The Tools: From Diagnostic to Implementation
Impact
Evaluation
Alina Antoci - IFC Trade Logistics Advisory Service
Practical
Implementation
Examples
Contents
Why does it matter to firms and countries?
What do traders want?
IFC Global Trade Logistics Advisory Program
Practical Implementation Examples
Impact Evaluation
of Investment Climate Reforms
Why does it matters to firms and countries?
Poor trade logistics creates tremendous costs for businesses including inventory,
transportation….
Source: IFC
Source: dipity.com
Source: blog.allstate.com
Cost Categories
Risk
Financial

Direct cost of transportation
•
Market share

Lost days due to delays
•
Spoilage

Cost of financing investment in
inventory (interest paid or
opportunity cost of capital)
•
Shrinkage
•
Obsolescence

Taxes

Insurance
33
..impacting the investment climate
Storage and Handling
•
Warehousing and storage
especially when large
inventories require
additional space
•
Handling and transportation
in general and to overflow
facilities
Why does it matter to firms?
(2) Logistics costs have a disproportionate burden on small firms
Average logistics cost as a % of firm sales
45
42
40
35
Inventory a function of timeliness
and reliability
12.7
30
..impacting the investment climate
25
20
15
29.4
18
18
6.28
7.31
11.36
10.63
18
11
10
5
6.9
0
Les s than US$ 5 M
US$ 5 M to US$ 50 M US$ 50 M to US$ 500 M
Inventory Management &Warehousing
Source: Centro Logístico de Latinoamerica, Bogota, Colombia. Benchmarking 2007:
Estado de la Logística en America Latina Anexo, María Rey LogisticSummit 2008
More than US$ 500 M
Transport &Dis tribution
Why does it matter to firms?
(3) High costs of inputs
60% of the cost related to the importation of pineapples CR to Saint Lucia is due to
documentation preparation, border clearance, transportation and logistics.
2
Costa Rica (CR)
Retail Profits
+ Other -------------->
Costs
St. Lucia (SL)
------------>
Consumer
Cost
Cost breakdown for Pineapples imported from Costa Rica
30% to
1.6
Landed
St Lucia
Duties
1.8
Land
Transport
Land
Transport + Storage
& Handling
US$/lb
1.4
Cost
Ocean
Transport
+ Port SL
1.2
1
60%
0.8
Other Costs
0.6
0.4
0.2
Producer
Price
Land
Transport
Ocean
Transport
+ Port CR
Wholesale
Consolidated
Port
Cost
Miami
10%
0
Farm Gate
(CR)
Transport
and
Logistics
Costs
CR FAS Ocean to Miami Port Miami Miami FOBOcean to St.
St. Lucia PortW holesale DistributionRetail Price
Miami
Warehouse Price
Lucia
Source: Adapted from : Logistics, Transport and Food Prices in LAC (2009) and OECS Backward Linkages Study (2008)
Farm Gate
price
Why does it matter to countries?
Logistics directly affect the poor…

Logistics costs make up large part of food prices
 20 to 60 percent
 Depending upon product and trade route

Food is the primary purchase of households
 20-30 percent of expenditures on average
 For the poor, 60 to 70 percent of HH expenditures
…and these high costs are driven by “soft issues”
Developing country average import time
4.5 days
5 days
Source: DB 2013
DAYS
4 days
14 days
DOCUMENTS ASSEMBLY
AND PROCEDURES
CUSTOMS AND TECHNICAL
CONTROL
TERMINAL AND
PORT HANDLING
INLAND TRANSPORT
Soft issues
Hard and soft issues
Categories accounting for more
than 50 – 60% of the total time to
export and import in many
countries around the world.
Categories accounting for 40% or
less of the total time to export
and import around the world.
Contents
Why does it matter to firms and countries?
What do traders want?
IFC Global Trade Logistics Advisory Program
Practical Implementation Examples
Impact Evaluation
of Investment Climate Reforms
Firms depend on the entire supply chain to connect to
regional and international markets
Trade supply chain performance and reliability determined by:
1.
quality of trade related infrastructure
2.
efficiency of trade procedures and regulations
3.
quality and availability of private sector services
TRADE FACILITATION
Simplification
Process of eliminating all
unnecessary elements
and duplications in
formalities, processes
and procedures
Harmonisation
Alignment of national
procedures, operations and
documents with international
conventions, standards and
practices.
Standardisation
Process of developing
internationally agreed
formats for practices and
procedures, documents
and information.
What do traders want ?
♦ Simple and smooth processing of formalities
♦ A ‘seamless’ process (minimal intervention)
♦ Means to allow goods to proceed promptly to their final destination.
♦
♦
♦
♦
No longer itineraries, no unpacking, no delays
A single control point for all public services
Standard forms, assembled into a ‘single bunch of documents’,
compatible with trade documents and transport contracts
Predictable and transparent rules and procedures
Consistency even if not so simple, at least be consistent
Timely, cost effective, reliable and predictable connections
critical for commercial competitiveness
Timely, cost effective, reliable and predictable connections
International
Jurisdiction
Distance
National
Jurisdiction
In-house procedures
Points of Interconnectivity
Land
Transport
Port Handling
& Border
Clearance
Port Handling
& Border
Clearance
Ocean
Shipping
Inventory
of Semi-Finished
Collection, Product
Marketing &
Packaging
Information Flow
Seller
Inland
Transport
Processor
Warehouse
Changes in supply chain
performance are realized
through changes in:
• In-house Procedures
• Level of Interconnectivity
• Regulation
• Technology and systems
• Infrastructure
Logistics Costs
(Value of Time & Service Charges)
11
Source: DB database 2012, 2013
To Achieve This
Changes in supply chain
performance are realized
through changes in:
• In-house Procedures
• Level of
Interconnectivity
• Regulation
• Technology and systems
• Infrastructure
Cooperation
at the national level
• Between the government
institutions concerned by
foreign trade: Finance,
Commerce, Transport
• With the trading community:
importers and exporters
• With service providers:
transport operators, banks,
insurance companies…
Contents
Why does it matter to firms and countries?
What do traders want?
IFC Global Trade Logistics Advisory Program
Practical Implementation Examples
Impact Evaluation
of Investment Climate Reforms
IFC Global Trade Logistics Advisory Program
Improve public agencies regulatory role for
importing/exporting firms and their performance
Objective
Address binding constraints
faced by the private sector
across the supply chain
Technical assistance to developing countries to
build efficient trade logistics systems and services
by improving:
 efficiency of border management
 coordination of Customs agencies
Partnerships with the public and private sectors
Expected Results and Impact
Reduce the time & cost to trade, leading to
increases in exports & savings to the private sector
14
Emphasis on impact evaluation
Impact on exports
Impact on private sector savings
A 10% reduction
export time
Inventory
Cost Savings
User Fees
and Charges
Increases Export of …
Sub Saharan Africa
South Asia
East Europe & Central Asia
Middle East & N. Africa
East Asia and Pacific Islands
Latin America and Caribbean
OECD
by …
6.1%
5.8%
5.0%
4.1%
4.1%
3.5%
1.7%
Cargo Loss
and Damage
Capital
Carrying
Charge
Inventory
Cost Savings
User Fees
and Charges
Cargo Loss
and Damage
Capital
Carrying
Charge
Source: Forthcoming research paper (Subramanian, Anderson and Lee (2012)
Program Core Areas
Economy-wide
Regional
Integration
Logistics Services
Supply Chain and
Agribusiness
• Simplifying & harmonizing trade procedures and documentation
• Conducting legal and regulatory reforms
• Integrating risk management systems into border inspections and clearance
• Implementing electronic processing/automation and Single Window Systems
• Enhancing/implementing information and communication technology (ICT)
solutions, including e-payment
• Improving trade logistics systems and services, order clearance at the regional
level
• Technical Control for the cross border movement of cargo focusing on the
implementation and mutual recognition of international standards, accreditation
and certification
• Improving national logistics efficiency of cargo movement and distribution
services at ports, airports & dry-ports
• Improving access for the private sector to invest in logistics and distribution
services
• Improving logistics services along the supply chain and/or specific Value
Chains
• Improving trade logistics in agribusiness supply chains
• Streamlining NTBs and thus offering market access for key agribusiness
products
Implementation Model
Rapid Response Program
10-12 Months
Industry Competitiveness Program
2-3 years
•Identify and achieve quick wins that
build trust and catalyze reforms
•Establish the basis for medium and
long term reforms
Systematic Reform Program
1-2 Years
•Support regulatory frameworks for
modern logistics and distribution
services
•Improve food security & enhance
agribusiness competitiveness
Regional Program
3-4 years
•Extend rapid response work and
addresses key constraints
•Promote best practices for efficient
trade logistics supply chains
•Ease access to regional and global
markets
•Provide solutions to land-locked, transit
and island economies
Typical Engagement Program
Source: DB database 2012, 2013
Contents
Why does it matter to firms and countries?
What do traders want?
IFC Global Trade Logistics Advisory Program
Practical Implementation Examples
Impact Evaluation
of Investment Climate Reforms
Impact on the Ground – At the Country level
Rwanda
Liberia
Colombia
Armenia
Enhanced riskbased inspections
process
Implemented
Customs
automated system
Implemented a
simultaneous
inspections regime
across all border
agencies
Removed export
license and
technical
certificates
Allow 60% of cargo
shipments routed
through low
/medium risk
channels
Reduced Customs
clearance from 3
weeks to 3-4 days
Established a
common
methodology for
sharing risk data
Exporters no longer
require Expertise
Test Reports to
obtain a certificate
of origin
Business process
re-engineering
underway
Reduced export
documents from 7
to 5 and time by
56% in 3 years
To improve
functionality of the
Single Window for
Trade
Saved 4 days and
$100 per export
transaction
Reduced time to
import by 55% and
time to export by
25%
Impact on the Ground – At the Regional level
aligned working
hours between
India and Nepal
South Asia
South-Eastern Europe
Central America
the Caribbean
and most recently
West Africa
IFC South Asia
Regional Project
automated transit
processes
aligned processes
and procedures at
land border
stations
to improve
movement of goods
across region
Our clients
SE Europe Region - Serbia, Albania, Bosnia
Herzegovina, Kosovo, Macedonia, Montenegro
Liberia, Mali, Burkina
Faso, Guinea Bissau,
Benin, Sao Tome
West Africa Region
(ECOWAS)
Armenia
Kazakhstan, Mongolia
Caribbean Region St Lucia, Antigua &
Barbuda, St Kitts & Nevis,
Grenada, Dominica
South Asia Region India, Bangladesh,
Nepal
Philippines
Timor-Leste
Central America Region
El Salvador, Honduras,
Guatemala, Nicaragua,
Costa Rica
Columbia, Peru
Chad, Central
African Republic,
Cameroon, Gabon
Egypt, Ethiopia,
Rwanda, Kenya,
Zambia
Trade Logistics projects in over 50 countries
Contents
Why does it matter to firms and countries?
What do traders want?
IFC Global Trade Logistics Advisory Program
Practical Implementation Examples
Impact Evaluation
of Investment Climate Reforms
Impact Evaluation of Investment Climate Reforms
Challenge
How can we get better at measuring
what we value
♦ Development Impact Evaluation
♦
♦
♦
(DIME) – WBG
Investment Climate Department
(IC) – Trade and Investment
Development Research Group
(DEC) – Trade
Internal Client
Impact and Results working group
Opportunity
What gets measured gets done
 “How to integrate impact
assessments or build feedback loops
into our projects?”
 “What do we need to do less of to
increase our focus on results and
reduce the burden of process?”
 “How do we strengthen incentives to
focus on long-term results?”
“How to design appropriate impact indicators?”
Pilot project: Impact of border-related reforms
1)Simplification of border
procedures, e.g.
Introduce single window
Reduce/harmonize
documentation
2)Computerization of
procedures
Electronic scanning
REVENUE AND RENTS
Customs revenue
Illegal payments
TRADE FACILITATION
Lower and predictable
trading costs and
clearance times
3)Introduce/improve risk
management
4)Strengthen performance
incentives for customs officials
Measures of
Border performance
RISK
Illegal shipments
Higher trade
volumes and
more diversified
trade
Lower costs for firms
(lower inventories) and
higher returns
More trading
firms and
investment
Measures of
Economic activity
Thank you!
For further information:
aantoci@worldbank.org