Measuring National Level Logistics Costs

Measuring National Level Logistics Costs

Overview of Worldwide Empirical Evidence

Presented by Prof. Lauri Ojala Turku School of Economics at the University of Turku, Finland

[email protected]

ITF Summit 2012, Leipzig, May 2, 2012 Side Event: Logistics Performance Measurement

A comprehensive overview

By Rantasila & Ojala

Discussion Paper 2012 - 04

Published at the

ITF Summit 2012

Leipzig, Germany

Available also at:

www.internationaltransportforum.org

ITF Summit, Leipzig, May 2, 2012, Rantasila & Ojala 2

http://www.internationaltransportforum.org/

Logistics costs: no statistical nor accounting units

• Definitions vary from case to case

– Large differences in awarness levels across countries

• Firm and macro level data not compatible

– Linkage to National Accounts data only implicit;

• Some industry or transport statistics also rely on questionnaires

– Self-reported data may be subjective or biased


In short: severe knowledge gaps exist on the concept of logistics costs

The line between firm, supply chain or network?

Upstream SC <-> Focal firm <-> Downstream SC

Firm <-> Strategic Business Unit <-> Conglomerate

”Arm’s length” transaction <-> Long-term partnership

Outsourcing <-> In-house-operations

Intra-firm trading <-> Intra-industry trading

Domestic operations <-> International operations


The boundary of the firm affects the object and unit of analysis; but it is fuzzy

Main types of logistics study/survey

• Statistics-based studies applying models – Econometric

– Other modelling approaches

• Surveys using questionnaires – Comprehensive themes

– Single-theme surveys

• Case study-based approaches


Existing studies e.g. by the following…

ASLOG France

Brazil: ILOS

Transport Canada

University of Lund, Sweden

Technical University of Berlin

Fraunhofer Institute, Germany

Delcan Corp. for CSCMP , USA

Thammasat University Thailand

St. Gallen University Switzerland

Turku School of Economics, Finland

Japan Institute of Logistics Systems

South Africa: CSIR & Stellenbosch U.

Ministry of Transport, New Zealand

Latin America: Georgia Tech & LALC

Institute of Transport Economics Norway


Stat

isti

cs-b

ase

d

Su

rvey

-bas

ed

Logistics providers Logistics users

Source of data

Typ

e o

f st

ud

y

Finland Germany (BVL)

Switzerland Thailand, Japan

France Colombia

US State of Logistics South Africa

Brazil Europe Top 100

Norway

Sweden

0

5

10

15

20

25

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Finland ** ELA/ AT. Kearney** U.S. State of Logistics* Sweden*

State of logistics South Africa*

BVL Germany; Manufacturing***

China; Choi & Lee (2009) *

A wide spread of methods, units and definitions on logistics cost; few longitudinal studies exist

Logistics costs as % of: (i) GDP *; (ii) Sales **; (iii) Total costs *** Tajikistan 2005* Moldova 2005* Ukraine 2007*

Brazil = ILOS (2010) *


Russia 2011*

Levels of Logistics Costs in Statistics-based Studies; Percentage of GDP (* % of sales)

Source: Rantasila & Ojala (2012) ITF Discussion Paper 2012-04 ITF Summit, Leipzig, May 2, 2012, Rantasila & Ojala 8

Levels of Logistics Costs in surveys; Percentage of GDP (* % of sales)

Source: Rantasila & Ojala (2012) ITF Discussion Paper 2012-04 ITF Summit, Leipzig, May 2, 2012, Rantasila & Ojala 9

LPI 2007 indicated a strong correlation of national logistics performance and costs

Source: Arvis et al. (2007) Connecting to Compete; Logistics Performance Index, World Bank ITF Summit, Leipzig, May 2, 2012, Rantasila & Ojala 10

Knowledge gaps on national level logistics performance indicators & costs

• Lack of comparable methods & terminology

• Very few cross-country studies made even in HICs

• Little comparative data across countries & industries

Fact-based, comparative policy recommendations difficult to make without adequate indicators


• Collecting the existing knowledge LPIO – Starting mainly from High Income countries

– Three workshops held in the US, Europe and Asia

• Analytic tools esp. for Middle & Low Income countries • Questionnaire-based surveys

• Statistics-based studies

• Modelling approaches

• Other approaches, e.g. Logistics Performance Index (LPI) surveys

Aim to measure logistics costs & KPI’s in a more uniform way

” F K oC ”


Logistics Performance International Observatory LPIO initiative by The World Bank to improve

Logistics Cost & Performance analysis

In conclusion, there is strong…

• …interest for exchange of knowledge among researchers in the field;

• …need for improved market information; and

• …demand for better analysis to support policy-making especially in LICs and MICs.

A need to create a joint knowledge platform to study national level logistics performance


Thank you for your attention!


Selected references: • ELA and AT Kearney (2004) Differentiation for Performance Excellence in Logistics, http://www.elalog.org/ • ELA and AT Kearney (2007) Innovation Excellence in Logistics 2007, http://www.elalog.org/ • Finland State of Logistics 2006; Naula, Ojala and Solakivi (2006) MoTC publications 45/2006 www.mintc.fi • Finland State of Logistics 2009; Solakivi, Ojala et al. (2009) MoTC publications 21/2009 www.mintc.fi • Finnish Logistics Survey 1992. Ministry of Transport and Communications publications 6/1993 • Finnish Logistics Survey 1996-7. Ministry of Transport and Communications publications 33/1997 • Finnish Logistics Survey 2001. Ministry of Transport and Communications publications 52/2001 • Ittmann, HW, King, DJ, Maspero, EL et al. (2008) Fourth annual state of logistics survey for South Africa 2007:

logistics for regional growth and development • Langley, J. and Dort, E. and Ang, A. and Sykes, S.(2007) “2007 Third-Party Logistics, Results and Findings of the

12th Annual Study”, http://www.us.capgemini.com/industries/ind_tl.asp?IndID=19. • Ojala, Solakivi, Hälinen, Lorentz and Hoffmann (2007) State of Logistics in the Baltic Sea Region, LogOn Baltic

3:2007 www.logonbaltic.info

• Rodrigues, A.M, Bowersox, D.J, Calantone, R.J, (2005) Estimation of Global and National Logistics Expenditures: 2002 Data Update. Journal of Business Logistics, Vol.26, No. 2, 1-16

• Supply Chain & Logistics Association Canada (2008) State of Logistics, The Canadian Report 2008

• Transport Intelligence (2008) Logistics & transport Industry Environmental Survey • Töyli, Häkkinen, Ojala, Naula (2008) Logistics and financial performance - An analysis of Finnish small and

medium-sized enterprises, Int. J. of Physical Distribution and Logistics Management, 38, 1, 57-80

• Guasch J.L – Kogan J (2006) Inventories and Logistic Costs in Developing Countries: Levels and Determinants—A Red Flag for Competitiveness and Growth. Policy Research Working Paper 2552. Washington DC: World Bank

• Guerrero P - Lucenti K – Galarza S (2010) Trade Logistics and Regional Integration in Latin America and the Caribbean, ADBI Working Paper Series No. 233

• Barbero J A (2010) Freight Logistics in Latin America and the Caribbean: An Agenda to Improve Performance, Inter‐American Development Bank Infrastructure and Environment Department, TECHNICAL NOTES No. IDB‐TN‐103 ITF Summit, Leipzig, May 2, 2012, Rantasila & Ojala 15

http://www.elalog.org/

http://www.elalog.org/

http://www.mintc.fi/

http://www.mintc.fi/

http://www.us.capgemini.com/industries/ind_tl.asp?IndID=19

http://www.logonbaltic.info/

Statistics-based logistics studies do exist: • Annual State of Logistics Report U.S 1989 • Bowersox, Rodrigues, Calantone & Closs, Stank 1999, -02,-05 • South Africa State of Logistics Survey 2003 • Logistics costs in Brazil 2005 • Top 100 in (European) Logistics 2007 • Norwegian logistics costs 2008 • Svensk Makrologistik (Sweden) 2008 • Radelet and Sachs 1998 • Lee & Hausmann (World Bank background note) 2005


…as do surveys using questionnaires, such as: • ELA & A.T. Kearney 1987 • Finland State of Logistics 1991 • German Logistics Association BVL 1995 • State of Logistics: The Canadian Report 200X • Norwegian Logistics barometer 2003 • ASLOG L'Etat de l'art de la logistique française 2005/2006 • McKinsey Global Supply Chains 2006 & 2008 • LogOn Baltic Logistics Survey 2007 • World Bank Logistics Performance Index 2007 • Colombian logistics survey 2008 • Swiss Logistics market, St. Gallen University 2009


World Bank case studies on national logistics costs in Low-Income countries

• Arvis: Sub-Saharan and North Africa 2003

• Ojala: Moldova, Albania, Ukraine, Central Asia 2003

• Naula: Central Asia 2007


Documents

Measuring National Level Logistics Costs