PH ports move up in World Bank's logistics index global ranking

BY

Philippine ports, and the way they are managed, have significantly improved based on the 2023 report of the World Bank that includes the speed of the movement of containers as one of the key performance indicators. 

From 60th place in 2007, the Philippines now ranked 43rd based on the 2023 World Bank Logistics Performance Index (LPI) which covers 139 countries around the world—the country’s highest ranking so far. 

The 2023 LPI survey was conducted from Sept. 6 to Nov. 5 last year and contains 4,090 country assessments by 652 logistics professionals in 115 countries in all World Bank regions.

Singapore topped the LPI survey but almost all countries included in the Top 10 are high-income economies in Europe that include Finland, Denmark, The Netherlands and Switzerland. 

In its report entitled Connecting to Compete 2023: Trade Logistics in the Global Economy, the World Bank presented the latest view on trade logistics performance wherein countries were rated in seven categories.

One of them is through the logistics performance index which focuses on a network of services that support the physical movement of goods, trade across borders, and commerce within borders. It comprises transportation, warehousing, brokerage, express delivery, terminal operations, and related data and information management.

Infrastructure, logistics competence and quality, timeliness and tracking and tracing score were also included as performance indicators. 

PH could do better

The latest report from the World Bank also indicated that supply chain disruptions and logistics performance may improve through time if changes will be accepted and implemented.   

“Trade logistics performance may have improved due to policy reforms and private sector capacity building over time, despite the constraints imposed by recent conditions. In other words, today’s performance should be higher than what it was five years ago, but the impact of the supply chain crisis may have prevented some of this development from showing up in the survey data,” stated in the report. 

The World Bank report also stressed the importance of a broader set of interventions covering policy and private sector development in getting or sustaining high logistics performance. 

“One important objective should be to better predict when goods will arrive at their destination, as with supply chain visibility tools that facilitate traceability,” the report read.

This is where the digital transformation in operations comes into play as the World Bank report also indicated that digitalizing the operations means decreasing the steps in the supply chain process: 

Meaning when the containers are not in motion, this contributes disproportionately to the supply chain lead time.

“On average across all potential routes, a container takes 44 days from entering the port of export to exiting the destination port, with a standard deviation of 10.5 days. Over 60 percent of this time is spent on ships, with the rest split between stays at ports of export, import, or transshipment,” the report read. 

In the case of the Philippines, there was already an existing intervention through the Trusted Operator Program Container Registry Monitoring System (TOP CRMS).

The implementation of the project, however, was suspended and the Department of Transportation (DOTr) is reportedly now planning for its cancellation. 

PPA priority 

The Philippine Ports Authority (PPA), which is under the DOTr, has been pushing for the implementation of the TOP-CRMS as a long-term solution to end decades-long problems on port congestion and the complaints of stakeholders on high logistics cost. 

TOP-CRMS uses technology for up-to-date container tracking allowing customers, carriers, freight forwarders, and shippers to access the status of their cargoes and containers. 

It is expected to keep a registry and monitor all inbound shipping containers that will track every foreign-owned container’s location and movement using the industry- accepted data interchange formats through encrypted channels.

The push for TOP-CRMS appeared to have been vindicated in the 2023 World Bank report which mentioned digitalization as one of the factors contributing to the growth of the emerging economies which is said to cut port delays by 17 percent. 

PPA General Manager Jay Santiago said the result of the World bank’s report shows that port digitalization is the way to go.

“It only proves that we need to be open in trying out new solutions to the current problems and it is about time to make the government processes more effective and transparent,” said Santiago.

“Hence the push of the state-run Philippine Ports Authority for continued digitalization plans as it hopes to hasten the flow of trade, speed up the process of transactions, and to lower the existing high costs.”

“Digitalization is our priority right now within the PPA to prevent the usual issues that people deal with in transacting at the ports. When it’s all done and everything is digital and online, we can reduce their waiting time and there would be no unwarranted challenges in their transactions. This is a big step in helping our economy rise from the pandemic,” he added.

PBBM’s digitalization push 

The PPA's TOP-CRMS uses technology for up-to-date container tracking allowing customers, carriers, freight forwarders, and shippers to access the status of their cargoes and containers. 

The program is in line with the directive of President Ferdinand "Bongbong" Marcos Jr. to digitalize government processes and make them more effective and transparent for the end-users.

Santiago said the TOP-CRMS will streamline all the transactions at the ports in support of the Ease of Doing Business Law. 

“In fact, in a meeting with the Private Sector Advisory Council (PSAC) at Malacañan Palace, the President has favored the Digital infrastructure group of the TOP-CRMS program of PPA a chance to help lower commodity prices, prevent smuggling, and improve revenue collections,” said Santiago.

World Bank LPI explained 

The World Bank LPI is an interactive benchmarking tool created 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. 

The LPI is based on two components: First, a worldwide survey of international logistics operators on the ground (global freight forwarders and express carriers), providing feedback on the logistics “friendliness” of the countries with which they trade. 

The International LPI 2023 allows for comparisons across 139 countries. Second, this edition introduces indicators derived from global tracking datasets. They measure speed and delays for container, postal and air freight activities. 

They complement the main indicator but do not enter its score. Hence logistics performance is measured from two different perspectives: one based on the perceptions of international logistics professionals assessing their partner countries, the other one measuring the actual speed of global trade by using supply chain tracking information.