The high cost of trade and logistics bottlenecks handicaps competitiveness and disproportionately affects the poor. Today, the gains that countries can achieve from better trade logistics generally outweigh those from further tariff reductions. Logistics expenditures account for 15 to 30 percent of GDP in developing countries and typically 20 to 60 percent of delivered food prices.
Trade facilitation and logistics are cross-cutting development challenges that are identified as key priorities in three Bank network strategies—Trade, Transport, and Agriculture. They are also key components of several regional strategies, including for Africa, East Asia, and Middle East and North Africa (MENA). The Africa strategy highlights the importance of stimulating trade by connecting farmers to markets and developing cost-effective economic infrastructure that can spur competitiveness and faster growth. Particularly important to overcome are the physical disadvantages of 15 landlocked countries whose trade performance relies on collaborating with coastal countries.
The trade facilitation and logistics agenda is broad and aims at addressing the link between the World Bank’s investments in hard infrastructure and the policy actions that are needed to facilitate trade flows. Priorities include topics such as:
- Regional integration and trade corridor development;
- Border management extending beyond customs;
- Port reform;
- Regulation and development of logistics services (such as trucking, third party logistics, freight forwarding, and warehousing).
The Bank World intervenes through lending, advisory work, technical assistance, and dissemination of knowledge products.
A number of initiatives and tools facilitate the development of capacity.
Global Expert Team for Trade Facilitation and Logistics
The World Bank Group has established a Global Expert Team for Trade Facilitation & Logistics (GET-TFL), formally approved in the second quarter of FY12. It is made up of an array of Bank Group staff - with support from industry experts and academics - dedicated to helping clients across the developing world to facilitate trade and improve the efficiency of logistics. The agenda aims at addressing the links among investments in hard infrastructure, the services provided for the movement of freight, and the policy actions that are needed to facilitate trade flows.
Logistics Performance Indicators
See the data section.
Trade and Transport Facilitation Audits (TTFA)
The Bank’s Trade and Transport Facilitation Audits seek to improve diagnosis and corrective trade activities by providing guidelines on how to carry out a preliminary audit. They also give insights on how to go over the analysis and prepare appropriate remedial action. They establish a diagnosis, as comprehensive as possible, of procedural and operational constraints to external trade and international transportation services. Built on public and private sector assessments, these baseline diagnostics are carried out primarily in LDCs on a stand-alone basis or as a contribution to a wider diagnostic. In addition to the TTFA, the Bank is consolidating a series of more specialized methodologies, including supply chain analysis, surveys of truckers, and analysis of border delays (ports).
Trade Facilitation Facility (TFF)
In 2009 the World Bank launched the Trade Facilitation Facility (TFF), a multi-donor trust fund that supports concrete improvements in trade facilitation systems, which in turn can help reduce developing countries’ trade costs and thereby improve their competitiveness. The TFF responds rapidly to government requests for assistance in improving infrastructure, institutions, services, policies, procedures, and market-oriented regulatory systems that enable firms to conduct international trade on time and at lower costs. The TFF is projected to deliver around US$53 million in support over the next few years.
Connecting to Compete: Trade Logistics in the Global Economy
The World Bank publishes Connecting to Compete, an assessment of global trade logistics, and its underlying Logistics Performance Index every two years. Based on a world survey of international freight forwarders and express carriers, the report consistently shows that the capacity to connect firms, suppliers and consumers, is crucial in a world where predictability and reliability are becoming even more important than costs. Connecting to Compete has been published three times since 2008, most recently in May 2012.
Border Management Modernization: A Guide for Reformers
In 2011, the World Bank published a major new publication focused on the issue of border management modernization. The objective of the book is to provide policymakers and reformers with a practical guide to address border management issues including, but extending well beyond, customs. The book emphasizes the roles of other control agencies and the crucial importance of coordination between them. This approach represents a significant change from the traditional customs-specific focus to a new and more comprehensive “whole of government” approach to trade facilitation. The book is being complemented by a series of practical implementation guides taken from reform and modernization programs throughout the world. A Trade Portal guide is the first to be made available.
Trade Corridors and Landlocked Countries
The World Bank has invested significantly in the understanding of inland trade corridors, based on projects targeting corridors and regional trade and transport facilitation in all regions of the world. Efficient trade corridors require carefully designed transit regimes, but also cooperative arrangements conducive to efficient trucking services and customs control. The Bank has published two books on the policies and the economic impacts of corridors: The Cost of Being Landlocked (in 2010) and Connecting Landlocked Countries to Markets: Trade Corridors in the 21st centuries (in 2011). These publications are being complemented by a series of practical thematic implementation guides in the form of a corridor toolkit.
Logistics in Lagging Regions
Related to the case of landlocked countries is that of remote and lagging regions in large economies, where farmers and traders often face challenges in accessing markets for their products and their inputs, due to distance, lack of economies of scale or underdeveloped services. A first analysis based on case studies in Brazil and India called Logistics in Lagging Regions is currently being expanded.
The World Bank’s Transport department has updated and prepared toolkits relating to the management of key international infrastructure, including a port toolkit and railway toolkits.
International Finance Corporation (IFC) Analytical and Advisory Services
The core activities of the IFC’s Foreign Investment Advisory Service (FIAS) includes providing advice on the reduction of red tape on import/export policies and procedures, and advice on investment promotion strategies and tools. See www.ifc.org/fias
The World Bank, in partnership with other international organizations, is also promoting two advocacy initiatives, namely:
Trade Facilitation WTO Negotiation Support
The Trade Facilitation (TF) Negotiation Support Program assists developing countries and LDCs in playing a more active role in the WTO TF negotiations. The objective is to secure an ambitious and development-friendly new WTO TF Agreement. This program provides real-time analysis and practical advice to negotiators in Geneva and country capitals. A series of national workshops is also held to demonstrate the utility of capital-based support groups to Geneva negotiators.
The Global Facilitation Partnership for Transportation and Trade (GFP)
The GFP is a collaborative initiative between the main agencies interested in trade facilitation (IFIs, UN and specialized organizations). It also involves governments, the private sector, and not-for-profit groups. It is primarily a platform to consolidate and share practical knowledge and exchange information about ongoing initiatives and new ideas. The GFP host a rich resource website and hosts regular meetings organized by core members in various regions. See www.gfptt.org
For more information: www.worldbank.org/tradefacilitation