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WASHINGTON, DC: August 13, 2018. Confirmation by an international arbitration tribunal that the government of Djibouti has illegally seized the Doraleh Container Terminal (DCT) from DP World, coincides with the news the country has risen 44 places to No.90 on the World Bank’s latest biannual Logistics Performance Index (LPI).

With an annual capacity of 1.3 million TEU and reportedly the most advanced ocean container terminal on Africa’s east coast, DP World says its DCT remains the largest employer and biggest source of revenue in the country, has operated at a profit every year since it opened, and has been found to have been a “great success” for Djibouti under its management.

In addition to its original investment the company says it has contributed 12 percent to Djibouti’s economy, grown origin and destination cargo by 380 percent in the last 14 years, grew volumes over 70 percent in 2017, and was aiming for 80 percent this year.

World Bank Logistics Performance Index 2018“Logistics services are the backbone of international trade," commented Caroline Freund, director of the Macroeconomics, Trade & Investment (MTI) Global Practice at the World Bank Group. “Good logistics reduces trade costs, but supply chains are only as strong as their weakest link. For developing countries, getting logistics right means improving their infrastructure, Customs, skills and regulations.”

The significant jump in Djibouti’s LPI position in the two years since the World Bank’s last survey suggests DP World is making a difference to the country’s trade – despite the politics.

“With international trade becoming more dispersed through global value chains, good logistics are more important than ever. Small disruptions to a supply chain can spread rapidly to other countries and regions,” added Christina Wiederer, Economist with the World Bank Group’s Macroeconomics, Trade & Investment Global Practice and index co-author.

Published since 2007, the latest Connecting to Compete report says the performance of logistics in each economy depends on the public sector’s interventions and policies: “Public features include regulation; transportation infrastructure; the implementation of controls, especially for international goods (as in trade facilitation); and the quality of public–private partnership and dialogue.”

High-income countries that dominate global supply chains rank top in logistics performance. Not surprisingly, Germany has the highest aggregate score over the past four LPI editions followed by the Netherlands, Sweden, Belgium and Singapore. The UK, where DP World has a growing presence, is in sixth position ahead of Japan, Austria, Hong Kong and the US.

Countries that rank the lowest are described by the World Bank as low-income, isolated, fragile, or facing conflict or unrest: Somalia, Haiti, Afghanistan, Sierra Leone and Syria occupy the bottom five positions on the 167-place index.

The LPI analyzes countries through six indicators: The efficiency of Customs and border management clearance; the quality of trade- and transport-related infrastructure; the ease of arranging competitively priced international shipments; the competence and quality of logistics services; the ability to track and trace consignments; and the frequency with which shipments reach consignees within the scheduled or expected delivery time.

Noting the global turnover generated by logistics networks exceeds US$4.3 trillion; the World Bank suggests “a better understanding of their operation is no trivial issue”.

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