LOGISTICS PERFORMANCE INDEX
1. The LPI is based on six indicators namely:
2. Customs; the efficiency of the clearance process (including speed, simplicity, and predictability of formalities)
3. Infrastructure; the quality of trade and transport related infrastructure (including ports, roads, railroads, and IT)
4. International Shipments; the ease of arranging competitively priced shipments
Logistics Competence; the competence and quality of logistics services (including transport operators and customs brokers)
5. Tracking & Tracing; the ability to track and trace consignments
6. Timeliness; the timeliness of shipments in reaching destination within the scheduled or expected delivery time
COMPETITIVENESS
1.Indonesia still ranks below Malaysia, Thailand, India and Vietnam (in fact Vietnam overtook Indonesia in the latest LPI). This is a problem because weak connectivity causes relatively high logistics costs, thus implying that Indonesian products and services are not as competitive compared to its regional counterparts.
2. Despite the remarkable achievement, Indonesia accounts for most of the region’s e-commerce market, but unfortunately still has some of the highest logistics costs across the region, accounting for 24% of the country’s GDP.
3. While the ratio in neighboring countries, like Thailand and Malaysia reached 13.2% and 13%, respectively.
OTHER COUNTRIES
1. UAE ranked first in the Arab world and 11th globally, followed by Oman, Saudi Arabia, Bahrain and Kuwait. United Arab Emirates topped the list with 3.96 points, followed by Oman 3.20, Saudi Arabia 3.01 and Bahrain 2.93.
2. Egypt ranked seventh in the Arab standings, followed by Lebanon, Jordan and Djibouti, with 67, 79, 84 and 90 respectively. Tunisia, the Comoros, Morocco, Algeria, Sudan and Mauritania followed in the rank, while Syria, Yemen, Somalia, Iraq and Libya were placed in last regionally.
3. The LPI report noted that the gap between the performance of high-income and low-income countries in the 2018 LPI remained high, with the overall result of high-income countries, on average, surpassing low-income countries by 48 percent in their scores.
4. Over the past several years, high-income countries, most of which are in Europe, occupied the top 10 positions in the LPI rankings. The composition of the 15 best-performing countries has not significantly changed either. But there are major improvements in LPI scores of Japan, Denmark, the United Arab Emirates, and New Zealand since 2012.
5. Globally, Germany topped the list of countries in terms of performance of logistics services for 2018, with a total score of 4.20, followed by Sweden 4.05, Belgium 4.04, Austria and Japan 4.03.
DISRUPTION NEEDED
1. One of the proofs of this inefficiency can be seen in the trucking sector, which has been used by large FMCG (fast moving consumer goods) companies to carry inventory in bulk. This is a result of the lack of a single data point connecting all FMCG companies, trucking companies, and drivers together, resulting in several problems, such as under-utilized fleets, empty backhaul and insufficient drivers to arise in certain regions.
2. In Vietnam, another startup called Logivan has been exploring the possibility of utilizing data to better manage resources. By collecting data on truckers’ routes and company fulfillment needs, managers can function like control towers, directing demand to truckers to prevent empty backhauls.
3. Adding to the potential benefits, pricing transparency may also be improved by utilizing a two-sided marketplace that can obtain the fairest price for both truckers and FMCG companies.
4. With advancements in technology, warehouses will no longer just be locations for storing a wide array of items, but instead can be transformed into fulfillment centers that are able to analyze consumer purchasing patterns and anticipate demand for certain products.
5. By shipping and storing selected items in advance, 3PLs can respond to orders faster and utilize bulk shipments at a lower costs.
6. Although spreading physical collection points has been the go-to expansion model for ages, it is ultimately expensive to set up and maintain. Meanwhile, 3PLs have the opportunity to shorten the distance between the hubs and consumers by considering several options, such as utilizing spaces like mum-and-pop stores as sorting hubs. This way, it is easier for consumers to drop their packages at the hubs and more efficient for the 3PLs to distribute.
Source:
https://www.indonesia-investments.com/news/todays-headlines/indonesia-s-rank-in-the-logistics-performance-index-improves/item8913
https://www.forbes.com/sites/tanyinglan/2019/01/18/southeast-asias-retail-boom-fuels-the-rise-of-logistics/#39c8fb3d7148
