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Private Sector Development

Logistics: Building skills to prepare for the jobs of tomorrow

Yin Yin Lam's picture


As one of the key foundations for manufacturing, trade and growth, logistics is a strategic component of every economy. The sector can also contribute significantly to job creation. For example, in the UK, logistics is a $120billion industry that employs about 8% of the workforce. In India, it is a $160billion industry accounting for 22 million jobs, with employment growing 8% annually.

In 2016 and 2018, the World Bank’s Logistics Performance Index found that many developing countries face a significant skills gap in the logistics sector, especially at the managerial level. Similarly, several studies conducted in emerging economies such as China, India, and South Africa report shortages of supply chain talent.

In that context, emerging economies must tackle two critical challenges in order to develop a competitive logistics sector:
  • How can governments plug the skills gap in logistics?

  • How can the sector cope with the rapid changes brought about by technology, such as warehouse automation “freight uberization” or online platforms matching demand and supply, and their impact on the labor market?
Let’s look at three countries that consistently rank high in various global logistics rankings—Germany, the Netherlands, and Singapore—to see how they manage these challenges.

India: A logistics powerhouse in the making?

Karla Gonzalez Carvajal's picture
Photo: Daniel Incandela/Flickr
The numbers are in: India now ranks 44th in the latest edition of the World Bank’s Logistics Performance Index, a relatively high score compared to other countries at similar income levels. This number matters not just to the logistics sector, but to India’s economy as a whole. Indeed, logistics can directly impact the competitiveness of an entire market, as its ability to serve demand is inextricably linked to the efficiency, reliability and predictability of supply chains.

Broadly defined, logistics covers all aspects of trade, transport and commerce, starting from the completion of the manufacturing process all the way to delivery for consumption. To say that it is a complex business is an understatement.

First, there is always a delicate balance between the public arm, which provides the roads, railways and waterways, and lays down the rules and regulations, and the private sector, which has responsibility for carrying out logistics operations in a smooth and seamless manner. This fine interplay is further complicated by the globalization of manufacturing which—with many more ports of call in the logistic chain—is putting ever-increasing pressure on the sector. In addition, there are very practical challenges in integrating different modes of transport, in speeding up border crossings, and in dealing with trade protections–all of which impact external trade.

But as difficult as it might be, creating a well-functioning logistics sector is essential to any nation looking to compete in the global economy. India is a case in point. To fuel its global ambitions, the country has taken active steps to up its logistics game.

Three ways governments can create the conditions for successful PPPs

Lincoln Flor's picture
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A healthy Public-Private Partnership (PPP) has several defining features: strong competition, bankability with low financial costs, lower risk of renegotiations, secure value for money, and efficiency gains.

What does it take for countries to develop PPPs that can fit this description? Why is it that some countries such as India, Colombia, Turkey, and Egypt have been able to develop strong and successful PPP programs while others have not been able to award any projects under special-purpose PPP legislations? 

Our experience with infrastructure PPPs across the globe suggests that three institutional pillars are needed to increase the probability of PPP success.

How can Indonesia achieve a more sustainable transport system?

Tomás Herrero Diez's picture
Photo: UN Women/Flickr
Indonesia, a vast archipelago of more than 17,500 islands, is the fourth most populous country in the world, with 261 million inhabitants, and the largest economy in Southeast Asia, with a nominal Gross Domestic Product of $933 billion.

Central government spending on transport increased by threefold between 2010-2016. This has enabled the country to extend its transport network capacity and improve access to some of the most remote areas across the archipelago.

The country has a road network of about 538,000 km, of which about 47,000 km are national roads, and 1,000 km are expressways. Heavy congestion and low traffic speeds translate into excessively long journey times. In fact, traveling a mere 100 km can take 2.5 to 4 hours. The country relies heavily on waterborne transport and has about 1,500 ports, with most facilities approaching their capacity limits, especially in Eastern Indonesia. Connectivity between ports and land infrastructure is limited or non-existent. The rail network is limited (6,500 km across the islands of Java and Sumatra) and poorly maintained. The country’s 39 international and 191 domestic airports mainly provide passenger services, and many are also reaching their capacity limits.

Maximizing finance for safe and resilient roads

Daniel Pulido's picture


Around the world, roads remain the dominant mode of transport and are among the most heavily-used types of infrastructure, accounting for about 80% of the distance travelled for individuals and 50% for goods.

Despite this intensive use, the funding available for road maintenance has been inadequate, leaving roads in many countries unsafe and unfit for purpose.

To make matters worse, roads are also very vulnerable to climate and disaster risk: when El Niño hit Peru in 2017, the related flooding damaged about 18% of the Peruvian road network in just one month.

It is no surprise then that roads are the sector that will require the most financing. In fact, the G20 estimates that roads account for more than half of the $15 trillion investment gap in infrastructure through 2040.

Railways are the future—so how can countries finance them?

Martha Lawrence's picture
Photo: Kavya Bhat/Flickr
As a railway expert working for the World Bank, I engage with many client countries that are looking to expand or upgrade their railway systems. Whenever someone pitches a railway investment, my first question is always, “What are your trains going to carry?” I ask this question because it is fundamental to railway financing. 

Railways are very capital intensive and increasingly need to attract financing from the private sector to be successful. That is why the World Bank recently updated its Railway Toolkit to include more information and case studies on railway financing. Here, in a nutshell are the key lessons about railway financing from this update. 

Maximizing finance for sustainable urban mobility

Daniel Pulido's picture
Photo: ITDP Africa/Flickr

The World Bank Group (WBG) is currently implementing a new approach to development finance that will help better support our poverty reduction and shared prosperity goals. This crucial effort, dubbed Maximizing Finance for Development (MFD), seeks to leverage the private sector and optimize the use of scarce public resources to finance development projects in a way that is fiscally, environmentally, and socially sustainable.
 
There are several reasons why cities and transport planners should pay close attention to the MFD approach. First, while the need for sustainable urban mobility is greater than ever before, the available financing is nowhere near sufficient—and the financing gap only grows wider when you consider the need for climate change adaptation and mitigation. At the same time, worldwide investment commitments in transport projects with private participation have fallen in the last three years and currently stand near a 10-year low. When private investment does go to transport, it tends to be largely concentrated in higher income countries and specific subsectors like ports, airports, and roads. Finally, there is a lot of private money earning low yields and waiting to be invested in good projects. The aspiration is to try to get some of that money invested in sustainable urban mobility.

Transforming Transportation 2018: To Craft a Digital Future for All, We Need Transport for All

Jose Luis Irigoyen's picture



Exponential progress in how we collect, process and use data is fundamentally changing our societies and economies. But the new digital economy depends fundamentally on a very physical enabler. Amazon and Alibaba would not exist without efficient ways to deliver products worldwide, be it by road or ship or drone. The job you applied for through Skype may require travel to London or Dubai, where you’ll expect to get around easily.

In fact, as the backbone of globalization, digitization is increasing the need to move people and goods around the planet. Mounting pressure on transportation as economies grow is leading to unsustainable environmental and safety trends. Transport needs are increasingly being met at the cost of future generations.

Can the digital revolution, which depends so much on efficient global and local mobility, also help us rethink transportation itself? To be a part of the solution to issues such as climate change, poverty, health, public safety, and the empowerment of women, the answer must be yes. Transport must go beyond being an enabler of the digital economy to itself harnessing the power of technology.

E-commerce is booming. What’s in it for urban transport?

Bianca Bianchi Alves's picture
Também disponível em: Português
 

Worldwide, e-commerce has experienced explosive growth over the past decade, including in developing countries. The 2015 Global Retail E-Commerce Index ranks several of the World Bank’s client countries among the 30 most important markets for e-commerce (China ranks 2nd, Mexico 17th, Chile 19th, Brazil 21st, and Argentina 29th). As shown in a 2017 report from Ipsos, China, India, and Indonesia are among the 10 countries with the highest frequency of online shopping in the world, among online shoppers. Although growth in e-commerce in these countries is sometimes hindered by structural deficiencies, such as limitations of banking systems, digital payment systems, secure IT networks, or transport infrastructure, the upcoming technological advances in mobile phones and payment and location systems will trigger another wave of growth. This growth will likely lead to more deliveries and an increase in freight volume in urban areas.

In this context, the Bank has been working with the cities of Sao Paulo and Bangalore to develop a new tool that helps evaluate how different transport policies and interventions can impact e-commerce logistics in urban areas (GiULia). Financed by the Multidonor Sustainable Logistics Trust Fund, the tool serves as a platform to promote discussion with our counterparts on a subject that is often neglected by city planners: urban logistics. Decision-making on policies and regulations for urban logistics has traditionally been undertaken without sufficient consideration for economic and environmental impacts. For instance, restrictions on the size and use of trucks in cities can cause a number of side effects, including the suburbanization of cargo, with warehouses and trucks located on the periphery of cities, far from consumers, or the fragmentation of services between multiple carriers, which may lead to more miles traveled, idle truck loads, and inefficiencies.

Three factors that have made Singapore a global logistics hub

Yin Yin Lam's picture
Then vs. now: the Port of Singapore circa 1900 (left) and today (right). Photos: KITLV/Peter Garnhum

When it gained independence in 1965, Singapore was a low-income country with limited natural resources that lacked basic infrastructure, investment and jobs.

A few decades later, the picture couldn’t be more different. Singapore has become one of Asia’s wealthiest nations, due in large part to its emergence as the highest-performing logistics hub in the region (see World Bank Logistics Performance Index).

The numbers speak for themselves. Today, the small city-state is home to the world’s largest transshipment container port, linked to over 600 ports worldwide. Singapore Changi airport is voted the best internationally, and is served by about 6,800 weekly flights to 330 cities. Finally, the island nation’s trade value amounts to 3.5 times its GDP.

Singapore’s achievements did not happen by chance. They result from a combination of forward-looking public policy and extensive private sector engagement. This experience could provide some lessons to any developing country seeking to improve its logistics network. Let us look at three key factors of success.

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