IMPORTANCE OF LOGISTICS IN FOREIGN INVESTMENT
A study done by International Chamber of Commerce states “Logistics can be the crucial factor in Foreign Direct Investment”. A World Bank study also has noted that the quality of national logistics services is now a major detriment of capital flows into developing countries.
The Connecting to Compete: Trade Logistics in the Global Economy study and its associated
Logistics Performance Index (LPI), rates the competitiveness of countries in a manner similar to the World Economic Forum Global Competitiveness Report and the World Bank’s Ease of
Doing Business Survey
This is the first year of the study, which will be released on an annual basis. It was compiled through a survey of 800 freight forwarders and express carrier in 100 countries. “In this highly competitive world, the quality of logistics can have a major bearing on a firm’s decisions about which country to locate in, which suppliers to buy from and which consumer markets to enter,” it notes. Singapore came in top of the LPI, which rates performance along the logistics supply chain across 150 countries. Broadly, it covers international and domestic shipping efficiency, in terms of efficiency of customs, quality of infrastructure, ability to track and trace, direct freight costs and constrains to logistics performance. The research also includes time-cost performance data such as average percentages of damaged shipments, lead times to export / import and typical costs for export of a 40ft container
With an overall score 4.19 (out of 5), Singapore beat the Netherlands into second place. The
Southeast Asian transport hub ranked third overall in terms of customs efficiency; second in the infrastructure and international shipment and logistics competence categories and first in timeliness of shipments, tracking and tracing capability. Its lowest ranking was in the category of domestic logistics costs, where it came in at number 113
“The biggest source of costs is not really transportation cost (such as freight costs), port and handling charges, procedural fees (such as bonds), or even agent fees and side payments; it is the predictability, the reliability and the quality of services that are much more important than the cost,” said one of the study’s lead authors Jean Francois Arvis of the Bank’s Poverty
Reduction and Economic Management (PREM).
The Next best Asian performer was Japan, which placed sixth. Hong Kong came in eighth place and Australia in seventeenth. The US ranked 14 th while China ranked in 30 th place overall, surprisingly high when you consider the ranking applies to the whole country and not just the better developed costal and southern areas
Quite independently of the foregoing ICC actively advocates investment in transport infrastructure, as part of their objective to promote sufficient and reliable freight transport services to support world trade
Around the world, freight transportation infrastructure into and from ports and to the regions they serve is increasingly incapable of adequately handling current cargo volumes. These volumes are expected to rise further. Infrastructure must keep up with the pace of international trade. Freight industry stakeholders and public authorities must act now to eliminate infrastructure bottlenecks and to ensure the smooth flow of international cargo shipments

ICC Committee on Maritime Transport, which brings together maritime transport providers and transport users, calls on all parties in the international supply chain to work together in planning and arranging for the necessary expansion and efficient usage of freight transportation infrastructure supporting ports, for the benefit of world trade
In many ports around the world, containers are piling high in many terminals because of transportation bottlenecks. This means costly delays, missed berthing slots in subsequent ports, higher fuel costs to make up schedules, readjusted schedules, missed ports, missed feeder and train connections, changed documents and penalties. Access roads and intermodal connections are insufficient to ensure the swift and efficient transportation of containers that have been unloaded in terminals. Inland waterway barges and feeder ships compete with ocean vessels for berths. Access roads of ports and highways are congested, as are the railways. Problems in one region affect the performance of ports, waypoints and carries in all modes along the entire supply chain, all incurring and causing additional costs
World trade and commerce depends on sufficient and reliable freight transport services. So do the economic health of individual trading nations, their businesses, their workforce and ultimately their citizens
ICC, the world business organization, founded 90 years ago in 1919 has national committees in 130 countries that have contributed to this survey, urges ports and freight transportation infrastructure operators, public authorities around the world to consider that:
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the current situation of inadequate port and freight transport capacity around the world harms world trade
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the demand for such capacity will continue to rise
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public authorities should develop and implement the necessary planning and investment tools for the expansion of port and freight transportation infrastructure
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public authorities should ensure adequate funding for required infrastructure developments
The international business community calls for immediate steps to ensure an adequate freight transportation infrastructure is in place to facilitate and move world trade effectively and efficiently – today and in the long term
Tissa Jayaweera
Chairman
International Chamber of Commerce Sri Lanka