Measuring National Level Logistics Costs
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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
Lauri.ojala@utu.fi
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
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
ITF Summit, Leipzig, May 2, 2012, Rantasila & Ojala 3
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
ITF Summit, Leipzig, May 2, 2012, Rantasila & Ojala 4
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
ITF Summit, Leipzig, May 2, 2012, Rantasila & Ojala 5
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
ITF Summit, Leipzig, May 2, 2012, Rantasila & Ojala 6
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) *
ITF Summit, Leipzig, May 2, 2012, Rantasila & Ojala 7
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
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• 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 ”
ITF Summit, Leipzig, May 2, 2012, Rantasila & Ojala 12
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
ITF Summit, Leipzig, May 2, 2012, Rantasila & Ojala 13
Thank you for your attention!
ITF Summit, Leipzig, May 2, 2012, Rantasila & Ojala 14
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
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
ITF Summit, Leipzig, May 2, 2012, Rantasila & Ojala 16
…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
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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
ITF Summit, Leipzig, May 2, 2012, Rantasila & Ojala 18
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