1. The Tools: From Diagnostic to Implementation Alina Antoci - IFC Trade Logistics Advisory Service Practical Implementation Examples Impact Evaluation

2. Contents Why does it matter to firms and countries? What do traders want? IFC Global Trade Logistics Advisory Program Practical Implementation Examples Impact Evaluation of Investment Climate Reforms

3. Why does it matters to firms and countries? 3 3  Direct cost of transportation  Lost days due to delays  Cost of financing investment in inventory (interest paid or opportunity cost of capital)  Taxes  Insurance Financial RiskStorage and Handling Market share Spoilage Shrinkage Obsolescence Warehousing and storage especially when large inventories require additional space Handling and transportation in general and to overflow facilities Cost Categories Poor trade logistics creates tremendous costs for businesses including inventory, transportation…. Source: blog.allstate.comSource: dipity.comSource: IFC..impacting the investment climate

4. Source: Centro Logístico de Latinoamerica, Bogota, Colombia. Benchmarking 2007: Estado de la Logística en America Latina Anexo, María Rey LogisticSummit 2008 Why does it matter to firms? (2) Logistics costs have a disproportionate burden on small firms Average logistics cost as a % of firm sales Inventory a function of timeliness and reliability..impacting the investment climate

5. Cost breakdown for Pineapples imported from Costa Rica to St Lucia 10% Producer Price Land Transport Ocean Transport + Port CR Port Miami Wholesale Consolidated Cost Other Costs Ocean Transport + Port SL Duties Land Transport & Handling Land Transport + Storage Retail Profits + Other Costs 60% 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 Farm Gate (CR) CR FASOcean to Miami Miami PortMiami Warehouse Miami FOB Price Ocean to St. Lucia St. Lucia PortWholesaleDistributionRetail Price Costa Rica (CR) ------------> --------------> St. Lucia (SL) US$/lb 60% of the cost related to the importation of pineapples CR to Saint Lucia is due to documentation preparation, border clearance, transportation and logistics. Source: Adapted from : Logistics, Transport and Food Prices in LAC (2009) and OECS Backward Linkages Study (2008) Farm Gate price 30% Transport and Logistics Costs Consumer Cost Landed Cost Why does it matter to firms? (3) High costs of inputs

6. Why does it matter to countries? Logistics directly affect the poor…  Logistics costs make up large part of food prices  20 to 60 percent  Depending upon product and trade route  Food is the primary purchase of households  20-30 percent of expenditures on average  For the poor, 60 to 70 percent of HH expenditures

7. …and these high costs are driven by “soft issues” Developing country average import time DAYS 14 days 4 days 5 days 4.5 days DOCUMENTS ASSEMBLY AND PROCEDURES CUSTOMS AND TECHNICAL CONTROL TERMINAL AND PORT HANDLING INLAND TRANSPORT Source: DB 2013 Categories accounting for more than 50 – 60% of the total time to export and import in many countries around the world. Categories accounting for 40% or less of the total time to export and import around the world. Soft issuesHard and soft issues

8. Contents Why does it matter to firms and countries? What do traders want? IFC Global Trade Logistics Advisory Program Practical Implementation Examples Impact Evaluation of Investment Climate Reforms

9. TRADE FACILITATION Process of eliminating all unnecessary elements and duplications in formalities, processes and procedures Simplification Harmonisation Alignment of national procedures, operations and documents with international conventions, standards and practices. Standardisation Process of developing internationally agreed formats for practices and procedures, documents and information. Trade supply chain performance and reliability determined by: 1.quality of trade related infrastructure 2.efficiency of trade procedures and regulations 3.quality and availability of private sector services Firms depend on the entire supply chain to connect to regional and international markets

10. What do traders want ? ♦ Simple and smooth processing of formalities ♦ A ‘seamless’ process (minimal intervention) ♦ Means to allow goods to proceed promptly to their final destination. No longer itineraries, no unpacking, no delays ♦ A single control point for all public services ♦ Standard forms, assembled into a ‘single bunch of documents’, compatible with trade documents and transport contracts ♦ Predictable and transparent rules and procedures ♦ Consistency even if not so simple, at least be consistent Timely, cost effective, reliable and predictable connections critical for commercial competitiveness

11. 11 Source: DB database 2012, 2013 Distance Logistics Costs (Value of Time & Service Charges) International Jurisdiction National Jurisdiction Collection, Marketing & Packaging Inventory of Semi-Finished Product Land Transport Port Handling & Border Clearance Ocean Shipping Inland Transport Processor Warehouse Information Flow Seller In-house procedures Points of Interconnectivity Changes in supply chain performance are realized through changes in: In-house Procedures Level of Interconnectivity Regulation Technology and systems Infrastructure Timely, cost effective, reliable and predictable connections

12. To Achieve This Cooperation at the national level Between the government institutions concerned by foreign trade: Finance, Commerce, Transport With the trading community: importers and exporters With service providers: transport operators, banks, insurance companies… Changes in supply chain performance are realized through changes in: In-house Procedures Level of Interconnectivity Regulation Technology and systems Infrastructure

13. Contents Why does it matter to firms and countries? What do traders want? IFC Global Trade Logistics Advisory Program Practical Implementation Examples Impact Evaluation of Investment Climate Reforms

14. IFC Global Trade Logistics Advisory Program 14 Expected Results and Impact Reduce the time & cost to trade, leading to increases in exports & savings to the private sector Improve public agencies regulatory role for importing/exporting firms and their performance Technical assistance to developing countries to build efficient trade logistics systems and services by improving:  efficiency of border management  coordination of Customs agencies Objective Address binding constraints faced by the private sector across the supply chain Partnerships with the public and private sectors

15. Emphasis on impact evaluation Capital Carrying Charge Cargo Loss and Damage User Fees and Charges Inventory Cost Savings Capital Carrying Charge Cargo Loss and Damage User Fees and Charges Inventory Cost Savings Increases Export of … by … Sub Saharan Africa6.1% South Asia5.8% East Europe & Central Asia5.0% Middle East & N. Africa4.1% East Asia and Pacific Islands4.1% Latin America and Caribbean3.5% OECD1.7% A 10% reduction export time Impact on exportsImpact on private sector savings Source: Forthcoming research paper (Subramanian, Anderson and Lee (2012)

16. Program Core Areas Simplifying & harmonizing trade procedures and documentation Conducting legal and regulatory reforms Integrating risk management systems into border inspections and clearance Implementing electronic processing/automation and Single Window Systems Enhancing/implementing information and communication technology (ICT) solutions, including e-payment Economy-wide Improving trade logistics systems and services, order clearance at the regional level Technical Control for the cross border movement of cargo focusing on the implementation and mutual recognition of international standards, accreditation and certification Regional Integration Improving national logistics efficiency of cargo movement and distribution services at ports, airports & dry-ports Improving access for the private sector to invest in logistics and distribution services Improving logistics services along the supply chain and/or specific Value Chains Improving trade logistics in agribusiness supply chains Streamlining NTBs and thus offering market access for key agribusiness products Logistics Services Supply Chain and Agribusiness

17. Source: DB database 2012, 2013 Implementation Model Rapid Response Program 10-12 Months Identify and achieve quick wins that build trust and catalyze reforms Establish the basis for medium and long term reforms Systematic Reform Program 1-2 Years Extend rapid response work and addresses key constraints Promote best practices for efficient trade logistics supply chains Industry Competitiveness Program 2-3 years Support regulatory frameworks for modern logistics and distribution services Improve food security & enhance agribusiness competitiveness Regional Program 3-4 years Ease access to regional and global markets Provide solutions to land-locked, transit and island economies Typical Engagement Program

18. Contents Why does it matter to firms and countries? What do traders want? IFC Global Trade Logistics Advisory Program Practical Implementation Examples Impact Evaluation of Investment Climate Reforms

19. Impact on the Ground – At the Country level Rwanda Enhanced risk- based inspections process Allow 60% of cargo shipments routed through low /medium risk channels Reduced time to import by 55% and time to export by 25% Liberia Implemented Customs automated system Reduced Customs clearance from 3 weeks to 3-4 days Colombia Implemented a simultaneous inspections regime across all border agencies Established a common methodology for sharing risk data Business process re-engineering underway To improve functionality of the Single Window for Trade Armenia Removed export license and technical certificates Exporters no longer require Expertise Test Reports to obtain a certificate of origin Reduced export documents from 7 to 5 and time by 56% in 3 years Saved 4 days and $100 per export transaction

20. Impact on the Ground – At the Regional level IFC South Asia Regional Project aligned working hours between India and Nepal automated transit processes aligned processes and procedures at land border stations to improve movement of goods across region South Asia South-Eastern Europe Central America the Caribbean and most recently West Africa

21. Our clients Trade Logistics projects in over 50 countries Caribbean Region - St Lucia, Antigua & Barbuda, St Kitts & Nevis, Grenada, Dominica Central America Region El Salvador, Honduras, Guatemala, Nicaragua, Costa Rica Liberia, Mali, Burkina Faso, Guinea Bissau, Benin, Sao Tome West Africa Region (ECOWAS) SE Europe Region - Serbia, Albania, Bosnia Herzegovina, Kosovo, Macedonia, Montenegro Armenia Kazakhstan, Mongolia South Asia Region - India, Bangladesh, Nepal Philippines Timor-Leste Chad, Central African Republic, Cameroon, Gabon Egypt, Ethiopia, Rwanda, Kenya, Zambia Columbia, Peru

22. Contents Why does it matter to firms and countries? What do traders want? IFC Global Trade Logistics Advisory Program Practical Implementation Examples Impact Evaluation of Investment Climate Reforms

23. Challenge How can we get better at measuring what we value Opportunity What gets measured gets done ♦ Development Impact Evaluation (DIME) – WBG ♦ Investment Climate Department (IC) – Trade and Investment ♦ Development Research Group (DEC) – Trade ♦ Internal Client Impact and Results working group  “How to integrate impact assessments or build feedback loops into our projects?”  “What do we need to do less of to increase our focus on results and reduce the burden of process?”  “How do we strengthen incentives to focus on long-term results?” “How to design appropriate impact indicators?” Impact Evaluation of Investment Climate Reforms

24. Measures of Economic activity Measures of Economic activity Measures of Border performance Measures of Border performance Pilot project: Impact of border-related reforms RISK Illegal shipments

25. Thank you! For further information: aantoci@worldbank.org