Factors Affecting Logistic Performance: A Global CrossSection Supply Chain Study

The underlying objective and purpose of this thesis is to test a model that studies relationship between costs to export, cost to import, GDP, per capita income and IT on logistics performance. This research will assist the logistics industry for identifying the opportunities and challenges in terms of their trade logistics performance, what factors affect this benchmarking tool and what steps can the logistics industry take to improvise their performance. The data is selected for 41 countries worldwide on the basis of their land area from World Bank for the year of 2010. When the viability of the model was checked the results shown that all the independent variables contribute some exertions to affect the logistic performance of any country. The exports and imports of goods and services contribute to about 40% and 42% to the logistic performance to be precise. However, GDP, IT, and income per capita have an impact of about 16%, 8%, and 61% to the logistic performance respectively. However, for the countries having lower degree of logistic performance can improve their performance by focusing on their imports and exports of goods and services, and their per capita income which are the factors having enormous effect on the logistic performance of any country.

byMUHAMMAD ZAIN SIDDIQUI

Reg #: 8709Submitted to: Mr Farhan Mehboob

A thesissubmitted in partial fulfillment of the requirementsfor the degree of Master of Business Administration

tothe Iqra University

Karachi, PakistanMAY, 2015

The underlying objective and purpose of this thesis is to test a model that studies relationship between costs to export, cost to import, GDP, per capita income and IT on logistics performance This research will assist the logistics industry for identifying the opportunities and challenges in terms of their trade logistics

performance, what factors affect this benchmarking tool and what steps can the logistics industry take to improvise their performance The data is selected for 41 countries worldwide on the basis of their land area from World Bank for the year of 2010

When the viability of the model was checked the results shown that all the independent variables contribute some exertions to affect the logistic performance of any country The exports and imports of goods and services contribute to about 40% and 42% to the logistic performance to be precise However, GDP, IT, and income percapita have an impact of about 16%, 8%, and 61% to the logistic performance

respectively

However, for the countries having lower degree of logistic performance can improve their performance by focusing on their imports and exports of goods and services, and their per capita income which are the factors having enormous effect on the logistic performance of any country

Chapter 1 Introduction 1

1.0 Overview 1

1.1 Background 2

1.2 Problem Statement 3

1.3 Purpose of Research 4

1.4 Objectives of Research 4

1.5 Research Questions 4

1.6 Research Hypothesis 5

1.7 Limitation of Study 5

1.8 Scope 6

Chapter 2 Literature Review 7

2.1 Theoretical Background 8

2.2 Logistics 8

2.3 Empirical Studies 9

2.4 Logistics Framework 10

2.5 GDP 12

2.6 Cost to Export & Import 12

2.7 Per Capita Income 13

2.8 Information Technology 13

2.9 Conceptual Framework 13

Chapter 3 Methodology 15

3.1Research Purpose 16

3.3 Research Design 16

3.4 Secondary Data: 17

3.5 Research Model 18

3.6 Variables Description 18

3.6.1 Dependent Variable: 18

3.6.2 Independent Variable: 19

Chapter 4 Data Analysis 20

4.1 Introduction 21

4.2 Cross sectional Regression 23

Chapter 5 Conclusion and Recommendation 30

5.1 Conclusion 31

5.2 Managerial Recommendation 32

5.3 Future Research 32

References 33

Chapter 1 Introduction

1.0 Overview

The notion of logistics has travelled a long way in recent years As previouslylogistics was seen as individual components of product flow, such as storing, handling ortransport However, now logistics has evolved into comprehensively managed and integratedsupply chains Logistics form a significant base for success of organizations and businessesaround the world as the logistics processes of distribution, production and sourcing havebecome global, and so countries need to focus on improving their logistic performance toachieve long-term growth in international markets In terms of global comparison, theimportance of logistic services largely depends on the nation’s economic power For instance,the prospects of logistics services have been quite strong in Europe, Japan, and United Statesfor a long time There are certain factors that affect a dynamics of logistics in a country

First of all foreign trade, especially export is quite important to increase a country’seconomic growth rate (Johnson, 2013) Moreover, export plays a key role for the countries toreceive a greater share of the global market Satisfactory and sustainability levels ofcountries’ export depend on exporting high value-added products and increasing the diversity

of products and markets Meanwhile, foreign trade transactions exhibit a complex view andhave enhanced the importance of logistics Logistics is considered as an important constituent

in the field of service, manufacturing and agriculture industry Moreover logistics has to besmoothly managed so that distribution and production functions can operate effectively

According to a research by Hollweg and Wong (2009) cost to import & import ofgoods and services; cost to export & export of goods and services and GDP are indirectlyproportional to logistics performance index On the other hand IT expense is directlyproportional to logistics performance In this regard, countries that work on controlling theircost of import, cost of export, GDP, IT enhances the quality of logistics and ensurescompetitiveness and eventually reach the top positions in the Logistics Performance

According to Christopher (2012) efficiency of logistics can be measured through theapplication of logistics performance index (LPI) This index primarily depends on the qualityand competence of customs and border management, trade and transport infrastructure andlogistics services In this paper, it is worked on the model that studies relationship betweencosts to export, cost to import, GDP, per capita income and IT on logistics performance.

This study investigates the affect of GDP, export and import of goods and services,cost to export and import, IT, and income per capita on logistic performance Theintroductory chapter of this study will provide background information relevant to researchquestions, its contextual framework, and problem identification, purpose of study, researchquestion, justification and limitation of this research

1.1 Background

The prospect of logistics performance starts with its definition According to WorldBank, the logistic performance of countries at the same level of per capita income with thebest logistics performance experience additional growth of 1% in gross domestic product(GDP) and 2% in trade So it’s essential to improve a countries’ logistics performance as ithas significant valuable effects on the statistics of a countries’ economy Additionally nomatter if there is successful logistics or not the trade cycle is always present and it eventuallyrelies on the pace and extent of government strategy and measures that will liberalizelogistics supply (Havenga, 2011)

Furthermore World Bank denotes LPI as an index that captures mainly the mainfeatures of the existing logistics environment LPI is deliberated by the efforts of BRICcountries (Brazil, Russia, India and China); World Bank; and various other sophisticatedemerging economies Efficient supply chain and logistics of any country can become itscompetitive advantage over its competitor, so focus should be on improving the LogisticsPerformance Index of a country

LPI, as implied by the acronym, places great emphasis on performance, expressedthrough the reliability and predictability factor, unlike the conventional performance metrics,such as average delays and direct freight costs, or more generically expressed in terms of timeand costs World Bank representatives, experts in the field, and academics, came to theconclusion that, currently important indicators such as reliability, predictability and quality ofservice, along with transparency of processes, cannot be comprehended solely from costs andtime information “The predictability and reliability of shipments, while more difficult tomeasure, are more important for firms and may have a more dramatic impact on their ability

to compete” (Arvis, et al 2007:4).

1.2 Problem Statement

In the year 2007, Singapore had the highest logistic performance index score of 4.19 with logistic competence of 4.21 which is the highest of all (World Bank) Whereas, when thedata was extracted for the year 2010 Germany was the country where logistic performance index found to be 4.11 with logistic competence of 4.11 (World Bank) (Shown below in table 1.2.1)

up due to extra money and time needed (Korinek & Sourdin, 2011)

As developed countries are shifting from traditional agriculture and manufacturingmodel to globalized trade they are increasingly interacting in international markets and need

an efficient logistics services to gain competitive advantage Therefore in this study we try tofocus on logistics of developed and developing countries and finds out how quality andcompetency of logistics services is affected by country specific factors such as, GDP, exportand import of goods and services, cost to export and import, IT, and income per capita

1.3 Purpose of Research

As mentioned above the quality logistics performance serves as a competitiveadvantage for countries This research has tried to find factors which affect the Logisticsdynamics and efficacy For this research 41 country’s data will be assessed and influence ofdifferent variables will be examined on logistics The independent variables which areselected for this research are also important and critical in today’s world i.e GDP, export andimport of goods and services, cost to export and import, trade services, IT, and income percapita This research can serve as a guideline for regulatory bodies to select strategic actionsfor improving their logistics The fundamental idea of this research is to study therelationship between logistics performance and cost to export, cost to import, GDP, tradeservices, per capita income and IT (Arvis, et al 2007) on the basis of a model This researchwill explore the relationship between dependent and independent variables on the basis of amodel

1.4 Objectives of Research

The objective of this research is to assess the concept of logistics performance andvarious factors that affect its efficacy The value of logistics performance is dependent onvarious factors and this paper explores the relationship among them

1.5 Research Questions

This study proposes to study the following questions:

1 What is the impact of export and cost of goods and services on Logistics Performance?

2 What is the impact of import and cost of goods and services on Logistics Performance?

3 What is the impact of GDP on Logistics Performance?

4 What is the impact of per capita income on Logistics Performance?

5 What is the impact of Information Technology on Logistics Performance?

1.6 Research Hypothesis

1 HO1: Export and cost of goods and services does not affect Logistics Performance?

2 HO2: Import and cost of goods and services does not affect Logistics Performance?

3 HO3: GDP does not affect Logistics Performance?

4 HO4: Per capita income does not affect Logistics Performance?

5 Ho5: Information Technology does not affect Logistics Performance?

1.7 Limitation of Study

There are certain limitations in this research

1 Limitation in terms of variables is that we have limited exposure of variables as weincluded the effect of only cost to export, cost to import, GDP, per capita income and IT

on logistics performance, however dynamics of logistics are influenced by various otherfactors apart from these Moreover, Researchers can include other factors to investigatelogistics performance further

2 Another limitation is that this study is conducted on cross sectional data of 2010, sousing panel or time series data can offer additional insights about the relationship ofdependent and independent variables

3 The data gathered in this research is based on 41 countries that are selected on the basis

of their size So further research can include other countries as well

4 Quantitative model has been applied to study association between dependent andindependent variables, so qualitative aspects can also be assessed to further gain insightsinto this topic.

1.8 Scope

This research comprises on the data of 2010 for 41 countries The data was taken fromthe website of World Bank The countries were chosen on the basis of their size (area) andlogistics data availability Similarly, the research area can be more broaden by taking the datafor more countries other than these 41 already selected on the base of their land area.Moreover, the research is based on the impacts of costs of exports and imports of goods andservices, GDP, IT, and income per capita, where more other variables can be added to gaugethe impact on logistic performance

Chapter 2 Literature Review

2.1 Theoretical Background

The theories of management that can be applied to the domain of logisticsmanagement are relationship orientation (Panayides & So, 2005), resource-based view(Rungtusanatham, Salvador, Forza & Choi, 2003), competitive advantage (Sandberg &Abrahamsson, 2011) transaction cost analysis (TCA) (Bowersox, Mentzer & Speh, 2008),and the principal-agent theory (PAT) (Fei & Yun-fei, 2009)

According to Panayides and So (2005) the idea of relationship orientation denotesproactively creating, developing and maintaining strong relationships with stakeholders thatwould ultimately provide benefit in the form of mutual exchange and profitable opportunities.Similarly in the domain of logistics management there are varies parties or stakeholdersacting hand in hand to support the intricate operations of logistics, this there is a dire need forefficient relationship orientation

Moreover, the link between resource based view and logistics management is thatcapabilities and resources can only be obtained from a particular market to certain extent andafter that there is a need to outsource the resources from other markets (ldórsson & Skjøtt-Larsen, 2004) In this regard the concept of logistics becomes very important because itshows that it’s important for a country to improve it logistics services to achieve long-termmutual commitment (Rungtusanatham, Salvador, Forza & Choi, 2003) Similarly if a countrywants to attain the competitive advantage it need to improve its logistics performance(Sandberg & Abrahamsson, 2011)

To add on, the connection among transaction cost analysis (TCA) and logisticsmanagement is that TCA sets the boundaries of firms in terms of entering into inter-organizational arrangements The underlying idea is that a firm can decrease its overalltransaction costs by partnering and cooperating with external parties A firm should performthose activities internally or within their local geographical domain, in which it has acompetitive edge and for others, the firm should outsource them from external or

international parties, thus fostering International logistics (Bowersox, Mentzer & Speh,2008) So all in all, the approach of TCA is used to decide on the make-or-buy decisions insupply chains, for example restructuring of supply chains, buyer supplier relationships andoutsourcing of logistics activities.

Lastly, since there is separation of economic activities and ownership among principleand agent, agency problems can incur, such as bounded rationality, behavior based on self-interest, outcome uncertainty, differences in risk aversion, conflicting objectives andasymmetric information among agent and the principal and the agent In this regard, animportant issue of logistics management is the alignment of incentives, as misalignmentfrequently comes from hidden information or hidden actions Nevertheless, the prospect ofmisalignment can be controlled by creating contracts with supply chain partners balancingpenalties and rewards

2.2 Logistics

Logistics by definition is considered a functional system that incorporatescoordination and combination of operations of diverse transport modes as a primary pre-requisite for making sure that there is efficient service (Leal, 2012) In other words, logisticscan be defined as a management framework for business planning for management of capitalflows, information, service and material Logistics function also incorporates the intricatecontrol systems, IT and information that are needed in today’s dynamic businessenvironment Furthermore logistics can also be defined as the replacement, distribution,maintenance and procurement of material and personnel

Logistics framework typically consists of physical distribution of services and goods,internal operations; physical distribution and internal operations; and physical supply ofgoods and services (Mentzer, Stank & Esper, 2008) Simultaneously, logistics framework can

be seen as a structure that ensures that a country have the right type of service or product

designated at the right order, place and time However, our expectations for a firm orcompany are directly related to logistics

2.3 Empirical Studies

According to Arvis and colleagues (2014) “improving logistics performance is at the core of the economic growth and competitiveness agenda.” Considering this, the global policymakers must distinguish the sector of logistics as a key milestone for their growth and development Sustainable and seamless logistics are seen as engine of integrating global marketplace and value chains by the trade powerhouses like the Netherlands or developing countries such as Indonesia The author’s further stress on the idea that is logistics is

inefficient, and then it can reduce the prospects of global integration and increase the costs of trading

Considering this, one of the important goals of the global economy is to enhance the prospect of logistics framework (Waters & Rinsler, 2014) To add on, according to Waters and Rinsler (2014) the institution of Global Supply Chains has raised the issue of moving goods inexpensively, reliably and rapidly around the globe As the importance of logistics hasincreased steadily, there is a mounting necessity of assessing the components of logistics and comparing different countries performance and data with regard to these components

The prospect of logistics performance starts with its definition According to WorldBank, the logistic performance of countries at the same level of per capita income with thebest logistics performance experience additional growth of 1% in gross domestic product(GDP) and 2% in trade So it’s essential to improve a countries’ logistics performance as ithas significant valuable effects on the statistics of a countries’ economy Additionally nomatter if there is successful logistics or not the trade cycle is always present and it eventuallyrelies on the pace and extent of government strategy and measures that will liberalizelogistics supply (Havenga, 2011)

The framework of Logistics Performance Index (LPI) is measured by World Bank a tool to survey on the operators in charge of trading and moving goods A report taken from the World Bank gives the idea that LPI is produced to close the knowledge gap related to logistics and to facilitate nations in developing reforms of to improve their competitive circumstances The results of LPI ranking introduce some interesting findings; first, the higher the score in terms of LPI, the greater the countries’ role in logistics industry, and vice versa On a second note, scoring low in LPI terms can be interpreted as being “trapped in a vicious circle of overregulation, poor quality services, and under- investment” (Arvis, et al 2007).

Furthermore World Bank denotes LPI as an index that captures mainly the mainfeatures of the existing logistics environment LPI is deliberated by the efforts of BRICcountries (Brazil, Russia, India and China); World Bank; and various other sophisticatedemerging economies Efficient supply chain and logistics of any country can become itscompetitive advantage over its competitor, so focus should be on improving the LogisticsPerformance Index of a country

LPI, as implied by the acronym, places great emphasis on performance, expressedthrough the reliability and predictability factor, unlike the conventional performance metrics,such as average delays and direct freight costs, or more generically expressed in terms of timeand costs World Bank representatives, experts in the field, and academics, came to theconclusion that, currently important indicators such as reliability, predictability and quality ofservice, along with transparency of processes, cannot be comprehended solely from costs andtime information “The predictability and reliability of shipments, while more difficult tomeasure, are more important for firms and may have a more dramatic impact on their ability

to compete” (Arvis, et al 2007:4).

According to Christopher (2012) efficiency of logistics can be measured through theapplication of logistics performance index (LPI) This index primarily depends on the qualityand competence of customs and border management, trade and transport infrastructure andlogistics services

In a study performed by Mohan in 2013, it was showed that the logistics managementhas effect on global competitiveness Furthermore, the paper also examined the salientfeatures of Indian logistics systems (Mohan 2013) The prospect of logistic performance

index is built upon previous literature (Arvis, Mustra, Panzer, Ojala & Naula, 2007) Its focus

however, is primarily on supply chain performance, and its indicators have been developed insuch a way that, they complement the existing competitive indicators in the two fore-mentioned studies

According to Islam (2014) LPI consists of two main parts, namely International andDomestic LPI The former has encompassed a range of metrics, they estimate as crucial in thecurrent international trading environment, and conditions:

1 Shipment’s timeliness in reaching target location

2 Effectiveness of clearance process monitored by customs agencies

3 Quality of transport infrastructure that is needed for efficient logistics

4 Affordability and easiness of arranging shipments

5 Ability to trace and track shipments

6 Proficiency in local logistics industry (for instance, customs brokers and transport operators)

7 Costs of domestic logistics (for instance, warehousing, terminal handling and localtransportation)

The second constituent of logistics performance is domestic logistics performanceindicator that provides quantitative and qualitative assessments of a country’s logistics byprofessionals working inside it According to Solakivi, Töyli, Engblom and Ojala (2011)

domestic logistics tend to include comprehensive information on the cost data, performancetime, institutions, and core logistics processes and logistics environment.

2.4 Logistics Framework

The significance of having an efficient logistics framework is currently acknowledged

by decision makers worldwide Private operators move commerce and trade are moved andwithin borders Logistics performance actually measures the competence of these supplychain -logistics performance The value of logistics performance depends on governmentpolicy that is formulated by regional economic groups and individual countries indevelopment and regulation of services, infrastructure provision or trade facilitation all theway with the help of friendly border procedures that substantially facilitate in efficientperformance of logistics (WTO 2014)

According to Puertas, Martí and García (2013) the provision of International LPI isbased on assessment of foreign operators and that consider the average of six components,namely, tracking and tracing; services quality; infrastructure; customs; timeliness; andinternational shipments

Fig 2.4 Input and Outcome LPI Indicators

Retrieved From: (WTO 2012)

The components of supply chain delivery and logistics are selected on the basis ofempirical and recent theoretical research and moreover on practical understanding of logisticsprofessionals that are concerned with international freight forwarding (as shown in Fig 2.4).There have been four logistics performance surveys made so far accordingly in 2007, 2010,

2012 and 2014 On the basis of the worldwide survey of express carriers and global freightforwarders, the LPI is regarded as a benchmarking tool that evaluates performance of acountry in terms of the efficacy of its logistics supply chain This index allows comparisons

of 160 countries, and therefore helps the countries in identifying opportunities and challenges

in improving their logistics performance (WTO 2014) The value of logistics LPI ranges from

1 to 5, in which higher the number of index, the better comparative performance of thecountry (The World Bank 2014)

First of all foreign trade, especially export is quite important to increase a country’seconomic growth rate (Johnson, 2013) Moreover, export plays a key role for the countries toreceive a greater share of the global market Satisfactory and sustainability levels of

countries’ export depend on exporting high value-added products and increasing the diversity

of products and markets Meanwhile, foreign trade transactions exhibit a complex view andhave enhanced the importance of logistics Logistics is considered as an important constituent

in the field of service, manufacturing and agriculture industry Moreover logistics has to besmoothly managed so that distribution and production functions can operate effectively

According to a research by Hollweg and Wong (2009) cost to import & import ofgoods and services; cost to export & export of goods and services and GDP are indirectlyproportional to logistics performance index On the other hand IT expense is directlyproportional to logistics performance In this regard, countries that work on controlling theircost of import, cost of export, GDP, IT enhances the quality of logistics and ensurescompetitiveness and eventually reach the top positions in the Logistics Performance(Hollweg & Wong, 2009)

Gogoneata (2008) stated that nations that are leading the International markets arecharacterized by major logistics hubs and global transport, which obtained huge advantage ofglobalization’s consequences In terms of LPI, the lowest developed countries are placed atthe base of ranking, as they are going through constant resources shortage and experiencingconflicts The LPI is quite important for comparing between nations and for cross-sectionalstatistical investigations (Gogoneata, 2008)

To add on, a research concluded that “least developed countries in terms of logisticsare making a significant effort to improve their situation, which is boosting international tradeand their own economic growth” (Puertas, Martí & García, 2013)

2.5 GDP

According to Korinek and Sourdin (2011) trade logistics serves a very important job

in facilitating trade services as it supports the transportation of international goods and

services On the other hand, if the logistics services are inefficient then they tend to impedetrade services as there is imposition of extra money and time cost

Now a day’s developed nations are shifting from traditional agriculture andmanufacturing and are progressing towards international vertical specialization, so due to thistransition there is greater need for competent logistics services Furthermore when quality oflogistics services is enhanced, it improves a country’s competitive position by decreasing theoverall costs that are involved in transporting good So cost of imports and exports are closelylink of logistics performance index (Korinek & Sourdin, 2011)

Moreover, according to a research study by Gogoneata (2008) the findings portraythat logistics performance improves as the share of value added services and exports increase

in GDP Therefore, the findings point to an elevated elasticity of logistics performance to theexpansion of services’ sector, as compared to the relative importance of exports To add on,the research findings suggest that lower descriptive influence of exports for logisticsperformance can be defended on the note that a higher portion of exports in GDP areobserved from middle-income nations, that indulge in international trade on one hand, but donot possess adequate resources to build better institutions and infrastructure (Gogoneata,2008)

2.6 Cost to Export & Import

According to Arvis, Saslavsky, Ojala, Shepherd, Busch and Raj (2014) there is astrong association between logistics performance, consistency of supply chains and theservice delivery certainty So this denotes the idea that efficient logistics of a country directlysupports its export function Moreover, according to Puertas, Martí and García (2013) interms of assessing a country’s export competitiveness; logistics performance has evolved as adecisive factor According to World Economic Forum (2013) there is massive potential forenhancing global trade and export by reducing barriers of logistics and supply chain

Furthermore it is not easy for an exporter to export their goods and services atcompetitive prices if the logistics and transport sector is dysfunctional or inefficient Thismeans that if there is lack of certainty in logistics and transport, poor service and high prices,then it will translate in the form of isolating the country from world markets (Arvis et al.,2013)

2.7 Per Capita Income

Yildiz (2014) states that “as domestic production per capita increases, so does the range of human activities, both for society as a whole and for individual lifestyles Thus, eachdevelopment proposal must be examined not only for its economic, environmental and social impacts, but also for its implications for transport.” This denotes that as per capita income increases, it directly influences the increasing need for efficient transportation, which is turn leads to improvisation in logistics performance

by provision of Electronic Data Interchange (EDI) and ICT-supported information exchange systems

Moreover, the effects of technological innovation and advanced information

technologies on logistics is logistics performance improvement as information exchange in supply chain is improved; development of logistics management and integrated production systems improved management of logistics; and the provision of Electronic Data Interchange (EDI) radically altered the manner in which commercial and international transactions were

being managed, thereby promoting the prospects for improved logistics performance (OECD,2002)

To add on provision of IT enables creation of new supply chain structures Direct trade is enhanced due to easy access to information between users and suppliers leading to provision of easily available information to all partners of supply chain These initiatives have also resulted in creation of a particular service, known as ‘virtual logistics chain’

(Lusch, 2011) Other avenues created by the prospect of leading IT that foster logistics performance are Value-Added Network (VAN), PARIS (Planning And Routing Intermodal System) and Information Clearing House (ICH) (OECD, 2002)

Furthermore, Information technology promotes contributing to intermodal transport and modal shift The idea is that is transport and logistci8s technology will develop; it will increase intermodal transport’s competiveness Well-organized system of information technology has condensed cost and processing time and formed seamless links, by this meanseasing out intermodal transport (OECD, 2002)

2.9 Conceptual Framework

The research is based on a conceptual framework that seeks to analyze the effect ofcost to export (Arvis, Saslavsky, Ojala, Shepherd, Busch, & 2014; Hausman, Lee &Subramanian, 2005; Naudé & Matthee, 2012; Turkson, 2011); cost to import (Arvis,Saslavsky, Ojala, Shepherd, Busch, & 2014; Hausman, Lee & Subramanian, 2005; Naudé &Matthee, 2012; Turkson, 2011); GDP and Trade services (Diop, 2010; Havenga, 2011); andper capita income (Portugal-Perez & Wilson, 2012) on logistics performance

Chapter 3 Methodology

3.1Research Purpose

The underlying objective of this thesis is to analyze the effect of cost to export, cost toimport, GDP, per capita income and IT on logistics performance This research will assist thelogistics industry for identifying the opportunities and challenges in terms of their tradelogistics performance, what factors affect this benchmarking tool and what steps can thelogistics industry take to improvise their performance

Logistics industry is growing at an increasing pace but on the other hand, according toBusiness Recorder estimate, “Pakistan is losing $2.6 billion annually because ofinefficiencies in its logistics despite the significant growth in the efficiency of the roadtransport system” (Mirza, 2013) So if logistics industry focuses on leveraging the keylogistics performance indicators (LPI) then they can gain competitive advantage in long-run

3.2 Research Approach

The approach of this research is based on multiple regressions that are focused

on learning more about the relationship between several independent or predictor variablesand a dependent or criterion variable This thesis utilizes multivariate regression analysis thatdescribes and evaluates the relationships between a given dependent variable and one or moreindependent variables