As supply chains become more globally dispersed, the quality of any country’s logistics services becomes crucial. Playing a determining role in whether or not it can participate in the global economy, most countries have pursued logistics related reforms and investments to build infrastructure to facilitate transportation and trade to improve overall performance.
South Africa’s logistics performance is considered to be right up there with the best in
the world. “Supply Chain Today” attended a Transport Forum meeting at which some interesting facts were revealed.
Professor Lauri Ojala of the Turku University in Finland and an author of the 2018 global Logistics Performance Index (LPI), published biannually by the World Bank, says South Africa’s logistics performance scores in the top fifth in the world. This is right up there with the likes of North America and most of Europe.
“South Africa is the only country on the African continent that has reached the top performance levels,” says Prof Ojala. “It has consistently improved over the past few years and does very well when compared internationally.”
First published in 2007 the LPI report scores 160 countries on how efficiently their supply chains connect firms to domestic and international opportunities.
“The LPI offers two perspectives on a country’s performance,” explains Prof Ojala.
“The domestic LPI offers quantitative and qualitative assessments of a country’s services from logistics professionals working inside the country. This component offers detailed information on a country’s infrastructure, quality of service providers, border procedures, and supply chain reliability.
“The international LPI provides evaluations of a country’s services by logistics professionals
located outside the country. This component provides qualitative information of how a country’s trading partners perceive the efficiency and quality of its logistics services.”
According to the Prof, the LPI is a synthetic metric of a country’s supply chain efficiency indicating its status and giving a crude idea of where problem areas may lie. “It is by no means a diagnostic tool on its own,” he adds indicating it has to be supported by other tools. “It also targets international supply chains of manufacturers and may not fully reflect
the quality of internal connectivity and logistics.”
Yet, the LPI has since 2007 had a significant impact in raising awareness and establishing
logistics as a cross-cutting policy concern and has contributed to motivating many national and regional initiatives in high, middle and low-income countries with a concomitant improvement in logistics performance.
Coming in 33rd, South Africa is, according to Prof Ojala, in a league of its own in Sub Saharan Africa. “Few other African countries score as high as South Africa.”
The index takes into account factors such as customs and border management, infrastructure, the price of international shipments, logistics competence and skills, tracking, tracing and timing of shipments, a benchmark for governments to deliver efficient supply chains.
According to Prof Ojala, the 2018 findings were not all that surprising with Germany once again the best performing country in the world, followed by Sweden, Belgium, Austria and Japan.
The LPI has consistently found that high-income countries score higher than low-income countries. In fact, the LPI score of high-income countries is 48% higher, on average, than low-income countries.
Among the 30 top performing countries, 24 are members of the Organisation for Economic
Co-operation and Development (OECD). “There is a definite and persistent logistics performance gap between countries. The performance, however, is not primarily about costs or even red tape, but about the reliability of the supply chain and service delivery.”
What was quite concerning this time round, was the low number of responses received from African countries which was significantly lower than two years ago which, naturally has an effect on the research.
South Africa is the only country that continues to reach the top quintile in this research and Prof emphasizes that it’s not all down to the highest GDP. Germany comes in top even though it does not have the highest GDP but the gap between developed and less developed countries persists. It has not widened or narrowed but there is a gap.
“South Africa is an example of a country doing better logistics than expected from its level of GDP per capita. South Africa has consistently performed well as have countries such as Rwanda, Malawi, India, Vietnam and China.” Developed/undeveloped China, for the first time, surpassed South Africa in logistics performance. Here, skills remains one of the biggest challenges but this is true for many countries. One of the key findings of this year’s report is that there is currently a labour shortage of logistics professionals in both developed and developing countries.
Developed countries, says Prof Ojala, need more blue-collar workers, such as truck drivers, while developing countries are looking for more managerial-level workers.
Although South Africa scored slightly lower than previously, for all intents and purposes it retained its rankings and position as one of the top logistics performers in the world.
Also speaking at the Transport Forum, from the Stellenbosch University’s logistics department, Professor Jan Havenga emphasized that this research is welcome as it is generated internationally rather than locally.
“We do measure our logistics costs in South Africa which have been rising over the past few years and I feel we have regressed ever so slightly in recent years,” adds Prof Havenga.
“We are not growing at the same pace as other countries which might not be a problem as yet, but there are some warning lights that we need to take notice of. The lack of a modal shift in the country remains a concern. We have too much cargo on road and we need to address this sooner rather than later,” he concludes.
Professor Lauri Ojala