Keeping tabs on the competition: assessing the performance of the transport logistics chain

Authorship

Paul E. Kent, Ph.D., Vice President, Infrastructure Planning and Economics, Nathan Associates Inc., Arlington, VA, USA

Publication

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Introduction

We know from recent literature that transport inefficiency can have a substantial impact on total transport cost. Factors all along the transport logistics chain, inside a country and at its border crossings, all contribute to the cost of doing business in a country. By extension, the economic impact of these inefficiencies can have harmful effects on a country’s competitiveness.

There is a gap in the ability of available tools to assess logistics performance on a consistent, standardized basis – especially one where equitable comparisons can be drawn between transport corridors in differing economic conditions, with performance scores based on terms commonly used and understood by the industry. To fill this gap, Nathan Associates developed an innovative ‘toolbox’ dubbed FastPath, which consists of an audit methodology and a computerized model. The audit methodology captures the range of data needed to assess performance, and the model measures the performance in detail.

To use the model, the user ‘sketches’ the system of links (for example, roads, inland waterways, rail, and coastal shipping) and nodes (ports, intermodal yards, dry ports, etc.) in the logistics chain on a graphic screen, and enters collected data for each link and node. The model then issues a report presenting time, cost, and reliability scores for each link and node, and for the transport logistics chain as a whole. It then compares these scores with regional norms and international benchmarks. Additionally, ‘what if ’ scenarios can be created to gauge the impact on freight corridor performance of various intervention options, such as investments in infrastructure and changes in clearance procedures.

Where specific data are not available or easily obtainable, the model turns to default performance indicators based on responses to qualitative queries (for example, is the road mountainous? Is the road congested?). The model can assess sub-chains or the entire logistics chain, identify bottlenecks, and screen and evaluate potential interventions, thus allowing users to narrow the field of solutions to those that would have the greatest impact on logistics chain performance. The model also makes novel use of international norms and benchmarks to aid the user in measuring performance.

Overall design and functionality requirements

In summary, we defined the following design parameters and attributes for the software application:
• Ease of use for government, economists, policymakers, and planners;
• Ability to apply it to a var iety of transport logistics environments;
• User-defined graphical depiction of logistics chain links, nodes, and performance;
• Ability to incorporate all surface modes, including rail, road, inland water transport, and coastal shipping;
• Qualitative and quantitative options for data input that take into account data availability and reliability;
• Create and evaluate a variety of ‘what if ’ scenarios for logistics chain improvements;
• Ability to compare performance with global standards and regional benchmarks.
 

Norms and benchmarks

The use of norms and benchmarks in FastPath is an innovation that provides:
(1) Access to worldwide standards by which to judge the performance of each component of a transport logistics chain, and

(2) Ranges of good, fair, poor, and very poor performance in the region in which corridors being assessed are located. The concept of different ranges for different levels of performance proved superior to the use of a single standard for good
performance.

We define benchmarks as typical and best practice performance values for developed countries, including the United States, Europe, Japan and selected high performance countries, such as Singapore. Benchmarks refer to excellent performance, and highly competent transportation operators may well try to match them or establish performance standards that are at least close to them. Benchmarks generally are developed for locations where performance is believed to be excellent. They therefore indicate what is possible.

FastPath queries the user for data on time, cost, and reliability for each link and node in the logistics chain, and provides norms and benchmarks for each case. Time is defined as door-to-ship or ship-to-door transport time of a container, including delays, and time for processing of paperwork and inspections. Cost is the cost to the importer or exporter of shipping a container or truckload through the entire logistics chain. Reliability measures the variability in transit time for container or truckload transport. To ensure wide application, we focus on performance measures that general users can most easily estimate. We also include some more technical benchmarks and norms so that knowledgeable stakeholders and experts, as well as general users, can form judgments about performance.
 

Fastpath application

In our experience, any government proposals for improving a freight corridor typically address only one portion of the transport logistics chain – or at most, a very few.

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