jean-François Arvis stresses that a country cannot improve through developing infrastructure, while failing to address border management and other supply-chain issues.

Logistics performance is strongly associated with the reliability of supply chains and the predictability of service delivery for producers and exporters, the report notes, adding that supply chains are only as strong as their weakest links. They are also becoming more and more complex, often spanning many countries while remaining critical to national competitiveness.

“It’s difficult to get everything right. The projects are more complicated, with many stakeholders, and there is no more low-hanging fruit,” Arvis argues.

The report also finds that low-income, middle-income and high-income countries will also need to adopt different strategies to improve their standings in logistics performance. “Comprehensive reforms and long-term commitments from policymakers and private stakeholders will be essential. Here, the LPI provides a unique reference to better understand key trade logistics impediments worldwide.” Source: Engineering News

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