Logistics Performance Index 2023, Parameters, Government Initiatives

According to the World Bank’s Logistics Performance Index Report for 2023, India has made remarkable progress, ranking 38 out of 139 countries. This achievement marks a substantial improvement from its position at 54 in 2014, demonstrating a commendable sixteen-place leap. The country’s ascent by six places from 44 in 2018 underscores the sustained efforts towards enhancing logistics efficiency and competitiveness.

Logistics Performance Index (LPI)

• Denmark retained its top position in the LPI for the fifth consecutive year.
• Germany moved up to second place, followed by Singapore in third place.
• The United States improved its ranking to 12th place.
• India improved its ranking to 38th place, up from 44th place in the 2018 LPI.

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Notable Trends

• The gap between the highest- and lowest-ranked countries is widening.
• Developing countries are making progress in improving their logistics performance.
• The COVID-19 pandemic has had a significant impact on global logistics.
• Customs performance is the most significant factor affecting logistics performance.
• Infrastructure is the most important factor for developing countries.
• The quality of logistics services is becoming increasingly important.

About Logistics Performance Index (LPI)

The Logistics Performance Index (LPI) is an interactive benchmarking tool created by the World Bank to help countries identify the challenges and opportunities they face in their performance on trade logistics and what they can do to improve their performance. This instrument assists nations in recognizing their trade logistics challenges and opportunities, guiding enhancement. The LPI is based on two components:

• A worldwide survey of international logistics operators on the ground (global freight forwarders and express carriers), providing feedback on the logistics “friendliness” of the countries with which they trade.
• A set of country-specific indicators based on six key dimensions of logistics performance: customs, infrastructure, ease of arranging shipments, logistics services quality, tracking and tracing, and timeliness of shipments.
• Duration: Published every two years since 2010, except for a 2020 pause due to the pandemic, with a revised index unveiled in 2023.

Parameters of Logistics Performance Index

1. Customs performance
2. Infrastructure quality
3. Ease of arranging shipments
4. Logistics services quality
5. Consignment tracking and tracing
6. Timeliness of shipments

India’s Rank in Logistics Performance Index (LPI)

Logistic Facts In India

• India’s logistics sector is a major contributor to the country’s economy, accounting for 15% of GDP.
• However, logistics costs in India are high, at 13-14% of GDP, compared to 7-8% in developed countries.
• This high cost of logistics can have a significant impact on exports, as a 10% decrease in logistics costs can lead to a 5-8% increase in exports.

Government Initiatives to Logistics Efficiency

• LEADS (Logistics Ease Across Different States) Study: It has been conducted by the Department for Promotion of Industry and Internal Trade (DPIIT) since 2018. The LEADS study helps to identify and resolve logistics inefficiencies and improve trade facilitation across supply chains.
• PM Gati Shakti Initiative: Launched in 2021, the PM Gati Shakti Initiative is a national master plan for multimodal connectivity. It aims to reduce logistics costs and boost the economy by 2024-25. The initiative will focus on developing infrastructure, improving connectivity, and streamlining processes.
• National Logistics Policy (NLP): The National Logistics Policy was introduced in 2022 to address the challenges faced by the logistics sector in India. The policy aims to improve efficiency, reduce costs, and promote sustainable practices. Some of the key objectives of the NLP include:
  • Streamlining customs procedures
  • Reducing the time taken to move goods from one place to another
  • Promoting the use of technology in the logistics sector
  • Developing a skilled workforce for the logistics sector

• Land Port Management System (LPMS): The Land Port Management System (LPMS) was implemented by the Land Ports Authority of India (LPAI) to digitise operations and facilitate a secure electronic flow of information between all stakeholders at the Integrated check posts (ICPs). It has been successful in reducing the dwell time from 57 days to less than 24 hours.
• Ministry of Railways: The Ministry of Railways has been working on a number of initiatives to improve the efficiency of the Indian Railways, including:
  • 100% electrification of railway tracks
  • Increased capital expenditure (CAPEX) of INR 2.6 lakhs in FY24
  • Development of the Eastern and Western dedicated freight corridors
• Bharatmala Project: A government initiative to build and upgrade highways across India for improved road connectivity and the creation of logistics parks, aimed at connecting 550 districts by the National Highways network​​​​​​​.
• Sagarmala Programme: The flagship programme of the Ministry of Ports, Shipping and Waterways aims to promote port-led development by harnessing India’s long coastline and navigable waterways, and enhancing port connectivity​​​​​​​​​​​.
• Dedicated Freight Corridors (DFC): Managed by the Dedicated Freight Corridor Corporation of India (DFCCIL), these corridors are intended to reduce India’s logistics costs and improve the efficiency of cargo movement across the country​​​​​​​​​.
• National Waterways 1 (NW-1): Declared in 1986, this waterway runs along the Ganga-Bhagirathi-Hooghly river system, enhancing transport and trade across several Indian states with developments like floating terminals.

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