Arvis, J: The Cost of Being Landlocked

This book proposes a new analytical framework to interpret and model the constraints faced by logistics chains in landlocked countries. The case of LLDCs has naturally received special attention for decades, including a specific set of development priorities based on the idea of dependence over the transit state. In this context, efforts to tackle the cost of being landlocked have been mainly directed to ensure or facilitate freedom of transit through regional/multilateral conventions, and to develop regional transport infrastructure. In contrast, analysis of service delivery constraints has been seriously neglected and could explain the disappointing implementation of regional transit agreements and massive investments in corridors for exports diversification in landlocked economies. Based on extensive data collection in several regions of the world, this book argues that although landlocked developing countries do face high logistics costs, these do not result from poor road infrastructure -contrary to conventional wisdom-since transport prices mainly depend on trucking market structure and organization. In turn, high logistics costs depend on low logistics reliability and predictability, which are sensitive to rent-seeking and governance issues. This volume proposes three types of measures with the largest potential gains in total logistics costs: (i) measures to increase supply chain predictability and to reduce hedging costs, (ii) measures to enhance best practices in governance, in order to phase out rent-seeking activities and therefore overhead logistics costs, (iii) reforms to increase efficiency in market structure. Hence, in practical terms supply chain predictability and performance might be improved by pursuing the following initiatives: (i) enhancing initiation of transit at the gateway or port through a streamlined transit regime, preferably using IT and based on quality and risk assessment system; (ii) improving clearance at destination; (iii) boosting market competition, by dismantling anticompetitive practices and upgrading entry requirements based on compliance and quality standards; (iv) re-engineering of transit regimes.