SCMAP Perspective is our fortnightly column on PortCalls, tackling the latest developments in the supply chain industry, as well as updates from within SCMAP. On this column, as the latest Logistics Performance Index reveals an improvement for the Philippines, we look at what’s working – and what else must be done.

60th

The headline figure is encouraging: the Philippines has jumped from 71st place to 60th in the latest Logistics Performance Index, a biannual survey conducted by the World Bank looking at the supply chain competitiveness of countries around the world.

We performed particularly well in three indicators. Our biggest jump is in international shipping, an indicator showing the ease of arranging competitively priced shipments: we went from 60th place to 37th. Our infrastructure score improved from 82nd to 67th; this covers not just physical infrastructure, but also network infrastructure. Our score on tracking and tracing also improved, from 73rd to 57th.

However, our score on customs processes saw us drop from 78th to 85th: this is our lowest point in this metric across all LPI releases. Our worst drop, however, is in timeliness of shipments, dropping from 70th two years ago to 100th this year.

Compared to other ASEAN states we are still in sixth place: Singapore, as always, leads the region (they are 7th globally) and we are performing better than Brunei, Cambodia, Laos and Myanmar. I imagine the government, who has been closely monitoring this benchmark index for years, would be slightly disappointed in realizing we are still fourteen places behind Indonesia, and our biggest rival in industrialization, Vietnam, is much further away at 39th.

Still, there is reason for them to be encouraged. The headline figure, again, is encouraging. It tells them they are on the right path. You can imagine that the score would get better once the Duterte administration’s landmark infrastructure projects are opened to the public, but as most of these are in and around Manila, this might lead to the highlight being shone on the other parts of the country where infrastructure spending remains stalled, for one reason or another.

Then again, the Logistics Performance Index is based on perceptions from observers outside the country, and for the most part they are basing their knowledge on what they are hearing from secondary sources, rather than first-hand knowledge. (By contrast, the Logistics Efficiency Indicators – a survey closely patterned after the LPI, conducted by the Department of Trade and Industry – has domestic stakeholders as respondents: our view of our own logistics performance is generally higher.) If you look at things that way, you can say the information campaign surrounding Build Build Build is working.

Still, it doesn’t explain the massive drop in timeliness of shipments. We’ve not had a triple-digit placing in the eight years of the LPI, so that should trigger warning sirens. Where do the inefficiencies lie? Is it something on the side of the ports? On existing infrastructure? Is it a drop in competency among our logistics providers? Is it a case of these providers being unable to keep up with increasing demand? One might be inclined to lean towards the last explanation, considering the recent surge of capacity expansion, as well as consolidation in the industry, to keep up with the higher pressures placed by changes in the retail landscape.

Of course we should not rest on our laurels now that we’ve arrested a steady drop in LPI ranking across the past few surveys. (Since hitting 44th place in the 2010 survey, we have gone down.) There is still a lot of work to be done. I am confident we can continue to improve on where we are right now. As all stakeholders become increasingly aware of the impact a competitive supply chain has in supporting a booming economy and enhancing quality of life for all, they will start making moves, incremental or otherwise, towards the realization of this goal.

Ultimately, however, the Logistics Performance Index is just a snapshot, and one based on perceptions. What we perceive is different from what really is. Will our work towards a more competitive supply chain bear truly concrete – and sustainable – results? Or will it just be about how high we fare in a survey?