Logistics Performance Index

The Logistics Performance Index (LPI)^[1] is an interactive benchmarking tool created by the World Bank to help countries identify the challenges and opportunities they face in their performance on trade logistics and what they can do to improve their performance.^[2] It is the combination of the weighted average of the country scores on six key dimensions: customs performance, infrastructure quality, ease of arranging shipments, logistics services quality, consignments tracking and tracing and timeliness of shipments as well as practical data measuring logistics efficiency. This measure indicates the relative ease and efficiency with which products can be moved into and inside a country.^[3] Singapore and Finland are the most efficient and highest ranked LPI countries as per the 2023 LPI.^[4]

The Logistics Performance Index was reported by the World Bank every two years from 2010 to 2018 with a break in 2020 due to the COVID-19 pandemic and a restructuring of the index methodology, eventually coming out only in 2023. The LPI is based on a worldwide survey of stakeholders on the ground providing feedback on the logistics "friendliness" of the countries in which they operate and those with which they trade. Since 2023 the LPI incorporates certain KPI and Big Data to complement the results of the survey.^[5]

LPI results have been used in many policy reports and documents prepared by multilateral organizations and findings from the index provide a worldwide general benchmark for the logistics industry and for logistics users.^[6] LPI results have also been embraced by the academic community.

The logistics performance (LPI) is the weighted average of the country scores on six key dimensions:^[3]

1. The efficiency of the clearance process (i.e; speed, simplicity and predictability of formalities) by border control agencies, including customs.
2. Quality of trade and transport-related infrastructure (e.g., ports, railroads, roads, information technology);
3. Ease of arranging competitively priced shipments;
4. Competence and quality of logistics services (e.g., transport operators, customs brokers);
5. Ability to track and trace consignments;
6. Timeliness of shipments in reaching the destination within the scheduled or expected delivery time.

Full listing by country is available on The World Bank website.^[4]

	2018		2016		2014		2012		2010		2007
Country	Rank	Score	Rank	Score	Rank	Score	Rank	Score	Rank	Score	Rank	Score
Germany	1	4.20	1	4.23	1	4.12	4	4.03	1	4.11	3	4.10
Sweden	2	4.05	3	4.20	6	3.96	13	3.85	3	4.08	4	4.08
Belgium	3	4.04	6	4.11	3	4.04	7	3.98	9	3.94	12	3.89
Austria	4	4.03	7	4.10	22	3.65	11	3.89	19	3.76	5	4.06
Japan	5	4.03	12	3.97	10	3.91	8	3.93	7	3.97	6	4.02
Netherlands	6	4.02	4	4.19	2	4.05	5	4.02	4	4.07	2	4.18
Singapore	7	4.00	5	4.14	5	4.00	1	4.13	2	4.09	1	4.19
Denmark	8	3.99	17	3.82	17	3.78	6	4.02	16	3.85	13	3.86
United Kingdom	9	3.99	8	4.07	4	4.01	10	3.90	8	3.95	9	3.99
Finland	10	3.97	15	3.92	24	3.62	3	4.05	12	3.89	15	3.82

World Bank has recently come out with the Logistics Performance Index 2018 (released every two years). Germany again leads the table as #1 with an LPI score of 4.20. Followed by Sweden, Belgium, Austria and Japan in that order of top 5 Nations. The LPI scores of high-income countries are 48% higher than in lower-income countries. Logistics is a $4.3 trillion industry globally. It is the backbone of trade, and good logistics can reduce trade cost and make countries compete globally. Getting logistics right means improving infrastructure, skills, customs and regulations, policies and governance at the right proportion. India's rank fell from 35 in 2016 to 44 in the 2018 ranking.^[7]

In the 2016 LPI, the top position is held by Germany (LPI score of 4.23). Civil war-inflicted Syria holds the last position (LPI score of 1.60). India’s ranking jumped from 54 in 2014 to 35 in 2016 whereas its score also improved from 3.08 in 2014 to 3.42 in 2016. ^[8][9]

Several studies have noted that, due to the nature of the methodology of the LPI, where it was comprised solely out of subjective answers of different logistics operators, it tended to be skewed and undervalued some countries with a statistically better logistics system.^[10][11] Moreover, studies have shown that the LPI was much more influenced by social, rather than economic factors.^[12] As of 2023 the World Bank has changed the LPI methodology to address these issues.