Investigating the Efficiency of the Logistics Performance Index (LPI) Weighting System Using the Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS) Method
9 Pages Posted: 1 Apr 2021
Date Written: July 15, 2020
Logistics performance, both in international and domestic trades, is crucial to the economic growth and competitiveness of countries. On the other hand, high quality logistic performance is the key capability for the economic growth of any country. Well-functioning logistics both domestically and internationally are necessary preconditions for national competitiveness. The Logistics Performance Index (LPI) laid down by the World Bank provides a snapshot of the supply chain performance of countries. Based on a worldwide survey of global freight forwarders and express carriers, the IPI consists of six specific indicators, namely efficiency of the clearance process, quality of trade and transport related infrastructure, ease of arranging competitively priced shipments, competence and quality of logistics services, ability to track and trace consignments, and timeliness of shipments in reaching destination within the scheduled or expected delivery time. These six indicators of have been considered as equally important when the overall index score is calculated, which seems highly unlikely within the complex system of logistics. For this reason, some attempts have been worked on to set differentiated weight values to the LPI indicators. This paper presents a methodology by which more justified weight values are determined. The proposed approach is based upon utilizing The Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS), which is a multi-criteria decision analysis method, to calculate the weight values. The ranking of countries according to the calculated weight values is compared with that of the World Bank and to other ranking results available in literature.
Keywords: Logistics Performance Index (LPI), Trade, Weighted LPI, Economic Development, Bilateral Trade
Suggested Citation: Suggested Citation