Oksana
Onyshchenko
Kremenchuk
Mykhailo Ostrohradskyi National University, Ukraine
E-mail: oksana.kremenchug@gmail.com
Yevhen
Yudenko
Kremenchuk
Flight College of Kharkiv National University of Internal Affairs, Ukraine
E-mail: tdsholding@ukr.net
Inna
Levytska
National
University of Life and Environmental Sciences of Ukraine, Ukraine
E-mail: ilevytska@nubip.edu.ua
Oleksandr Rarok
Kamianets-Podilskyi
National Ivan Ohiienko University, Ukraine
E-mail: ar.rarik87@gmail.com
Nataliia
Pokotylska
State
Agrarian and Engineering University in Podilya, Ukraine
E-mail: tilya777@ukr.net
Alina
Korbutiak
Yuriy
Fedkovych Chernivtsi National University, Ukraine
E-mail: fenkat1111@gmail.com
Submission: 8/17/2020
Revision: 8/26/2020
Accept: 8/31/2020
ABSTRACT
The aim of the study is to reveal the logistical component of sustainable development of regions in the context of decentralization reform in Ukraine. The role of logistics in ensuring the balanced development of regions and united territorial communities to gain their competitive advantages is shown. The dynamics of the Logistics Efficiency Index (LEI) of Ukraine in comparison with some other countries and the dynamics of the components of LPI in Ukraine for the period 2007-2018 are analysed. A number of problems that cause a low level of logistics in Ukraine have been identified and ways to improve the logistics activities of the regions have been proposed. A system for managing the logistics activities of the united territorial communities has been developed, which is the starting point for the organization of the social development management system. The system is a multi-component structure that combines objects, tasks, management methods and techniques, evaluation indicators and indicators. It should cover enterprises of production and non-production spheres, infrastructure facilities, organizations and institutions, interconnected in the decision-making process on the directions and ways of using elements of resource flow in the region and aimed at through optimization of flow processes based on estimating and minimizing logistics costs.
Keywords: Decentralization; United territorial communities; Region; Sustainable development; Logistics.
1.
INTRODUCTION
The imperfection of the
processes of structural reformation
of Ukraine's economy is manifested at the regional level, leading to a certain
depletion of the natural resource potential of individual territories and
disparities in the social and economic development of regions. The urgency of
reforming the territorial organization in Ukraine is long overdue, because the
current administrative and territorial system in the country did not allow for
effective regional policy, and, as a result, hindered the development of both
territories and the state as a whole. In addition, Ukraine's integration into
the European Community raised the question of compliance of the administrative
and territorial structure of the state with European principles of regional and
local development management, the need to build local self-government and
decentralization reform.
Decentralization
should be seen as a powerful tool of public policy for the balanced development
of territorial communities. From an economic point of view, increasing the
powers of communities and providing them with additional resources is the only
real opportunity to revive the social and economic development of territories.
But
at the same time, the strategic development of united territorial communities
includes a myriad of tasks that need to be addressed as soon as possible. One
of them is the organization of efficient logistics activities in the region, as
a way to strengthen the regional economy, increase security and development.
2.
LITERATURE REVIEW
2.1.
Decentralization literature review
World experience
includes a number of studies of theoretical provisions of the impact of
decentralization processes on the efficiency of public services in the country (the traditional theory of fiscal
federalism and intergovernmental fiscal relations) by (Tiebout, 1956; Musgrave,
1959; Oates, 1972; Olson, 1969).
American
economist TIEBOUT (1956), in the 60s of last century, concluded that only under
the conditions of fiscal independence of local governments, public spending
will meet the individual preferences of consumers according to their needs, is
the implementation of spending will be most efficient. As it is natural that
central authorities alone cannot fully ensure the full provision of public
goods throughout the territory, it is necessary to ensure the functioning of
local self-government, which is entrusted with the list of powers necessary to
ensure socio-economic development in a given area, and as a result – in the
country as a whole.
OATES’s (1972) theorem predicts a greater efficiency
of decentralized service delivery in terms of allocative efficiency, which is using available
resources to better match taxpayers’ preferences
and needs. Viewing government as a benevolent agent, decentralization theorem
by Oates states that in the presence of diverse preferences and needs, the
provision of public services by a decentralized government structure is
superior to the centralized provision and generally will lead to increased
citizen welfare.
Although
this first-generation literature has been characterized as normative, it may
also be described as making the economic case for fiscal federalism and it has
inspired numerous decentralization reform projects around the world.
There
have been empirical studies of the impact of decentralization processes on the
economic dynamics of development, which were covered in the works BALDERSHEIM (2011), BODMAN (2009),
BRUECKNER (2004), BRUECKNER (2006), generalization of the
experience of individual countries in spheres of decentralization are presented
in the works BALDERSHEIM (2011),
KOVACS (2009), KULESZA (2002), OTOLA (2008).
The
relationship between budget decentralization and economic growth on the example
of China was presented FELTENSTEINA and IWATAB (2005), SUN
et al. (2017). One of the key factors in China's
development was the rapid introduction of fiscal decentralization, which
created the conditions for economic decentralization, which had a positive
impact on economic growth. JIA et al. (2020) provide support to the argument in
the decentralization literature that improving local tax autonomy is a more
effective way than increasing fiscal transfers to finance local governments
while strengthening local fiscal discipline.
Decentralization
also, according to ARIKAN (2004) can reduce
corruption, which in turn can ensure dynamic economic growth.
But SLIJEPČEVIĆ et al. (2018) note that although the power of local
self-government differs significantly in European countries, they all share the
presence of corruption risk at the local and regional levels, which directly
affects the lives of citizens and has numerous economic consequences.
An
important extension of this literature is what has become known as
“second-generation theory” of fiscal federalism, that brings a “public choice”
perspective by assuming the presence of selfish public officials with their own
agenda, as opposed to the benevolent public officials assumed in the
first-generation theory. As an example, the market-preserving federalism
focuses on incentives for government officials not to deviate from ‘good
behaviour’ and emphasizes the role of decentralization as a mechanism to
control an expansionary public sector and to support private market activity (Weingast, 1995; McLure, 1995).
More
generally, the second generation literature depicts a world where political and
fiscal institutions work under imperfect information and political agents have
their own objective functions which are distinct from that of the “society” as
a whole (Oates, 2005). The
benefits and costs of decentralization are no longer limited to efficiency
gains and losses in public good provision; the second-generation literature
identifies other goals for decentralization, as well as trade-offs involving
the design of institutions, political incentives and rent seeking, and the
generation of information (Weingast,
2009).
The
decentralization of political and economic power has become a defining feature
of contemporary representative democracies. The dispersion of political
authority from national governments to supranational, regional and local ones
has expanded rapidly worldwide in the last decades, in what HOOGHE et al.
(2010) have characterized as the “era of regionalization”.
Over
the last several decades many countries around the globe have devolved fiscal
and political powers to sub-national governments. According to data gathered by
Garman et al. (2001), more than 80% of the seventy-five developing countries
analysed had been undergoing some decentralization of authority by the
beginning of the millennium. The picture is quite the same in developed
countries. The index of regional authority computed by HOOGHE et al. (2010) for
42 democracies and semi-democracies reveals that 70% of countries have
decentralized since 1950.
ARENDS (2020) emphasizes the dangers of decentralization and notes that
the success of fiscal decentralization depends
on a multitude of factors, which need to be closely monitored.
Consideration
of these researches is important for reformation processes in Ukraine.
Other
country`s experience suggests that increased economic growth and the increase
in the region`s competitiveness and welfare of its population relies on how
much the government is paying attention to a balanced development of the
country. Regional`s
development is mostly viewed through lens of such economic aspects as economic
growth, welfare and employment (level) (Armstrong; Taylor, 2000);
the number of number of workplaces, population`s income and labour productivity
(STORPER, 1997), as well as the overall economic welfare of the region (Beer et al., 2003).
Tulai et al. (2019) show the close correlation between budgetary decentralization and industrial capabilities of the regions. Recommendations for improving the financial support of the regions through the introduction of new instruments of community influence on local governments on economic growth of the territories were proposed by the authors.
Accounting the following aspects
like social inequality, ecological situation, effectiveness of bodies of local
municipality, cultural diversity (Haughton
et al., 2004) has led to more profound understanding (of decentralization and
its effects) not only in economical but in social and ecological spheres.
2.2.
Logistics literature review
The modern logistics as
an interdisciplinary science (Delfmann
et al., 2010; Klaus, 2009; Kovács; Spens, 2005; Malindžák,
2014; Møller, 1995) comes from
many scientific traditions and shaped by the influence of the economic and
behavioural approaches (Arlbjørn;
Halldorsson, 2002). The logistics
concept originates mainly from the marketing, management, engineering (Kovács; Spens, 2005), business administration, economics, computer
and social sciences (Delfmann et
al., 2010), microeconomics and organization theory disciplines (Møller, 1995).
In
a broad sense, the logistics appears as a “flow management philosophy” (Malindžák, 2014), the science about
complex flows in networks, focused on the design, dynamics and management of
these structures, that contributes to the growth and retention of “The Wealth
of Nations” (Delfmann et al.,
2010). More specifically, logistics is a branch of science related to managing,
guaranteeing, and implementation of flows in chains and networks for the
purpose of their global optimization (Malindžák,
2014).
The
methodology of logistics is aimed to model economic systems as networks,
analyse their relationships thus to form the information basis for their
optimal design (Møller, 1995) and
development in order to ensure progress in the balanced achievement of
economic, environmental and social goals (Delfmann
et al., 2010).
The
flow thinking is the central element and a distinctive feature that defines the
essence of the logistics as a discipline (Delfmann
et al., 2010; Malindžák, 2014; Arlbjørn; Halldorsson, 2002). This means that economic processes are
considered as the flows of objects (Delfmann
et al., 2010) that are studied from the technical, organizational and social
points of view.
The
logistics is based on a systemic approach (Delfmann
et al., 2010; Karatas-Cetin; Denktas-Sakar, 2013; Klaus, 2009; Malindžák, 2014; Nilsson;
Gammelgaard, 2012; Novack et al., 1992; Arlbjørn; Halldorsson, 2002) and its scientific toolkit provides the
space and time coordination of processes (Delfmann
et al., 2010; Malindžák, 2014)
being focused on the inter-organizational interactions (Møller, 1995) as well as on the issues of flows mobilization
and control while studying the optimal configuration and organization of
economic networks models (Delfmann
et al., 2010).
One
should emphasize that the economic approach as one of the mainstays of the
logistic concept focuses on full costs minimization (or profit maximization) (Karatas-Cetin; Denktas-Sakar, 2013; Arlbjørn;
Halldorsson, 2002) as a criterion
for such optimization modelling. The logistic flows are understood as a
controlled movement of objects between cooperative elements (machines,
activities, people, workplaces, etc.) linking them in chains and networks (Malindžák, 2014).
The
flow composition depends upon the objects (materials and substances) forming it
as well as the context. The elements, as a rule, include the material objects
such as raw materials, work in progress, finished products, goods as well as
information and services flows (Klaus,
2009; Arlbjørn; Halldorsson, 2002). At the same time,
the composition of the flow elements can vary depending on the context in which
they are investigated (i.e. level of analysis and purpose) (Arlbjørn; Halldorsson, 2002).
This
allows to cover the waste streams, gas-energy emissions and wastewater,
services (including ecosystem), in particular, in view of the environmental
objectives of logistics system analysis (Mishenin
et al., 2015; Linton et al.,
2007; Sarkis, 2012), as well as
people, services, finance, information and knowledge (Delfmann et al., 2010; Klaus,
2009; Malindžák, 2014; Sarkis, 2012) in the studying of the
logistics systems in socially important sectors: healthcare, education, etc. (Delfmann et al., 2010; Klaus, 2009; Kubatko; Kubatko,
2016).
At
the same time, the material flow is the main object in logistics considered as
a system-forming, integrating a variety of activities factor, that broadly
speaking, covers the full product lifecycle: from developing an idea to the
final disposal of waste of consumption. The material flow simultaneously
reflects the horizontal - the functional dimension of the logistics system,
i.e. supply, production, distribution and service, etc. (Møller, 1995).
Thus,
thanks to logistics, economic processes can be considered as flows of objects
that can be considered from a technical, organizational and social point of
view. Understanding the nature, features and components of material flows will
optimize the flow of efficient use of resources to achieve balanced processes
of creation and consumption of resources in the socio-economic system to ensure
stable community growth.
The
aim of the study is to reveal the logistical component of sustainable
development of regions in the context of decentralization reform in Ukraine.
As
a main method of research, we use the critical analysis and comparison of
analytical reports, the report of the World Bank for the Logistics Performance
Index for the following years 2007-2018 and The Global Competitiveness Report
2019, region development strategies and scientific publications on the issues
of sustainable social and economic development of regions in the context of
decentralization and also conception of logistic.
For
the purpose of achieving the set goals, the following general scientific and
specialized methods are used:
· theoretical
generalization, comparison and systematization - to study the essence and
features of logistics activity in united territorial communities;
· system analysis –
for determining the state and level of development of the logistics system of
Ukraine and the consequences of decentralization processes in Ukraine;
· abstract and
logical – for theoretical summarization and conclusion;
· graphical method –
for visualization dynamics of the Logistics Performance Index (LPI) of Ukraine
and others country and for visualization the system of logistic management of
the territorial community as an integral multicomponent structure.
4.
RESULTS AND DISCUSSIONS
The
process of European integration of Ukraine necessitates the reform of various
sectors and relies on existing economic, social and political factors. The
current situation in the economic and social development of Ukraine shows that
without decentralization of functions in economic development it is impossible
to ensure coordination and establishment of relations of administrative and
territorial interests with national ones.
Reforming
the administrative and territorial system in Ukraine began in 2014. The new
administrative and territorial system should be the basis for building a new
model of territorial governance based on decentralization, subsidiarity,
balance of national interests with the interests of the population of regions
and territorial communities, local government, ubiquitous local government
capacity and independence of territorial communities to address issues of local
importance (PAVLYUK et al., 2016).
The process of
decentralization began in Ukraine with the adoption of the “Concept of reform
of local self-government and territorial organization of power” (2014), Laws
“On cooperation of territorial communities” (2014), “On voluntary association
of territorial communities” (2015) and changes to the Budget and Tax codes on
financial decentralization. This process has allowed forming a significant
effective and capable institution of local self-government at the basic level –
united territorial communities, according to the provisions of the European
Charter of local self - government.
In 2014 at the time of
the concept approval of local self-government reformation and territorial power
organization in Ukraine “Concepts of reforming local self-government and territorial
organization of power in Ukraine” № 333-р (2014) (LAW OF UKRAINE N333-p, 2014) the existing
problems of local governance have accumulated enough. In Ukraine, until 2014,
about 12 thousand territorial communities have been formed, in more than 6
thousand communities the number of residents was less than 3 thousand people,
among them in 4809 communities – less than 1 thousand people, and in 1129
communities – less than 500 people. The most of the local budgets were
subsidized: 5419 budgets of local governments were subsidized; it is over 70%,
483 territorial communities were contained for 90 % at the expense of the state
budget (Concepts
of reforming local self-government and territorial organization of power in
Ukraine, 2014).
As a result of the reform, new
administrative and territorial units are created - united territorial
communities (UTG). The process of municipal consolidation has begun - the
formation of affluent communities as a result of voluntary unification of
adjacent territorial communities, villages, settlements, cities. According to
the Methodology of Formation of Able Territorial Communities (LAW OF UKRAINE
N214, 2015), able-bodied territorial communities are territorial communities of
villages (settlements, cities), which as a result of voluntary association are
able to provide an appropriate level of service provision independently or
through relevant local governments, in particular in the field of education,
culture, health care, social protection, housing and communal services, taking
into account human resources, financial support and infrastructure development
of the relevant administrative and territorial unit. That is to ensure
sustainable strategic development of your region.
The formation of UTCs (united of
territory communities) in Ukraine is rapid compared to similar reforms in other
European countries. In 2015, the first 159 UTCs are created, the following year
their number increased to 366, by the end of 2017 - to 665, by the end of 2018
- to 874, in 2019 there are already 1029 UTCs with a population of 11.7 million
people, in which united 4698 communities. At the same time, the population
living on the territory of the united territorial communities is 11.7 million
people, which is 33.3% of the total population in Ukraine.
Own revenues of local
budgets has increased from 68,6 billion UAH in 2014 to 267,0 billion UAH in
2019.
The
main idea of decentralization is to transfer to local governments the
competence to address issues related to local needs, increase the efficiency of
local governments by giving them the appropriate authority to effectively
manage financial resources and identify priority expenditures that need
funding.
European and world experience shows
that local problems can be effectively solved only at the local level. All
post-socialist countries in Central and Eastern Europe have undergone the path
of decentralization, which in turn has given them a huge impetus for their
development. Local interests can be much better assessed on the ground than by
the central government, which satisfies the latter at a higher price than when
provided by the local government (GUZIEJEWSKA, 2018; Opiłowska, 2019).
The main purpose of the
changes that are now taking place in most Ukrainian communities is to create
conditions for effective development. This also will provide high-quality and
affordable services, comfortable conditions for people to live in each
community – regardless of whether it is a big city or a small village.
Communities are not only united to gain more power and resources, they are
consolidating their efforts to become stronger, to have resources and to be
able to independently solve most of the issues that concern their residents. At the same time, the
communities should also increase their level of responsibility to the business:
the investor should not doubt that his funds can be used for other purposes (Pochtovyuk et al., 2019; Glonti et al., 2020).
In
today's conditions of rapid development of the world economy, population growth
and uncontrolled exploitation of natural resources, there is an understanding
of the importance of balanced regional development. Thus, the EUROPE 2020
strategy, among the main priorities, emphasizes balanced development in the
form of supporting a more efficient, cleaner and more competitive economy.
And
it is decentralization that is a powerful tool for ensuring the balanced
development of territorial communities. According to KASYCH (2016), compliance
with a number of conditions triggers a mechanism to influence decentralization
on the country's economic development by redistributing state budget revenues
in favour of regions, developing local infrastructure, ensuring the efficiency
of public goods production, increasing investment attractiveness and business
development in the region.
Decentralization
should be seen as a powerful tool of public policy to ensure the balanced
development of local communities. Strengthening the independence of local
authorities should motivate the effective and rational use of existing capacity
or management decisions to find alternatives and additional opportunities to
increase the competitiveness of communities to achieve the appropriate level of
service to local residents, improve social living conditions, create a full
living environment, stimulate and intensify economic activity, ensure
sustainable development of the region.
It
should be borne in mind that the greatest effect will be obtained in the long
run. BODMAN et al. (2009) note that fiscal decentralization has little effect
on economic growth in the short run. In analysing growth in the medium term,
the results have been mixed, as fiscal decentralization may tend to increase
income inequality and slow economic growth. However, in the long run,
decentralization results in accelerated economic growth.
Today, the definition of the region
as an economic unit has changed. Experts from the Organization for Economic
Cooperation and Development focus on defining a functional region that is not
only a geographical area with certain administrative boundaries. But also they
focus on a labour market with daily flows of workers and an area with strong
social and economic, cultural and environmental ties. (OECD, 2013).
Currently, there are
multidimensional changes in the functioning of the regions, namely: increasing
the social responsibility of residents and businesses; globalization of
interregional competition; strengthening migration processes; growth of capital
mobility; development of specialized credit institutions (KOZACHENKO et al.,
2020); digitalization of all spheres of life in the region. There are also
paradigm shifts in the management of the region, the main determinants of which
are: goal orientation based on task ideas, participatory leadership,
multicultural human resources, flexible structures, heterogeneous and network
organization, comprehensive vision (HOVRAK, 2019).
In turn, the development of
logistics plays an important role in ensuring the balanced development of
regions and territorial communities. Given the possibilities of using the
available potential, the logistics approach is important in choosing the
economic guidelines for the development of regions and UTCs. The implementation
of logistics activities contributes to the strengthening of the region's
economy, ensures its balanced development and the fullest satisfaction of
consumer needs. Logistics activities in the region are able to solve such
strategic tasks as creating conditions for gaining competitive advantages and
forming the appropriate level of logistics potential.
TKACHOVA and ZAHORNA (2012) define
logistics activity as “the direction of economic activity, which is the
management of material and related information, financial and service flows of
the enterprise, carried out by consistent and mutually agreed implementation of
logistics operations (logistics, warehousing of resources and products,
organization of production process, management stocks, customer service,
transportation, distribution and marketing) based on the principles of system,
complexity, integration of all parts of the logistics chain “supply -
production – sales” in order to achieve long-term business success by
maximizing customer satisfaction and minimizing costs in conditions of risks,
variability and uncertainty of the external environment”.
The development of the logistics
market of any country, including Ukraine, depends on the state of its economy.
Its operators ensure the interaction of participants in economic relations,
link production chains allow goods to find their customers. The volume of
services provided in the field of logistics directly depends on the level of
activity of their customers, the dynamics of production, domestic and foreign
trade.
In modern conditions, logistics
plays a key, often decisive role in the development of countries. The main goal
of logistics development in the national economy is to increase the transit
potential and reduce logistics costs in the final cost of production. Countries
that understand this pay considerable attention to the development of logistics
and the improvement of its infrastructure.
A method is used to effectively
assess the development of logistics that allows to assess the current state of
the logistics industry in the world. To measure the efficiency of logistics
countries, the World Bank and the Turku Institute of Economics in Finland in
2007 proposed a national logistics performance index (LPI), which became the
first comprehensive indicator to assess the level of logistics development in
different countries (CONNECTING TO COMPETE 2007: TRADE LOGISTICS IN THE GLOBAL
ECONOMY, 2007).
We
use the Logistics Performance Index (LPI) developed by World Bank (in order to
objectively assess logistic system in Ukraine and compare it to logistic
systems of other countries (Fig.1). The Logistics Performance Index is an
interactive benchmarking tool created to help countries identify the challenges
and opportunities they face in their performance on trade logistics and what
they can do to improve their performance.
Figure 1: Dynamics the Logistics Performance Index (LPI) of some of the worlds
in 2007-2018
Source: According to the data: The World Bank International LPI Data, available
at: https://lpi.worldbank.org (2020).
The LPI is determined on the basis
of a standardized questionnaire, for an online survey on the Internet, and uses
the analysis of the main components to compile data into a single index. The
study is based on the results of surveys of mainly international
(transnational) logistics companies, while not taking into account the views of
service consumers and the characteristics of individual countries, such as
access to the sea, the area of the country, etc. In addition, in
many countries, official statistics on the market for logistics services at the
national level are very limited, mainly based on expert opinions. LPI values
range from 1 to 5, with 1 indicating lower logistics performance
and 5 indicating higher logistics performance.
Construction of LPI following
indicators were used, the efficiency of customs and border clearance, the
quality of trade and transport infrastructure, the ease of arranging
competitively priced shipment, the competence and quality of logistics
services, the ability to track and trace consignment, the frequency with which
shipments reach consignees within scheduled or expected delivery time.
The country's ability
to trade with other countries depends on access to the global logistics network
and freight. The efficiency of supply chains (cost, time and reliability)
depends on the individual characteristics of the country's economy and the
construction of the logistics system. The LPI assumes that customs reforms,
better border management and infrastructure improvements have a significant
impact on logistics. The World Bank sees LPI as a sensory indicator of trade
growth.
Although LPI is the most complete
source of data for logistics and trade facilitation in the country, it has two
important limitations. First, the experience of international freight
forwarders may not reflect the broader logistics environment in poor countries,
which often rely on traditional operators. International and traditional
operators may differ in their interaction with government agencies and in the
level of service. Second, for landlocked and small island states, the LPI may
reflect out-of-country access problems that have been assessed, such as transit
difficulties. The low rating of a landlocked country may not adequately reflect
its trade facilitation efforts, which depend on the operation of complex
international transit systems. Landlocked countries cannot eliminate transit
inefficiencies through domestic reforms.
160 countries of the world took part
in the evaluation of the logistics efficiency index in 2018. The constant
leader of the rating (position №1 in 2010, 2014, 2016 and 2018) is
Germany (Figure 1). It should be noted that the top ten leaders do not change
significantly. Austria, Japan, the Netherlands, Singapore and the United
Kingdom have the most developed logistics systems.
The countries that topped the LPI
rankings are the main European transport logistics centres. They benefit from
the creation and implementation of innovative technologies, as well as
economies of scale. The country with the lowest rating is usually
geographically isolated or suffers from poor governance. There is also a
difference between countries with the same level of income. A country where
trade is a significant growth factor has higher logistics productivity than a
country with a similar level of income. An oil-exporting country often has a
low LPI, while a country with an export and oriented industry has a stronger
logistics sector.
According
to LPI Ukraine is placed 66th out of 160 countries that got in World
Bank’s rating. The world’s leading economies are found atop suggesting that
there’s a high correlation between country’s logistic performance and economic
success. Ukraine was placed 73rd in 2007, 102thin 2010, 66thin
2012, 61thin 2014, 80thin 2016 and 66thin
2018.
The decrease of LPI after 2014 can
be attributed to worsening of political and economic situation in the country. Macroeconomic situation
in Ukraine was unstable throughout the last from 2010 till 2018; in fact,
Ukraine has turned to the level of efficiency of logistics in 2012.
Dynamics the Logistics Performance Index in Ukraine
during 2007-2018 are presented in Table 1.
Table 1: Dynamics
the Logistics
Performance Index in Ukraine (2007-2018)
|
Year |
LPI rank |
LPI score |
Customs |
Infrastructure |
International
shipments |
Logistics
quality and competence |
Tracking
and tracing |
Timeliness |
|
2007 |
73 |
2.55 |
2.22 |
2.35 |
2.53 |
2.41 |
2.53 |
3.31 |
|
2010 |
102 |
2.57 |
2.02 |
2.44 |
2.79 |
2.59 |
2.49 |
3.06 |
|
2012 |
66 |
2.85 |
2.41 |
2.69 |
2.72 |
2.85 |
3.15 |
3.31 |
|
2014 |
61 |
2.98 |
2.69 |
2.65 |
2.95 |
2.84 |
3.20 |
3.51 |
|
2016 |
80 |
2.74 |
2.30 |
2.49 |
2.59 |
2.55 |
2.96 |
3.51 |
|
2018 |
66 |
2.83 |
2.49 |
2.22 |
2.83 |
2.84 |
3.11 |
3.42 |
Source: Official site of
the World Bank Group (2020), available at: http://www.worldbank.org/
Analysing
the integrated LPI index by components, we note that the situation is not
always clear, so in 2018 Ukraine took 66th place under the Customs
sub-index, 52nd for the Timeliness, but 119 for the International
shipments sub-index (Table 1). In 2018, there was an improvement in all
parameters, except for the parameters: “Infrastructure”, “Timeliness” (Fig.2).
Figure 2: Logistics Performance Index of Ukraine in
terms of individual indicators in
2007-2018
Source: According to the data: The World Bank International LPI Data, available
at: https://lpi.worldbank.org (2020).
This
is due to the insufficient level of technical and technological support, low
quality of the road surface, insufficient level of efficiency of the warehouse
organization.
World Bank analysts, when comparing
differences in logistics between different countries, regions and income
groups, and discussing different logistics strategies for different groups in
the world, note that low-income countries focus mainly on logistics
infrastructure and transport simplification, while middle-income countries
intend to improve logistics competencies and services, as well as trade rules.
On the other hand, high-income countries pay more attention to green logistics
and information systems. This means that richer regions have more opportunities
to promote the sustainable development of green logistics.
Thus, Ukraine is significantly
inferior in the development of logistics to the countries presented in Figure
1. Confirmation of this can be seen in The Global Competitiveness Report 2019
(2019), presented at the World Economic Forum. According to the general
indicator of transport infrastructure development, Ukraine ranks 59th
among 141 countries, according to the Road connectivity indicator 59th
place out of 141, according to the Quality of road infrastructure indicator -
114th place out of 141, according to the Railroad density indicator
- 25th place out of 141, according to the indicator “Efficiency of
train services” - 34th place out of 141, according to the indicator
“Airport connectivity” - 53rd place out of 141, according to the
indicator “Efficiency of air transport services” - 101 place out of 141,
according to the indicator “Liner shipping connectivity” - 57th
place out of 141, according to the indicator “Efficiency of seaport services” -
78th place among 141 countries.
This,
in turn, is due to a number of problems, including:
· insufficiency of transport and
logistics and hub logistics centers: lack of coordination in the management of
material flows and in the distribution of stocks, lack of additional services;
· lack of proper transport
infrastructure: low quality of roads, insufficient number of them, significant
physical and moral wear and tear of transport, which complicates the reduction
of delivery time from producer to consumer;
· inefficient use of fixed assets:
increased costs for transportation and storage due to downtime, under loading
of equipment and irrational use of working space;
· weak level of development of
enterprises producing packaging and containers;
· lack of relationships between
enterprises and logistics companies: difficulties with tracking logistics
chains and the process of transportation of goods;
· unsatisfactory level of
communication system: difficulties in the process of tracking goods on the
road;
·
shortage
of highly qualified specialists;
·
weak
level of effective mechanism of partnership relations between firms and
enterprises.
Thus, our country, despite the
significant potential for the development of the logistics industry, continues
to lag behind and shows deterioration in the LPI index. Experts recommend
implementing a set of measures both in the field of improving the logistics
infrastructure and finding new approaches to management to improve the
situation in Ukraine, and in the field of automation of logistics processes
(HRYNCHAK, 2020).
TYURINA et al. (2015) summarizing the views of leading
experts, identified the following trends in the international market of
logistics services:
· strengthening the position of
enterprises with developed logistics networks;
· intensification of logistics
outsourcing development;
· growth of regionalization of
logistics networks;
· reduction of the logistics chain and
optimization of logistics costs;
· reduction of product life cycle and
the emergence of approaches to distribution;
· growing role of innovation in
logistics business processes;
· increase in transport costs due to
rising fuel prices, tariffs, increasing the frequency of transportation.
The potential of logistics at the
regional level will help to properly form strategic guidelines for development,
namely, to identify opportunities for logistics activities.
The logistics activities of the
region should be understood as the activities of economic entities related to
the planning, organization, management and control of the entire set of
material flows and relevant information in the process of their physical
movement within the logistics field of the region through consistent and
consistent in time and space performing appropriate logistical actions (KASYCH;
ONYSHCHENKO, 2019).
Today,
the concept of logistics is a scientific basis for innovative change in
management practices in such key areas of integrated territorial communities as
nature management in production systems, management of secondary resources and
waste, formation and development of life support systems in the community.
Therefore,
the flow of various resources owned by the united territorial community (land,
people, capital, entrepreneurial skills, information) within the regional
social and ecological and economic systems are the object of logistics
research, because the community is a kind of basis, which is human environment,
the basis of management, a means of consolidating all spheres of social
production, as well as a carrier of natural resource, economic, social and
consumer potential through natural, social, demographic, social and economic
characteristics.
The effectiveness of the development
of a united territorial community is manifested in three spheres of human life:
economic, social and environmental. The interdependence and combination of
these three types of development also forms a sustainable balanced development
of the territorial community. The implementation of measures to improve
technological processes, reduce resource consumption of production,
environmental management should be carried out on an innovative basis, which is
based on a qualitatively new understanding of the content of resource use
processes, the content of resource-efficient economy.
Despite a certain lag of Ukraine
from the leading countries of the world, it is necessary to take into account
modern realities. The development of technologies of the fourth industrial
revolution has greatly influenced innovative solutions in the field of
logistics systems. Technologies that change the technical and economic
structure of many economies of the world and affect the format of logistics
systems include the following: implantable technologies; Big Data technologies;
unmanned vehicles; Artificial Intelligence; robotics and services; Blocks chain
technologies; 3D printing technology (DHL GROUP: LOGISTICS TREND RADAR, 2019);
genetic engineering; neuro-technology; smart cities and homes, widespread
introduction of ERP-systems (Enterprise Resource Planning), which have actually
become global standards and are information systems for planning and management
of all enterprise resources (TRUNINA et al., 2018).
All these trends affect the
technological changes that occur in logistics systems, which raises the
question of studying the impact of these changes on the logistics sector.
Against the background of these changes there is a question of compliance of
Ukrainian logistics with world standards, research of prospects of further
development of logistics in Ukraine and its integration into European logistics
systems, revision of requirements to logistics not only national but also
regional level.
The problem of ensuring sustainable
social and economic development of the community is in its content and
logistics, i.e. it can be presented as a problem of optimizing the flow of
resource use in space and time, which aims to balance the processes of
reproduction and consumption of resources in social, ecological and economic
system (MISHENIN; KOBLYANSKA, 2014).
The managing influence is realized
within the system of logistical management of the territorial community, which
is an integral multicomponent structure. Objects are a set of flow processes
that have technological, organizational, economic and information unity. The
purpose of logistics management is a thorough optimization of flow processes
based on the assessment and minimization of logistics costs, which is achieved
by performing tasks using management methods and tools (Figure 2).
Figure 2:
Components of the system of logistic management
of the territorial community
Source: independently developed by authors
Evaluation of the efficiency of the
logistics system is carried out using a number of quantitative and qualitative indicators,
and should include, in addition to determining total costs, an assessment of
profit losses due to irrational use of flow resources, which determines the
specificity of the logistics approach.
The
application of the logistics approach at the level of territorial communities
allows to ensure the solution of a number of key tasks of regional management:
development of the optimal strategy in the regulation of structural proportions
and material flows of social production; optimization of material and related
service, financial, information flows in the region based on the assessment and
minimization of logistics costs.
5.
CONCLUSIONS
The
practical implementation of the application of the logistics approach
necessitates the formation of a logistics system of territorial communities.
Management of flow processes of resource use at the regional level is carried
out at all stages of formation and operation of material and energy flow from
the provision of raw materials to the disposal of production and consumption
waste. Thus, the logistics system of the territorial community will include
enterprises of industrial and non-industrial spheres, infrastructure
facilities, organizations and institutions, interconnected in the
decision-making process on the directions and methods of using elements of the
resource flow. In turn, this encourages companies to be socially responsible,
to seek ways of cooperation through cooperation, consolidating their efforts
for the balanced development of their communities, to use public and private
partnership mechanisms to implement their development projects and the
development of their region.
Depending on the social and economic
conditions of a particular territorial community, there should be an
improvement of methodological tools for the analysis and optimization of flow
processes at different levels of management; development of structural and
substantive bases and components of the system of logistics management of
community development, as well as the development of practical recommendations
for their implementation, respectively.
Thus, the use of logistics tools in
regulating the processes of resource use at the level of territorial
communities allows to form an effective management approach to solving problems
of ensuring sustainable balanced development of the territorial community, and
hence timely appropriate quality in the required amount, provided that the
appropriate level of quality of environmental components, the disclosure and
use of existing natural resource, economic, social and consumer potential of
the region.
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