The Philippine logistics sector tumbled 14 spots from 57th to 71st in the World Bank’s bi-annual Logistics Performance Index (LPI) due to the impact of the Manila truck ban that affected the country’s transportation of goods and services last year, the chief of the National Competitiveness Council said.
According to WB’s 2016 LPI data, the Philippines scored 2.86 points in logistics performance—out of a possible score of 5 points—ranking the country 71st out of 160 economies studied.
In the previous LPI in 2014, the Philippines stood at 57th place with a score of 3.0.
WB’s bi-annual LPI data ranks an economy’s logistics performance based on six indicators, including the customs department, infrastructure, quality of services, international shipments, tracking and tracing, and timeliness of shipments.
According to the performance scores, the economies are classified in five “quintiles”: Top quintile or “logistics friendly” economies with scores of 4.25 points to 3.50 points; second quintile or “consistent performers” with scores between 3.50 points and 3 points; third and fourth quintiles or “partial performers” scoring between 3 points to 2.50 points; and the bottom quintile or “logistics unfriendly” economies with scores 2 points and below.
Based on the 2016 logistics index, the Philippines is a “partial performer.”
Guillermo Luz, co-chairman of the National Competitiveness Council (NCC), said there is “no surprise” in the downgrade of the country’s logistics sector due to the effects of the Manila truck ban in 2015 in which the flow of goods and services were affected, also taking a toll on businesses’ cost effectiveness.
“In the two years, what really hurt, what we saw in the trading across borders indicator last year, was when there was the truck ban installed that triggered all the Manila port congestion. And once that got started, it took so long to fix the backlog, only by the decision of one LGU [local government unit which is Manila]and that hurt,” Luz said.
“So in a way, we shouldn’t be surprised [with the downgrade],” he added.
The 160 economies studied were classified into five groups in the WB survey: the top 10 LPI economies, the bottom 10 LPI economies, the lower-middle-income economies, the upper-middle-income economies, and the low-income economies.
The Philippines is the seventh top logistics performer in the lower-middle-income category, which was led by India (35th, 3.42 points), Kenya (42nd, 3.33 points), Egypt (49th, 3.18 points), Indonesia (63rd, 2.98 points), and Vietnam (64th, 2.98 points).
Germany remains the leader in the world’s logistics sector, maintaining its 1st place and improving its score to 4.23 points from 4.12 points in 2014.
Aside from Germany, the rest of the top economies in terms of logistics are Luxembourg (4.22 points), Sweden (4.20 points), Netherlands (4.19 points), and Singapore (4.14 points).
WB’s 2016 LPI data—now the fifth edition—retains the methodology and indicators of the 2014 LPI.
The Philippines is expecting to earn higher spot in the next LPI rankings in 2018 as the next administration pushes to improve the country’s logistics sector and infrastructure, which are included in the 10-point economic agenda of President-elect Rodrigo Duterte, Luz said.