Wednesday, November 07, 2007

Trade logistics

The Trade Logistics and Facilitation department of the World Bank recently released a new index designed to measure the logistics performance of 150 countries. This measure, the Logistics Performance Index (LPI), consists of 7 key dimensions, and allows for the ranking of countries.

Here is how Armenia is ranked:
1. Efficiency and effectiveness of the clearance process by Customs and other border control agencies – Rank: 118
2. Quality of Transport and IT infrastructure for logistics – Rank: 143
3. Ease and affordability of arranging shipments – Rank: 140
4. Competence in the local logistics industry (e.g., transport operators, customs brokers) – Rank: 121
5. Ability to track and trace shipments – Rank: 113
6. Domestic logistics costs (e.g., local transportation, terminal handling, warehousing) – Rank: 8
7. Timeliness of shipments in reaching destination – Rank: 122
Overall rank: 131

The index reflects the perception of trading partners as well as the logistics environment in the country, and as such should provide a reliable picture of the situation in Armenia. Other than the domestic logistics cost, the country ranks way at the bottom. The performance of Customs is not surprising, but much of the rest was unexpected. While it is easy to quibble over the accuracy of the index (e.g. item related to infrastructure can’t be right), it suggests that much work lay ahead. For the curious reader, the overall rank for war torn Liberia is 105, Zimbabwe 114, Somalia 127, and 130 for Nepal. Belarus is ranked 74, Iran 78, Russia 99, and Azerbaijan 111. Georgia is not ranked, and, again, Armenia is ranked 131.


nazarian said...

Wow! They need some supply chain specialists to redesign the system.

armen said...

A look at the price sheet for “custom tax” on various products being shipped from Glendale, CA to Yerevan, with a local Armenian owned shipping company will reveal interesting numbers. For example, shipping a laptop from LA to Yerevan, will cost $300 in custom tax. Shipping cosmetic products regardless of weigh or amount will cost $150. Shipping medicine is forbidden. Shipping clothing has no custom tax. The worst is when you ask the shipping company where this "custom tax" money goes and if indeed goes to the State budget, their answer is "who knows", "that's the deal we have with the customs people". This type of arbitrary numbers can only reveal that they are set based on nepotism and corruption.

Indeed this is a serious problem that Armenia's government must deal with and make Customs department, FAIR and competitive without nepotism and corruption.

David said...

I think custom problems are serious, but more needs to be done to document them in a systematic way. If your $300 example is true, that is by far the worse thing that can be done to destroy the IT sector.
But in addition to poor governance, I think this new measure also highlights the poor training and eductation in preparing the country for open borders and market economy.