Possibilities of using Incoterms clauses in a country logistics performance assessment and benchmarking

Abstract

This study aims to contribute to the improvement of a country's transport and logistics (TL) performance assessment by exploring the possibility of using International commercial terms (Incoterms) clauses in international sales contracts. Incoterms clauses are commercial terms that clearly determine sellers' logistics commitments. They are also the “channels” that connect trade and logistics. The research explores the relationship between the international TL performance indicators and the Incoterms score (IS) which represents the extent of sellers' logistics commitments in bilateral trade at a national level. As per empirical results, the logistics performance indexes (LPIs) show the significant impact of a country's logistics performance on the IS. The country's economic development is also correlated with the IS and the domestic logistics performance indicators. This correlation is not seen with regards to the global competitiveness of transport infrastructure. Additionally, while the geographic distance does not have a direct correlation, it impacts buyers' or sellers' obligations, when considered along with the LPIs in the gravity model.According to the empirical results, a conceptual framework for the usage of applied Incoterms clauses for logistics performance assessment and benchmarking is proposed. The policymakers may use ISs as additional indicators when assessing a country's logistics performances as well as to estimate the possibilities of expanding the TL market for promoting international trade flows. Such assessment enables both national and international benchmarking to rely on the national database. The usage of Incoterms clauses for monitoring, assessing, and benchmarking a country's TL performance must be considered more profoundly by the policymakers in the future.