Facilitating Trade At The Border, Behind The Border, And Beyond

The modern era of international trade is one of increasingly complex interactions between people, firms, and organizations. Supply chains cross countries and regions. Trade has become a 24/7 business and good performance in trade requires connectivity along not only roads, rail, and sea, but in telecommunications, financial markets and information-processing. Having inefficient or inadequate systems of transportation, logistics, and trade-related infrastructure can severely impede a country’s ability to compete on a global scale.

This increasing complexity has serious implications for the world’s poor, who often are disproportionately disconnected from global, regional – or even local – markets. Poverty is often concentrated in geographic areas that are poorly connected to active economic centers, within and between countries. These pockets of poverty may be close to dynamic, urban markets, for example, but economically isolated from them. They often lack good connections to financial, economic, information, and infrastructure networks, too.  Firms and communities in these areas miss opportunities to develop skilled, competitive workforces; they are not integrated in global production chains and are less able to diversify their products and skills.

In line with twin goals of eradicating extreme poverty and increasing shared prosperity, experts in the World Bank Group work with developing country policymakers and private sector leaders to increase connectivity and facilitate trade. Developing countries -- especially those that are landlocked -- face considerable challenges when it comes to tackling trade facilitation issues. Recognizing this, the World Bank Group invests heavily in connectivity, logistics and trade facilitation.

Supply chain connectivity and logistics

Making it easier for firms and people to access opportunities, markets, and supply-chains is fundamental in today’s trade environment. Connectivity encompasses physical facilities, services, and ways to facilitate the movement of goods and people within and across borders regardless of their relative position within a network, e.g. hub or feeder, central or remote. The connectivity of one economy depends on the connectivity of all its partners. Understanding how well or how limited connectivity requires information about trade costs and economic distance, which reflect the average cost to access markets as a buyer or supplier. The unit of analysis can vary: networks can be global, regional, or sub-national. Connectivity links trade with transportation, entrepreneurship, and territorial development.

The World Bank Group is a leader in connectivity and logistics performance evaluation, and in customs and border control, a key piece of trade facilitation. 

Customs and Border Management

The World Bank Group has been an active supporter of customs reform and border management modernization for many years. The Bank Group has invested in more than 120 projects to improve border agency challenges over the past 20 years. The current trade portfolio includes approximately $300 million in border-related operations and technical assistance programs.

The World Bank Group’s projects include the application of technological solutions to support increased transparency and efficiency and to support collaborative border management approaches.  Work on this agenda is spread across all regions with customs and border management specialists providing advice and project implementation support as well as practical toolkits and knowledge products.  The World Bank Group is strongly engaged in supporting the implementation of the World Trade Organization (WTO) Trade Facilitation Agreement and the adoption of other international standards.  

Among the issues covered by our work are:

  • Trade infrastructure investments, especially along major routes
  • Logistics and transport services
  • Regional trade facilitation and trade corridors
  • Transit and multimodal transport
  • Customs and border management
  • Port efficiency

World Bank experts have developed a range of reports and toolkits for practitioners and policymakers to support improvements in countries’ global trade connectivity, logistics performance, as well as customs and border management.

The products include a dataset that provides a comprehensive cross-country benchmark for logistics performance, a diagnostic toolkit for trade and transport facilitation, a toolkit to assess logistics competencies and skills, and a series of handbooks that tackle the issue of streamlining customs and border clearance procedures through comprehensive border management reform.

Datasets, Toolkits and Reports

1. Datasets

The 2018 Logistics Performance Index (LPI) Report and Database

The Logistics Performance Index (LPI) measures how well countries connect to international logistics networks. It helps countries identify ways to improve their trade logistics performance. Based on a worldwide survey of operators on the ground—such as global freight forwarders and express carriers—the LPI provides in-depth knowledge and feedback on the logistics “friendliness” of the countries in which the operators do business and those with which they trade. It provides an informed qualitative assessment of the global logistics environment for the benefit of government and trade practitioners alike.  The LPI includes an interactive cross-country benchmarking tool with data for several years: 2007, 2010, 2012, 2014, 2016 and 2018.

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Trade Costs

The Trade Costs Dataset provides estimates of bilateral trade costs in agriculture and manufactured goods for the 1995-2015 period. It is built on trade and production data collected in 178 countries. Symmetric bilateral trade costs are computed using the Inverse Gravity Framework (Nov. 2009), which estimates trade costs for each country pair using bilateral trade and gross national output. Trade costs are available for two sectors: trade in manufactured goods, and agriculture. 

2. Toolkits

Trade and Transport Facilitation Audit (TTFA)

Trade facilitation and logistics have become an important policy area in development. Supply chain constraints are now recognized as a major impediment to export led growth. The Trade and Transport Facilitation Assessment (TTFA) is a practical tool to identify the obstacles to the fluidity of trade supply chains. Taking the perspective of service delivery to traders, the TTFA assessment is founded on facts and data collected through a series of meetings and interviews with the main public and private participants to these international supply chains. They include customs and other border agencies, transport regulators, freight forwarders, transport operators, ports, and others. The toolkit helps design plans of action to improve logistics performance among its three main dimensions: infrastructure, services, and procedures and processes. This new edition of the toolkit provides an opportunity not only to reflect the changes in the trade environment and the need for additional features in the toolkit, but also to benefit from the experiences of the assessments already undertaken based on the original edition. In 2001, the Bank issued a first TTFA toolkit based on an original concept developed by John Raven. This initial concept was extensively revised to give the new toolkit an increased operational focus. The semantic change from audit to assessment also reflects the expansion in scope and the emphasis on development of implementable actions beyond the initial diagnosis.

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Trade and Corridor Management Toolkit

A trade and transport corridor is a coordinated bundle of transport and logistics infrastructure and services that facilitates trade and transport flows between major centers of economic activity. Providing a comprehensive guide to tools and techniques for corridor projects is important, as the volume of such projects is likely to increase. Corridors remain very important, especially to landlocked countries and post-conflict countries and regions. This toolkit provides a comprehensive and holistic compilation of approaches and techniques on corridor diagnostics, performance assessment, management, operations improvement, and impact evaluation. The toolkit identifies mechanisms for improving the performance of the corridor through initiatives by the public and private sectors. These initiatives include investments in infrastructure and modification of policies and regulations, especially related to trade facilitation. It also considers the government's capacity to maintain the infrastructure and regulate the flow of goods along the corridor and the private sector's ability to provide a variety of levels and quality of services, as measured in terms of time and cost. It provides tools to answer four main questions: what are the approaches to identifying the main issues and constraints to movement of trade and transport along a corridor?; how well is the corridor performing, and where are the weaknesses?; what are the options for improving the performance of the corridor?; and what are the likely impacts of investments or improvements to the corridor? The toolkit groups the four main questions into three parts, which comprise 13 modules. Part one includes four modules on how to carry out a corridor diagnostic. These modules focus on the infrastructure, regulatory, and institutional framework for a corridor. It also includes a critical module on corridor performance indicators. Part two comprises eight modules on specific corridor components. It explains how performance can be improved through targeted interventions. Part three consists of a single module, on assessing the impact of a corridor.

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Logistics competencies, skills and training assessment Toolkit

Despite the spread of automation and new supply chain management paradigms, logistics remains dependent on a rather specific set of skills and competencies, whether for managerial, administrative, or blue-collar jobs, such as trucking or warehousing. This dependence implies that the logistical performance of businesses, industries, and nation states is strongly influenced by the quantity and quality of the workforce. Insufficient resources of a competent and properly trained workforce in logistics adversely affect the quality of service, reduce productivity in sectors dependent on logistics, and ultimately reduce trade competitiveness. While other interventions that affect logistics performance—such as international infrastructures, trade corridors, regulations, and services—have already been reviewed extensively, this report is the first to cover the contributions of human resources and explore how to develop skills and improve competencies, especially in developing countries. The study proposes a framework for the skills needed according to the logistics activity (such as transportation or warehousing) or the type and level of responsibility. Based on several sources, including recent surveys carried out by the World Bank and the Kühne Logistics University, the report uncovers where the skills constraints are according to the type of job or countries. Findings include that logistics is an industry struggling to hire skilled workers, although with differences between developed countries (where trucker shortages are more acute) and developing economies (where managerial shortages are more widespread). Typically, blue-collar logistics jobs have lower status and lower pay than blue-collar jobs in other industries; they are thus less attractive for skilled workers. In developing countries with a potentially available workforce, lack of vocational preparation for careers in logistics means that less-skilled workers are not easily re-skilled. Logistics tasks at the upper end of the occupational hierarchy and those with high information technology content often require an upskilling of employees to keep pace with new technology. Yet the problem is not confined to recruitment. The surveys point to limited resources, money, and staff time allocated to training, especially in developing countries. Realizing the promise of quality jobs from the growth of logistics worldwide requires a coordinated effort by logistics companies, professional associations, training providers, and policy makers. Through a combination of facilitation, regulation, advice, financial instruments, and land use planning, governments can exert significant influence.

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Quantitative Analysis of Road Transport Agreements

Road freight transport is indispensable to international economic cooperation and foreign trade. Across all continents, it is commonly used for short and medium distances and in long distance haulage when minimizing time is important. In all instances governments play a critical role in ensuring the competitive advantage of private sector operators. Countries often have many opportunities to minimize the physical or administrative barriers that increase costs, take measures to enhance the attractiveness and competitiveness of road transport, or generally nurture the integral role of international road freight transport in the global trade logistics industry. Road freight transport is critical to domestic and international trade. It is the dominant mode of transport for overland movement of trade traffic, carrying more than 80 percent of traffic in most regions. Generally, nearly all trade traffic is carried by road at some point. Therefore, the cost and quality of road transport services is of critical importance to trade competitiveness of countries and regions within countries. In fact, road transport is fundamental to modern international division of labor and supply-chain management.

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Border Management Modernization

This book provides border management policymakers and reformers with a broad survey of key developments in and principles for improving trade facilitation through better border management, including practical advice on particular issues. In contrast to the traditional border management reform agenda, with its focus on improving customs operations, this book addresses both customs reform and areas well beyond customs-a significant broadening of scope. The book thus presents a new, more comprehensive approach to trade facilitation through border management reform: an approach that embraces a much wider, 'whole of government' perspective. The objective of this book is to summarize and provide guidance on what constitutes good practices in border management-looking beyond customs clearance. The contributions to the volume make clear that there are no simple or universally applicable solutions. Instead, the aim is to provide a range of general guidelines that can be used to better understand the complex border management environment and the interdependencies and interrelationships that collectively need to be addressed to secure meaningful change and improvement.

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3. Other reports

Logistics infrastructure along the BRI economics

Logistics is the network of services that support the physical movement of goods, trade across borders, and commerce within borders. It comprises an array of activities beyond transportation, including warehousing and storage, terminal operations (e.g. in ports and airports), express delivery, customs brokerage, as well as data and information management. The global turnover generated by logistics exceeds USD 4.3 trillion. A country’s logistics performance is key to a country’s productivity and its attractiveness to outside investment. Inefficient logistics raise the cost of doing business and reduce the potential for international and domestic market integration, especially for developing countries. The gains from improving logistics performance are especially high in poorer countries. Increasing the logistics performance of a low-income country to the average performance of a middle-income country can increase trade by 15 percent or more. Better logistics allow more market access and can thus foster trade. Failing to move goods seamlessly hampers trade: a one-day delay at the border leads to an average 1 percent decrease in trade. Better logistics have a greater effect on trade promotion than tariff cuts: Logistics costs influence trade costs more than tariff barriers in most countries. Global production chains also depend on a robust logistics sector. Coordinating the various stages of product development, component production, and final assembly requires the ability to move goods across borders quickly, reliably, and at low cost. A lack of logistics infrastructure is one of the main reasons for companies to abstain from extending their procurement network to emerging and developing countries. This note summarizes information relevant to understanding the logistics infrastructure related bottlenecks impeding international and intra-regional connectivity along the Belt andRoad Initiative (BRI) economies. Data originates in the Logistics Performance Index, published by the World Bank. 

Maritime Networks, Port Efficiency, and Hinterland Connectivity in the Mediterranean (English)

For millennia, the Mediterranean has been one of the most active trading areas, supported by a transport network connecting riparian cities and beyond to their hinterland. The Mediterranean has complex trade patterns and routes--but with key differences from the past. It is no longer an isolated world economy: it is both a trading area and a transit area linking Europe and North Africa with the rest of the world through the hub-and-spoke structure of maritime networks. Understanding how trade connectivity works in the Mediterranean, and elsewhere, is important to policy makers, especially those in developing countries in the Mediterranean, concerned with the economic benefits of large investment in infrastructure. Better connectivity is expected to increase trade with distant markets and stimulate activities in the hinterland. This book is a practical exploration of the three interdependent dimensions of trade connectivity: maritime networks, port efficiency, and hinterland connectivity. Because of the complexity and richness of maritime and trade patterns in the Mediterranean, the research book combines both a regional focus and globally scalable lessons. This book is intended for a wide readership of policy makers in maritime affairs, trade, or industry; professionals from the world of finance or development institutions; and academics. It combines empirical analysis of microeconomic shipping and port data with three case studies of choice of port (focusing on Spain, Egypt, and Morocco) and five case studies on hinterland development (Barcelona; Malta; Marseilles; Port Said East, Egypt; and Tanger Med, Morocco).

The Eurasian connection: supply-chain efficiency along the modern silk route through Central Asia (English)

Central Asia is often associated with the silk route or road, the longest overland trade route connecting China to Europe and one of the oldest in history. Growth opportunities and the future prosperity of the region are highly dependent upon the efficiency of its internal and external supply-chain connections, which is the focus of this report. Supply-chain connectivity depends on the quality of the infrastructure on specific routes. This study explains how supply chain fragmentation remains a serious obstacle to economic development of Central Asia and to Eurasian integration more generally. It provides a comprehensive assessment of the various factors that yet impede supply-chain integration, including weak transport and communications infrastructure, but as important, and perhaps more so, critical weaknesses in policy, institutions, and governance. Based on this assessment this report provides an insightful set of recommendations that, if taken up by the governments of Central Asia and by their key neighbors, will go a long way in promoting the effective integration of Central Asia into an increasingly connected Eurasian continental economy and with that into the global economy. 

The Cost of Being Landlocked

About one in five countries in the world is landlocked; twenty out of 54 low-income economies are landlocked, the majority of them in Sub-Saharan Africa, while only 3 of 35 high-income economies are landlocked. The lack of access to maritime trade and logistics systems presents serious challenges for many Landlocked Developing Countries.   This book presents a new analytical framework to understand the causes, structure and constraints of logistics costs for Landlocked Developing Countries. Combining theoretical research, data/facts and field examples in project preparation and implementation, this book fills an important information gap in assessing the transport/logistics costs involved in being landlocked.  Based on extensive data collection in several regions of the world, this book argues that although landlocked developing countries do face high logistics costs, these do not result from poor road infrastructure per se. High logistics costs also depend on low logistics reliability and predictability, which are heavily influenced by rent-seeking and governance issues.






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PAGETITLE_VIDEO Nov 22, 2016

Facilitating Trade Across Borders