UNDERPERFORMING DIMENSION OF LOGISTICS PERFORMANCE INDEX (LPI) IN SRI LANKA

Sri Lanka has designed key development agendas in recent years to uplift its trade facilitation. One of the main aims is to convert Sri Lanka into a logistics hub to facilitate international trade. The perception of the logistics sector in executing such agendas is indeed supportive in terms of proper policy planning. LPI was developed by the World Bank as an outcome of this scenario. As a multi-dimensional evaluation indicator, LPI has seemingly taken the interest of potential investors. However, the LPI scores of Sri Lanka have not been satisfactory when compared with major competing countries in the region. Therefore, assessing the logistics performance of the country has become a contemporary requirement. The role of freight forwarders is vital in such assessments. Particular to this context, this research mainly aims to analyze the reasons for the most underperforming dimension of LPI in Sri Lanka which was identified as the quality of trade and transport related infrastructure. The findings were based on a questionnaire survey from a sample of 60 professionals from 20 freight forwarding companies and personal interviews. Data were collected on the most underdeveloped areas of the infrastructure dimension of LPI. In addition, a prioritization of infrastructure development was identified through Analytical Hierarchy Process. The key findings highlighted that eventhough rail infrastructure was identified as the most underdeveloped area, the respondents ranked the priority order for development as port infrastructure, warehouse and transloading, ICT infrastructure, road infrastructure, airport infrastructure and rail infrastructure respectively. In addition, poor cargo handling facilities at ports and warehouses, road congestion, not having separate lanes for trucks, not implementing a national level single window system, unsuitability of the current railway network for freight operations, lack of collaboration between private sector and government, not revising the tax structure for cargo handling equipment imports and not having an independent regulatory body for logistics operations were recognized as major reasons for the poor quality of trade and transport related infrastructure in Sri Lanka.