Why smarter logistics are essential for trade, growth, and jobs

In today’s global economy, competitiveness depends as much on how goods move across and within borders as what countries produce. When goods move faster and more reliably, costs are lowered, firms become more competitive, trade expands, and economies grow. Efficient logistics—which encompasses transportation, warehousing, and brokerage—make that possible. 

Stronger logistics are linked to higher trade volumes, which can raise incomes and fuel economic development. They enable countries to tap into global value chains, allowing them to specialize in specific stages of production rather than producing entire goods, an important pathway up the income ladder.

Logistics are also a driver of jobs. Despite rising automation, logistics remain a people-centric sector generating jobs across all skill levels, from truckers and warehouse staff to higher-skilled roles like customs brokers and supply chain managers. 

The World Bank Group’s new Logistics Performance Indicators (LPI 2.0) provide a clearer, more objective view of logistics performance than the previous survey-based Logistics Performance Index, and it does so across 172 economies, up from 139 in the last edition. 

Unlike the earlier survey-based index, the LPI 2.0 is built on tracking data from millions of shipments, tracking containers, aviation shipments, and postal packages across thousands of locations across the world. This new edition allows policymakers to better identify areas where improvements may be needed for their specific country context and compare performance across up to three logistics modes: maritime, air transport, and postal.

Improving trade logistics comes down to optimizing two key dimensions:

Connectivity: The extent to which a country is linked to global markets and logistics networks. Stronger connectivity expands trade opportunities, attracts global logistics providers, and enhances resilience by reducing reliance on a limited number of routes or partners.

Time: How quickly and predictably goods move through supply chains: For traders, reliability is at least as important as speed. Unpredictable clearance times can disrupt supply chains. Reducing delays, especially at borders and ports, lowers costs and increases a firm’s competitiveness. 

While improving connectivity is a long-term effort often influenced by factors such as geography, reducing delays is more achievable in the medium term. The two reinforce each other: faster, more reliable logistics can attract new investments.

The LPI 2.0 includes several measures of time, but one stands out: dwell time—the time a container spends in a port between unloading and exit. For container shipping, which accounts for around 46 percent of global goods by trade value, import dwell time is an important measure of efficiency. In the most efficient customs and seaports, containers clear in under three days while in the least efficient, it can take more than three weeks. 

The Connecting to Compete 2025 report released today shows that advanced economies tend to have short or moderate dwell times while some middle-income economies that have invested heavily in port infrastructure, such as India and Indonesia, also perform well. In contrast, performance is more uneven in low- and lower middle-income economies, with the longest delays concentrated in parts of Sub-Saharan Africa and the Middle East and North Africa, where dwell times can often exceed two weeks.

What drives poor performance and how can countries improve it?

Long dwell times and weak logistics performances are typically caused by several factors. These include a lack of automation of customs clearance and port logistics; inadequate risk management and inspection practices by customs agencies; fragmented procedures across different agencies beyond customs; and a regulatory environment that is difficult to navigate.

Policy makers seeking to improve the speed and reliability of supply chains should focus on dwell time and other indicators in which their economy underperforms compared with peers. They can enhance logistics performance and connectivity in three ways:

• Modernizing border clearance through the use of digital systems, improving risk management, and meeting international standards;
• Adapting regulations that affect market structure and service quality; and
• Providing infrastructure services directly or via public-private partnerships (terminal handling services, for instance).

Producing quality goods is not enough to be competitive in today’s global economy. Companies need to move their goods across and within borders efficiently and reliably. The Logistics Performance Indicators 2.0 provide policymakers with a practical toolkit to help identify gaps in their trade systems and take targeted action to strengthen them. 

Better logistics reduce trade costs and time. This helps increase economic opportunities, create jobs and enable countries, especially low- and middle-income economies, to participate in global value chains at scale.

Source : World Bank