What is Logistics Performance Index (LPI)?
The classical LPI was initially developed by The World Bank as an indicator for each country's internal and external logistics efficiency.
It is the weighted average of the country scores on six key indicators:
- efficiency of the clearance process (i.e., speed, simplicity and predictability of formalities) by border control agencies, including Customs;
- quality of trade and transport related infrastructure (e.g., ports, railroads, roads, information technology);
- ease of arranging competitively priced shipments;
- competence and quality of logistics services (e.g., transport operators, customs brokers);
- ability to track and trace consignments;
- timeliness of shipments in reaching destination within the scheduled or expected delivery time.
Logistics due to its specific can not fail to have clear criteria measurements, which are reflected in certain indicators. Of course, taking into account the diversity of technologies in logistics, you can cite an extremely large number of indicators, one way or another related to logistics. The task of optimizing the number and content of logistic indicators is traditional: for completeness of information, possible maximization of indicators is required, for the convenience of working with them - their minimization.
It is obvious from the diagram that Germany, USA and UK are the leading countries, whose infrastructure allows the economy to breath and grow fast. They make the environment for the state and independent private companies to apply their talents and opportunities for the benefit of each shipper and entire economy, which definitely makes sense.
SeaRates LPI for freight forwarding and transport companies
If you are a shipper/trader/exporter/importer and you don't have your own logistics department you will be much interested to know how effective is a logistics company, whose services you are using. If you are a genuine representative of transport company, interested in maximization of your efficiency and raising up your company services to a new level as well as your image, gaining new satisfied customers - it is time to understand which factors influence on the result.
Based on the experience of World Bank, expertise of working with more than 30 000 freight companies all around the world during 13+ years and the evolution of online bookings for cargoes, SeaRates has developed an exclusive indicator system, which can evaluate the performance of any logistics company based on their statistics and external independent audit. SeaRates LPI-12 devoted to raise up the quality of logistics services, risk insurance and create a positive effect even in countries with low LPI.
SeaRates LPI-12 - the main logistic indicators, on which any logistics company / department can be reviewed:
on-time delivery (%)
price discrepancy (%)
stability of the supply chain (%)
damages or losses from logistical risks (%)
price competitiveness (1 to 10 scale by customers reviewes)
quality of logistics services (1 to 10 scale by customers reviewes)
ease of shipping (1 to 10 scale by customers reviewes)
support and quality of communication (1 to 10 scale by customers reviewes)
cargo tracking (1 to 10 scale by customers reviewes)
crediting opportunity (1 to 10 scale by customers reviewes)
value-added services (1 to 10 scale by customers reviewes)
on-demand availability of the tonnage (1 to 10 scale by customers reviewes)
See the sample of SeaRates LPI ® calculation here.
Although the list of indicators used with German enterprises is very extensive (you can take the full list of 23 points from this article), in our opinion, it should be treated critically. The effectiveness of the application of logistics is estimated not so much by its specific indicators and the trend of their change as it is in the a change in the economic and financial results of the firm's activities: increase in the size of profits, increase in labor productivity, etc. If it is necessary to evaluate the technology of logistics itself, the quality of logistics as a system of physical distribution, then it is more expedient to judge this by the following indicators: speed of delivery, the reliability of delivery times, the ability of the system to immediately meet demand.
If you hold a transport company - learn how much you can earn working on SeaRates (contact email@example.com for more information). Remember that shippers put more trust on transport companies with higher LPI-12, we have even many cases of cross-bookings for example when a transport company from Canada arranges the delivery from Poland to Pakistan without own local offices - but a shipper is ready to pay a little more to be confident about the quality of his delivery.
SeaRates LPI-12 ® is a registered index approved by international shipping community for evaluation of the transport/logistics company performance. All rights reserved under SeaRates Trademark.
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