Competence & Quality of Logistics Services: An Asian Supply Chain Perspective.

CHAPTER 1
INTRODUCTION

Competence & Quality of Logistics Services: An Asian Supply Chain Perspective.

1.0.

Introduction

Quality logistics services play a key role in moving of trade goods globally. Ineffective logistics
services effected global trade and reason to pay extra cost in shape of time. Logistics services is
the process that is involved in moving goods from one place to another place included custom
clearing, track and tracing consignment, timeliness and quality of transport infrastructure.
Effective quality logistics services develop the competitiveness of a countrys exports by
reducing the cost and time involved in transporting goods. Devlin and Lee (2005) result shows
the difficulty faced by certain countries in the Middle East where logistics delay and ineffective
procedure negatively influence a countrys global competitiveness. Narendar (2005) developing
countries become strong links through global sourcing networks. However inefficient custom
clearness agents and government policy unfavorable impact of stream of goods these countries.
Wilson and others (2002) shows that some Asian countries differ substantially in the quality of
their logistics services and trade infrastructure, regulatory administration, and e-business use.
In many Asian Countries have poor and ineffective custom procedures, transport services and
road infrastructure. Poor road infrastructure reason extra transport time and high costs. Rajeev ,
Frankel and Romer (1999) result shows that those countries near to world markets its cost and
time of transportation is minimum, its trade growth higher than other countries. The intermodal
transport systems of many Asian countries are poorly integrated. With not efficient procedures to
help the smooth movement of containers between ports and inland areas. Poor shipment trace

Competence & Quality of Logistics Services: An Asian Supply Chain Perspective.

and tracking capabilities, Mirzabeiki & Holmstro, (2014) study on collaborative

tracking and tracing (T&T) system. That allows supply chain performers to join and leave the
system in run-time without disrupting the function of the system, border procedures are also
bulky and long time in these countries. In Cambodia custom clearance process complete 8 days
for imports and 10-14 days for export. While extra payments required to handle vessels after 5
p.m.
This study investigates the quality of logistics services in Asian countries and barriers affecting
to effective logistics services. Transport related infrastructure and custom procedure, trace and
tracking and time is important factor in logistics services.

LPI Ranking and Scores 2010

LPI
Country/Economy

LPI Rank

Rank in

Score

In Asia

World

Singapore

4.09

Japan

3.97

Hong Kong

13

3.88

Taiwan

20

3.71

Korea Rep

23

3.64

24

3.63

China

27

3.49

Malaysia

29

3.44

Lebanon

33

3.34

Thailand

10

35

3.29

United Arab
Emirates

Competence & Quality of Logistics Services: An Asian Supply Chain Perspective.

Source: World Bank connecting to compete 2010

1.1 Background
The idea of logistics starts from military logistics and traditional transport industries. Its
traditional logistics activities such as, warehousing, transportation and delivery of goods from
suppliers to buyers. The logistics industry has a broad scope of services, including sea, air and
land transport, goods storage, custom process, safety and security of consignment. The Logistics
industry changed in the 1980s. The technological development, the traditional form of logistics
has changed into modern logistics services. Nowadays, the competence and standard of service
have turn into key indicators to evaluate the competitiveness of a country or area. Being
cosmologies, Hong Kong has converted its traditional transport centre to large-scale modern
logistics center. The Hong Kong logistics industry contributes about 5.0% to the Hong Kong
economy. With unique geographic location as an international transport center, a sophisticated
infrastructure and a global network of trading associates and customers, Hong Kong is one of the
major worldwide trading centers in Asia. The advantages have also hastened the progress of
Hong Kong into a logistics center to give quality logistics services for large-scale worldwide
trading activities.
Based on USITC1 (2005), logistics services can be categorized as core freight, related freight and
non-core freight. Core freight logistics services contain cargo handling, storage and warehousing,
transport agency, supporting transport services. Related freight logistics services consist of sub
sectors (maritime, inland waterways, air, rail, and road transport services) connected to shipment
transport, shipments tracking, and customs brokerage. Daugherty et al (2014) integrate all

Competence & Quality of Logistics Services: An Asian Supply Chain Perspective.

logistics activities to reduce cost and time in logistics services and help to improve logistics
performance. Hummels (2001) investigate on importance of time as a trade barrier found that the
time cost of one day in transit for US imports is equivalent to an ad valorem tariff rate of 0.8%,
implying the equivalent of a 16% tariff on an average trans-Pacific shipment of 20 days. Clearly,
improvements in infrastructure services that reduce delays in border crossing transit. Hausmanet
at al. (2005) logistics is one of the most important elements of national competitiveness. Quality
logistic services and infrastructures have a strong effect on the facilitation of transport of goods
between countries. The OECD2 (2005) estimates the logistics costs range between 2% and 15%
of total turnover. In this way logistics play vital role in international competition.

1.2 Problem Statement

Past many studies Hollweg and Wong (2009) make an index of regulatory boundaries in
logistics for the Association of Southeast Asian Nations, finding that the index and Logistics
services Performance are negatively correlated, that is countries with poor legal barriers attain
better logistics scores. The extra legal barriers of trade result in increased time and extra costs.
Guner and Coskun (2012) search for a relationship between growth in logistics, measured
through Logistics Performance, and other economic and social factors, focus on the 26 OECD
members. Developed countries such as United States, Germany and Singapore on leading
position in the index. Likewise, China, India and Vietnam, all consider low cost producers, are
ranked higher than other developed nations such as Portugal and ice land. Therefore in this study
try to focus on Asian logistics, and finds out competency and quality of logistics services through
custom procedures, transport infrastructure, shipment tracking and import and export time.

Competence & Quality of Logistics Services: An Asian Supply Chain Perspective.

________________________
USITC: United States International Trade Commission
OECD: The Organization for Economic Co-operation and Development (OECD)

1.3 Justification of Study

As mentioned above the quality logistics services growth is one the important driver for an
industry. This research has tried to find those factors which affect the Logistics and eventually to
the industry. For this research 30 Asian countrys data will be analyzed and influence of different
variables will be examined on logistics. The independent variables which are selected for this
research are also important and critical in todays world i.e. Custom Clearing, track & tracing
consignment, transport infrastructure, import & export time. This research can help the
governments to implement policies and to take necessary actions in particular areas that can
positively affect the Logistics.
1.4. Research Question
This study proposes to examine the following questions:
Question # 1 What is the impact of Efficiency of customs clearance process on Logistics Services?
Question # 2 What is the impact of transport-related infrastructure on Logistics Services?
Question # 3 What is the impact of Ability to track and trace consignments on Logistics Services?
Question # 4 What is the impact of Time to Import on Logistics Services?
Question # 5 What is the impact of Time to Export on Logistics Services?
1.5. Research Hypothesis
Following are the null hypothesis of this study,

Competence & Quality of Logistics Services: An Asian Supply Chain Perspective.

HO1: Custom Clearness process does not significantly effects the Logistics services.
HO2: Transport related infrastructure does not effects the Logistics services.
HO3: Track & tracing does not effects the Logistics services.
HO4: Time to import does not effects the Logistics services.
Ho5: Time to export does not effects the Logistics services.

1.5 Scope of the Study

This Research comprises on the data of 2010 for 30 Asian countries. The data was taken from the
website of World Bank. The countries were chosen on the basis of logistics data availability. In
this study, Logistics performance index: Competence & quality of logistics services (1=low to
5=high) is dependent variable; whereas Independent variables are efficiency of custom clearing
process, quality of transport related infrastructure (Rail, Road, Air & Sea etc.), ability to track a
trace consignment, import & export time (time recorded in calendar days) .

1.6 Limitation of the Study

There are some limitations in this study, this study based only 30 Asian countries other Asian
countries has not enough logistics data. There are many factors that influence the Logistics
services apart from custom clearness, transport infrastructure, tracking consignment, import &
export time. By including those variables, researchers can investigate further more. The study
has been done on cross sectional data for the year 2010, time series or panel data can explore
additional information about the relation between variables. Relation between variables has been
investigated only by quantitative method, but qualitative investigation can also verify the
outcomes of this research.

Competence & Quality of Logistics Services: An Asian Supply Chain Perspective.

Import & export time recorded in calendar days. In this study normal process used to calculate
time, but some time fastest process used. Researcher can investigate further more to included
fastest process. Logistics performance index survey conduct only 5000 likert scale questionnaire
on most importing & exporting countries and also select landlocked countries, nearest countries
that connect them with international markets.