News Analysis Trade

Serious logistics underperformance

Bureau of Customs (BOC) Commissioner, Nicanor Faeldon, will be looking very closely at how the BOC contributed to the Philippine’s plunging ranking in the latest World Bank logistics report. And, given the determination of President Rodrigo Duterte to swiftly improve the country’s trade-competitiveness standing – and raise its sagging export figures – this report could be the final straw to break the lethargy and incompetence which, along with widespread corruption, have defined the BOC for years.

The 2016 Logistics Performance Index (LPI), which compares 160 countries, ranks the Philippines 71st, a 14-places drop from its previous ranking of 57th. The results are published in the World Bank’s biennial report, “Connecting to Compete 2016: Trade Logistics in the Global Economy”

Countries are rated on a number of key criteria including, border-clearance efficiency, infrastructure quality, timeliness of shipments, ease of arranging competitively priced shipments, competence and quality of logistics services, and ability to track and trace consignments.

In all categories, with the exception of ‘timeliness of shipments,’ the Philippines showed seriously plunging performance numbers. Here’s a snapshot.

Border-clearance efficiency. Falling to 78th place from 47th previously. The rating takes into account factors such as speed of execution and simplicity of procedures.

Infrastructure quality. Falling to 82nd from 75th place. Infrastructure needed for haulage of goods, roads and railways, along with port facilities and IT infrastructure, form the criteria.

Easing of arranging competitively priced shipments. Rank 60th. Previous rank 35th.

Competence and quality of logistics services. Rank 77th. Previous rank 61st. Transport operators and customs brokers are also assessed in this category.

Ability to track and trace consignments. Rank 73rd. Previous rank 64th.

Faeldon will be far from impressed by these numbers and will be determined to ensure that the next time this report is issued, the Philippines will be moving smartly in the opposite direction. The Philippines Ports Authority also has a great deal of work to do.

In an Asean context the Philippines comes 7th. Asean rankings within the 160 countries surveyed are: Singapore 5th, Malaysia 32nd, Thailand 45th, Indonesia 63rd, Vietnam 64th, Brunei 70th, Cambodia 73rd, Myanmar 113th. Of these only the last two improved their performances: Cambodia by 10 places, Myanmar by 32 places.

According to the World Bank: “Logistics performance both in international trade and domestically is central to the economic growth and competitiveness of countries, and the logistics sector is now recognized as one of the core pillars of economic development”.

Pointing out that the index can play an important role in raising awareness of logistics problems and help to focus policies to address them, the report added: “Countries characterized by low logistics performance face high costs, not merely because of transportation costs but also because of unreliable supply chains, a major handicap in integrating and competing in global value chains.”

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