Dhaka ranks lower in Logistics Performance Index
Wednesday, 7 November 2007
FE Report
Bangladesh, ranked at 87, trails behind India and Pakistan in the region in terms of competitiveness in global trade logistics, thus undercutting the country's ability to connect to international markets, says a new World Bank study report.
The report focusing on international trade logistics performance puts India at 39, making it the top performer in South Asia, while the ranking of Pakistan is 68. Interestingly, Bangladesh has managed to marginally outshine Sri Lanka (92), although the island nation has a well-functioning Colombo sea port.
Titled "Connecting to Compete: Trade Logistics in the Global Economy," the report, released Tuesday, pointed out that the country had also scored 2.47 out of 150 countries covered in the Logistics Performance Index (LPI)-those of India and Pakistan are 3.07 and 2.62.
The WB report noted Bangladesh has to rely on an average 10 per cent of its air shipment for ready-made garment goods to meet the tight deadline of European buyers.
"Bangladesh has to ship, on average, 10 per cent of its garment production by air to be certain to meet the schedules of European buyers," says the report, hinting the potentially huge cost burden on local apparel exporters.
Compared to Bangladesh, other South Asian nations which fared badly included Bhutan (128), Nepal (130) and Afghanistan (150).
Although the report did not specify why Bangladesh failed to perform well, it said a country's overall governance and institutional context contributed to the lower ranking.
"Success in improving logistics performance will also depend on the overall governance and institutional context," the report said.
"While solicitation of informal payments is rare among the top 30 countries of the LPI, it turned out to be common among lower performers," its added.
The rate of physical inspection in Bangladesh was 0.31 per cent, customs clearance 4.12 days, lead time for export in median case was 2.29 days, lead time for import in the best case 3.04 days, and lead time for import in median case 4.48 days, according to the study report.
The study report estimated that typical charge for a 40-foot export container or a semi-trailer was at US$382 and typical charge for a 40-foot import container or a semi-trailer remained at $ 444.
By contrast, costs are much higher in India-a 40-foot export container was at $601 and a 40-foot import container hovered at $618
Excluding landlocked countries, the average inland costs (port and hauling) of importing a 40-foot container or semi-trailer, for all countries in the survey, is about $700: typically 1.5 per cent of the value of goods or the equivalent of two weeks of inventories, much less than the actual costs in many developing countries once large induced costs are factored in, the report maintained.
Meanwhile, in a press release attached to the survey report, the bank said the capacity to connect to international markets to ship goods is "critical" for developing countries to improve their competitiveness, reap the benefits of globalisation, and fight poverty more effectively in an increasingly integrated world.
The study based on a world survey of international freight forwarders and express carriers, indicates that facilitating the capacity to connect firms, suppliers and consumers, is crucial in a world where predictability and reliability are becoming even more important than costs.
"Being able to connect to global markets is fast becoming a key aspect of a country's capacity to compete, grow, attract investment, create jobs and reduce poverty," said Danny Leipziger, the bank's vice-president. "But for those unable to connect, the costs of exclusion are large and growing."
According to the study, which includes a Logistics Performance Index (LPI), Singapore, a major global transport and logistic hub, ranks first.
At the other extreme are low-income countries, particularly those landlocked in Africa and Central Asia.
All developed countries turned out to be top performers -among the seven most industrialised nations, Germany ranks 3rd, Japan 6th, the United Kingdom 9th, Canada 10th, the U.S. 14th, France 18th, and Italy 22nd out of a total of 150 countries covered. There are also significant differences among developing countries with similar incomes.
Bangladesh, ranked at 87, trails behind India and Pakistan in the region in terms of competitiveness in global trade logistics, thus undercutting the country's ability to connect to international markets, says a new World Bank study report.
The report focusing on international trade logistics performance puts India at 39, making it the top performer in South Asia, while the ranking of Pakistan is 68. Interestingly, Bangladesh has managed to marginally outshine Sri Lanka (92), although the island nation has a well-functioning Colombo sea port.
Titled "Connecting to Compete: Trade Logistics in the Global Economy," the report, released Tuesday, pointed out that the country had also scored 2.47 out of 150 countries covered in the Logistics Performance Index (LPI)-those of India and Pakistan are 3.07 and 2.62.
The WB report noted Bangladesh has to rely on an average 10 per cent of its air shipment for ready-made garment goods to meet the tight deadline of European buyers.
"Bangladesh has to ship, on average, 10 per cent of its garment production by air to be certain to meet the schedules of European buyers," says the report, hinting the potentially huge cost burden on local apparel exporters.
Compared to Bangladesh, other South Asian nations which fared badly included Bhutan (128), Nepal (130) and Afghanistan (150).
Although the report did not specify why Bangladesh failed to perform well, it said a country's overall governance and institutional context contributed to the lower ranking.
"Success in improving logistics performance will also depend on the overall governance and institutional context," the report said.
"While solicitation of informal payments is rare among the top 30 countries of the LPI, it turned out to be common among lower performers," its added.
The rate of physical inspection in Bangladesh was 0.31 per cent, customs clearance 4.12 days, lead time for export in median case was 2.29 days, lead time for import in the best case 3.04 days, and lead time for import in median case 4.48 days, according to the study report.
The study report estimated that typical charge for a 40-foot export container or a semi-trailer was at US$382 and typical charge for a 40-foot import container or a semi-trailer remained at $ 444.
By contrast, costs are much higher in India-a 40-foot export container was at $601 and a 40-foot import container hovered at $618
Excluding landlocked countries, the average inland costs (port and hauling) of importing a 40-foot container or semi-trailer, for all countries in the survey, is about $700: typically 1.5 per cent of the value of goods or the equivalent of two weeks of inventories, much less than the actual costs in many developing countries once large induced costs are factored in, the report maintained.
Meanwhile, in a press release attached to the survey report, the bank said the capacity to connect to international markets to ship goods is "critical" for developing countries to improve their competitiveness, reap the benefits of globalisation, and fight poverty more effectively in an increasingly integrated world.
The study based on a world survey of international freight forwarders and express carriers, indicates that facilitating the capacity to connect firms, suppliers and consumers, is crucial in a world where predictability and reliability are becoming even more important than costs.
"Being able to connect to global markets is fast becoming a key aspect of a country's capacity to compete, grow, attract investment, create jobs and reduce poverty," said Danny Leipziger, the bank's vice-president. "But for those unable to connect, the costs of exclusion are large and growing."
According to the study, which includes a Logistics Performance Index (LPI), Singapore, a major global transport and logistic hub, ranks first.
At the other extreme are low-income countries, particularly those landlocked in Africa and Central Asia.
All developed countries turned out to be top performers -among the seven most industrialised nations, Germany ranks 3rd, Japan 6th, the United Kingdom 9th, Canada 10th, the U.S. 14th, France 18th, and Italy 22nd out of a total of 150 countries covered. There are also significant differences among developing countries with similar incomes.