Pan-Pacific Conference XXXIV. Designing New Business Models in Developing Economies

Relationship between logistics and trade: A South African ecological study
Pisa, Noleen M and Luke, Rose
University of Johannesburg
Department of Transport and Supply Chain Management, University of Johannesburg, P O Box 524, Auckland
Park, Johannesburg, South Africa, 2006, 0115594951
noleen@uj.ac.za; rluke@uj.ac.za
ABSTRACT
The liberalisation of global trade has resulted in the
reduction in the imposition of traditional trade
barriers in the form of tariff barriers. With the
decline in traditional barriers to trade, shifts in the
sources of competitive advantage are being
experienced. Today one of the key sources of
competitive advantage in international markets is
logistics. This study sets out to analyses the trend
associations between South Africa’s trade and
logistics. The aim of this study is to analyse the
trends in logistics performance and trade, in
particular imports and exports. Overall logistics
performance is analysed logistics performance
index (LPI), connectivity, infrastructure and
customs procedures (costs and time associated with
importing and exporting). The results show that
improvements in logistics factors improve trade
volumes. It is recommended that the South African
government and other role players take into account
the significant impact that logistics has on the
country’s competitiveness. Improvements in these
elements will results in improvements in trade
which is instrumental in the country’s growth and
development.
INTRODUCTION
The liberalisation of global trade has resulted in the
reduction in the imposition of traditional trade
barriers in the form of tariff barriers. A vast
majority of countries have reduced or eliminated
tariff barriers on goods imports in accordance to
World Trade Organisation (WTO) agreements. The
number of trade agreements between countries and
regions has subsequently proliferated in an effort to
increase trade and development. The role of trade as
an instrument for development has been well
documented [1-8]. Similarly, vast empirical
evidence of trade as an instrument of development
has been documented e.g. the East Asian Tigers,
and more recently China’s rise as a global power is
attributed to trade. Trade provides domestic
products access to larger and more dynamic
markets, access to new technology that promotes
innovation, access to foreign currency and credit
[9].
However, seeing as trade provides unchartered
access to international markets, the intensity of
competition in the global markets has increased.
With the decline in traditional barriers to trade,
shifts in the sources of competitive advantage are
being experienced. One of the key sources of
competitive advantage in international markets is
logistics [10].
The ability of firms or supply chains to efficiently
deliver the right products, at the right time, in the
right quantities and at the right cost now sets firms,
supply chains and countries apart. Coca-Castaño et
al. [11] distinguish between logistics hardware and
logistics software. Logistics hardware refers to
country level logistics infrastructure related to
connectivity to the rest of the world (coverage of
transportation networks) while logistics software
relates to competencies in logistics management.
Competitive advantages are no longer determined
by factor endowments or cost of production
advantages only, but also by the coverage and
extensiveness of transport networks (connectivity;
[12]), quality of infrastructure (ports, rail lines etc;
[11,13-18]), the efficiency of customs procedures
[19]; time to import or export; the cost to import or
export [13] and overall logistics performance [10].
There is no widely accepted definition of logistics in
studies that have measured its national and regional
effects on trade[10]. The aim of this study is to
analyse the trends in logistics performance and
trade, in particular import and exports.
RESEARCH METHOD
The data used for this study was obtained from
World Bank’s world development indicators
database [20]. Gross domestic product data (at
constant local currency units) was obtained from the
World Bank national accounts data and OECD
National Accounts data file. Data regarding goods
imports and goods exports (balance of payment in
current US dollars) were obtained from the
International Monetary Fund, Balance of Payments
Statistics Yearbook and data file. This data was
used in all comparisons.
Data regarding import and export customs issues
also included the cost to import and export (in US$)
was obtained from the World Bank Doing Business
project. The efficiency of the customs clearance and
the lead time to import and export were obtained
from the World Bank and Turku School of
Economics, Logistic Performance Index (LPI). The
burden of customs procedure (extremely inefficient
to extremely efficient) was obtained from the World
Economic Forum Global Competiveness Report
(GCR) and data files. The number of documents as
well as the time) to import and export were also
obtained from the World Bank Doing Business
project.
To determine the interaction between GDP, goods
imports and exports and transport infrastructure, the
following data were used: the quality of port
infrastructure (low to high) was obtained from the
LPI; the length of rail lines, measured as total routekm
was obtained from data from the World Bank,
Transportation, Water and Information and
66