Container shipping in Vietnam and its neighbor Cambodia had the lowest turnaround time at ports in ASEAN in June 2022 as both secured an average of 0.9 days, the World Bank says.
The findings are in the bank’s Logistics Performance Index (LPI) 2023 report, which came after three years of unprecedented supply chain disruptions during the Covid-19 pandemic when delivery times soared.
The LPI, which covers 139 economies, measures the ease of establishing reliable supply chain connections and the structural factors that make it possible, including the quality of logistics services, trade and transport-related infrastructure, and border controls.
In the study released late last week, the World Bank said the findings were among new key performance indicators that complement its LPI. “The two categories of indicators provide a complementary yet consistent understanding of logistics performance,” the bank said.
In Southeast Asia, coming after Vietnam and Cambodia was Thailand, which had the second-lowest turnaround time of 1.0 days. Both Malaysia and Singapore got 1.2 days, the Philippines 1.3 days, while Indonesia and Myanmar recorded 1.8 and 2.0 days, respectively.
The bank said turnaround times were based on its own calculations and data from MDS Transmodal Ltd, a British firm of transport economists that specializes in freight modes of transport.
However, Singapore ranked first worldwide in the LPI study, followed by Finland. Sharing the third place were Denmark, Germany, the Netherlands, and Switzerland. Up to six economies shared the seventh ranking – Austria, Belgium, Canada, Hong Kong, Sweden, and the United Arab Emirates. Vietnam came 43rd, along with Croatia, The Czech Republic, Malta, Oman, the Philippines, Slovakia, and Slovenia. In this overall ranking, Cambodia came 115th.
On average across all potential trade routes, 44 days elapse from the time a container enters the port of the exporting country until it leaves the destination port, with a standard deviation of 10.5 days, according to LPI 2023. That span represents 60% of the time it takes to trade goods internationally.
The study shows that end-to-end supply chain digitalization, especially in emerging economies, is allowing countries to shorten port delays by up to 70% compared to those in developed countries. Moreover, demand for green logistics is rising, with 75% of shippers looking for environmentally friendly options when exporting to high-income countries.
“While most time is spent in shipping, the biggest delays occur at seaports, airports, and multimodal facilities,” said Christina Wiederer, the World Bank senior economist who co-authored the report. “Policies targeting these facilities can help improve reliability,” she added.
The LPI has six indicators namely efficiency of customs and border management clearance; quality of trade and transport infrastructure; ease of arranging competitively priced shipments; competence and quality of logistics services; ability to track and trace consignments; and frequency of on-time deliveries.
Regarding overall scoring in ASEAN, Singapore topped the world and the region as mentioned above at 4.3 points. Second was Malaysia (3.6 points), followed by Thailand (3.5 points), the Philippines and Vietnam (both 3.3 points), and Indonesia (3.0 points). An index for Myanmar is not seen in the report.
Cambodia and Laos (both 2.4 points) ranked low in logistics performance compared with their regional peers.
ASEAN smart logistics network under construction
The World Bank’s International Finance Corporation (IFC) signed a deal on April 19 with the Cambodian government to set up a public-private partnership to construct a $200 million logistics complex in Cambodia’s coastal province of Sihanoukville. The global giant investor said the complex, once completed, is expected to cut logistics costs in Cambodia, which are among the highest in East Asia and represent a key constraint to the country’s competitiveness and diversification.
The Sihanoukville Logistics Complex is one of the two priority logistics hubs to be developed in Cambodia. The other, also with IFC involved, is the $300 million Phnom Penh Logistics Complex (PPLC).
PPLC is the second project under the ASEAN Smart Logistics Network, a platform designed to promote logistics connectivity and resilience between ASEAN countries.
The first project under the regional logistics network is the Vietnam Superport project, which is being built in Vinh Phuc province near Hanoi by Singapore firm YCH and Vietnamese conglomerate T&T.
IFC announced in Singapore this February that the logistics sectors in Vietnam and Southeast Asia were set to receive a significant boost following a new partnership between IFC and the two leading companies, with more than $2 billion to be invested over the next five years, focusing on the Vietnam Superport hub.
The two “super ports” in Cambodia and northern Vietnam are seen as complementing each other. Phnom Penh is strategically located between two of ASEAN’s biggest metropolises – Bangkok and Ho Chi Minh City, while the Vietnamese project near Noi Bai International Airport in Hanoi is located near border crossings with China and Laos.
Vietnam Superport is also within reach of at least 20 industrial parks, which, together with many other industrial parks across the country, have helped turn Vietnam into a global production base.