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In the global competitive environment, the logistics sector and international trade have a strong link, it is observed that the logistics performance index score and the foreign trade volume score increase together. So the logistics development has a positive effect on the foreign trade volume of countries.
Logistics performance index
LPI is defined as a tool of measurement among the states, it focuses on determining the trade and transportation suitability of the world countries.
The Logistics performance index summarizes countries' performance in six dimensions explains the most important aspects of the logistics environment:
1- Customs: efficiency of the customs clearance process.
2- infrastructure: quality infrastructure from commercial and transport sources.
3- International shipments: arranging highly competitive shipments.
4- Logistics quality standards: efficiency and quality of logistics services.
5- Monitoring and tracking: the ability to track and trace shipments.
6- Timing: the frequency of reaching the final consumer in the planned or desired time (Arvis, ET al, 2014).
LPI has been published biennially by the World Bank since 2007, and its use and importance have been increasing since then.
The logistics performance index is initially created and presented in a report by the world bank with its academic and professional partners to aim to help countries develop logistics reform programs to increase their competitiveness, as well as to identify the opportunities and challenges that countries faced in logistics performance.
The Logistics performance index and its data allow making a comprehensive assessment of logistical advantages or deficiencies among countries. Professionals around the world provide a comprehensive analysis of the customs procedures, and the ability to track and trace shipments, logistics cost as well as infrastructure quality.
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The logistics quality and the cost are not only related to the performance of infrastructure and public institutions but also to private services.
Table 1 Top 10 countries in LPI scoring between 2010 and 2018
As can be seen from Table 1, the superiority of European states in the 2018 LPI rating stands out. Germany also ranked 1st in the scoring average between 2010 and 2018.
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The role of LPI
The LPI consists of qualitative and quantitative measures and helps to create profiles of friendly logistics for countries. LPI measures the performance of a country's logistics supply chain and offers two different points of view: global and domestic (Ojala et al., 2014).
The Role of the LPI:
-Most detailed country performance information.
-Large indication of problems.
-Strengthen public-private dialogue on reform priorities.
-Promote fresh acceleration for reforms.
-Track progress over time.
International LPI
Provides qualitative ratings of a nation in six categories by logistics specialists operating outside the country for its trading partners. The international LPI's components were chosen based on the most recent theoretical and empirical research as well as the practical experience of international freight logistics specialists.
Domestic LPI
Domestic LPI provides logistics professionals working in the country with qualitative and quantitative evaluations of a country. It includes detailed logistics information, key logistics processes, institutions, and time and cost data. The Domestic LPI examines the logistics environments in 100 countries in detail.
Logistics professionals surveyed evaluate the logistics environment in their own countries for this measure. This domestic evaluation includes more detailed information on the logistics environment of countries, key logistics processes and institutions, and time and distance info. This approach examines the logistical restrictions in countries, not only on terminals, such as ports or borders. To measure performance, it uses four key determinants of overall logistics performance.
• Infrastructure,
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• Services,
• Custom procedures and time
• Reliability of supply chain.
Construction of LPI
In order to build the international LPI, the standardized scores for each of the original six indicators are multiplied by their component loads and summed up. Loads of the components are the weight given to each initial indicator in the international LPI.
Because the loadings are similar to the six indicators, the international LPI is close to the simple average of the indicators.
LPI and other index’s
The LPI score can be considered as a reflection of the studies of the countries for the logistics development. LPI measures how advanced the countries are in terms of logistics, such as customs, on-time delivery, and quality.
LPI guides countries in terms of the aspects they need to improve in terms of logistics. Researchers previously found that it was more beneficial than other studies to make the studies that affect LPI scores increase trade.
As a result, the Global Competitiveness Index (GCI) analyzes the collection of rights, laws, and variables that determine the present and medium-term levels of economic success. The research looks at a country's capacity to deliver high levels of welfare to its population. This is dependent on how effectively a country utilizes its resources. Çemberci et al. (2015) investigated the moderator influence of the Global Competitiveness Index (GCI) on the LPI and found that enhancing timeliness might lead to a higher GCI score.
Tracking, and tracing of LPI components and international shipments. Erkan (2014) also investigated the link between GCI's infrastructure-weighted indicators and LPI.
The infrastructure components of GCI used; Road Quality, Railway Infrastructure Quality, Port Infrastructure Quality, Air Transport Infrastructure Quality, Value Chain Width, and R&D.
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LPI scores combined with the Environmental Performance Index (EPI) from Kim and Min (2011). EPI addresses the effect of environmental changes in a country on the population and ecosystem.
The Corruption Perception Index (CPI) lists countries/regions, public officials, and politicians in terms of corruption. Benet from various assessments and commercial opinion surveys conducted by independent and recognized institutions. Gains data on the political and administrative aspects of corruption.