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Connecting logistics performance to export: A scenario-based approach

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DOI: 10.1016/j.retrec.2018.05.007

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 Research in Transportation Economics xxx (xxxx) xxx–xxx

Contents lists available at ScienceDirect

Research in Transportation Economics

journal homepage: www.elsevier.com/locate/retrec

Connecting logistics performance to export: A scenario-based approach

Özgür Kabaka, Füsun Ülenginb,∗, Şule Önsel Ekicic
a
Istanbul Technical University, Department of Industrial Engineering, Maçka 34356, Istanbul, Turkey
b
Sabanci University, Sabanci School of Management, Istanbul, Turkey
c
Doğus University, Department of Industrial Engineering, Istanbul, Turkey

A R T I C LE I N FO A B S T R A C T

Keywords: We propose a novel scenario analysis-based approach to investigate the relationship between logistics perfor-
Logistics performance mance and exports at a country level. Different from the existing scenario analysis methods that contain sub-
Scenario analysis jectivity in measuring consistency, the proposed approach uses objective information rather than expert opi-
ExportJEL classification: nions. We propose a binary integer program to select significantly different, consistent and small number of
R42
efficient scenarios. On the basis of the selected scenarios, we develop a new approach for evaluating the per-
C61
formance of strategies across a series of scenarios.
C65
F10 Furthermore, the proposed approach is used to analyse the relationships between exports and the six in-
dicators of the logistics performance index (LPI): customs, infrastructure, international shipments, logistics
quality and competence, tracking and tracing, and timeliness. With the help of these case studies, conducted for
Turkey and four other selected countries, namely Burundi, Zimbabwe, Brazil and Portugal, the proposed method
is proved to be generally applicable.

1. Introduction
Development of public policies for logistics that covers freight
transportation, border clearance, warehousing, payment systems and
many other functions is an important area for national governments to
support regional and international organisations (Arvis, Mustra, Ojala,
Stepherd, & Saslavsky, 2012). For a country, it is necessary to under-
stand its logistics performance to better evaluate and target trade and
transport facilitation policy efforts over time and across countries. A
competitive advantage in terms of logistics performance can lead a
country to increase its international trade potential and help to reach
new markets and encourage business. The policymakers of a country
can also benefit from a country-based logistics performance evaluation
by understanding the relative position of their country. A guide can be
developed to decide which specific logistics function to focus on.
Although the logistics functions are mostly performed by private
service providers for private traders and owners of goods, if country-
based improvements can be realized, companies with access to high-
quality and cost-efficient logistical capabilities can perform better. For
instance, high-quality roads and certain customs clearance will de-
crease delivery time and its variance. The development of the logistics
sector is expected to have a positive impact on increasing production,
consumption and trade, thus stimulating the economic growth.
(Barnister & Berechman, 2001; Berechman, Ozmen, & Ozbay, 2006;
Gunasekera, Anderson, & Lakshmanan, 2008; Lean, Huang, & Hong,
2014).
Infrastructure has a very close relationship with economic devel-
opment and international trade. The improvement of the logistics in-
frastructure will reduce the travel time, and the resulting time savings
will facilitate producers’ access to distant markets and the drawing of
inputs from distant markets. Fedderke and Garlic (2008) show a posi-
tive relationship between infrastructure and economic development in
South Africa. Bensassi, Márquez-Ramos, Martínez-Zarzoso, and Suárez-
Burguet (2015) analysed the relationship between logistics infra-
structure and trade. According to the evidence from Spanish regional
exports, they find the importance of logistics for the analysis of trade
flows. Liu, Li, and Huang (2006) find a unidirectional causality from
logistics to economic growth. Carruthers, Bajpai, and Hummels (2003)
highlight that the economic growth of many countries, such as Singa-
pore and Hong Kong, has been partly due to their transport invest-
ments. Chen and Novy (2011) underline that the modern logistics in-
dustry plays an important role in national economic development.
These researchers use econometric methods to establish the relation-
ship between logistics and gross domestic product (GDP). Demurger
(2001) provides empirical evidence of the links between infrastructure
investment and economic growth in China. Esfahani and Ramirez
(2003) develop a structural growth model of infrastructure and output
growth. Their model indicates that infrastructure services greatly

∗
Corresponding author.
E-mail addresses: kabak@itu.edu.tr (Ö. Kabak), fulengin@sabanciuniv.edu (F. Ülengin), sonsel@dogus.edu.tr (Ş. Önsel Ekici).

https://doi.org/10.1016/j.retrec.2018.05.007
Received 5 January 2018; Received in revised form 22 May 2018; Accepted 22 May 2018
0739-8859/ © 2018 Elsevier Ltd. All rights reserved.

Please cite this article as: Kabak, Ö., Research in Transportation Economics (2018), https://doi.org/10.1016/j.retrec.2018.05.007
Ö. Kabak et al.
contribute to GDP and that this contribution more than offsets its cost.
Fan and Chan-Kang (2008) use an econometric model to estimate the
impact of road investments on overall economic growth.
As the literature shows, the impact of logistics on growth and in-
ternational trade is generally analysed from the transport infrastructure
perspective. However, logistics should be investigated from a wider
spectrum. Indeed, the logistics performance index (LPI) is a very com-
monly used index for evaluating the logistics performance of 155
countries based on six areas: customs, infrastructure, international
shipments, logistics quality and competence, tracking and tracing, and
timeliness (Arvis et al., 2012; Rantasila & Ojala, 2012). The World Bank
and the Turku School of Economics have administered the index every
two years since 2007, rating countries based on a scale of 1 (worst) to 5
(best) (Arvis et al., 2012). Therefore, one of the significant contribu-
tions of this study is to analyse logistics performance based on this
wider perspective.
Although deterministic forecasting models are widely used to ob-
serve the impact of logistics on the improvement of trade or economic
development, the basic drawbacks of such models are that they typi-
cally provide a single prediction and that they do not include qualita-
tive systemic change (Tietje, 2005). Indeed, particularly for long-term
planning, backcasting, scenario analysis and foresight techniques are
accepted as suitable for providing information to logistics and trans-
portation decision makers in highly uncertain future conditions
(Schuckmann, Gnatzay, Darkow, & Heiko, 2012).
Backcasting is an approach for exploring long-term scenarios to
reach a desirable future. It first creates a desirable future vision and
then looks back at how this desirable future can be achieved (Quist &
Vergragt, 2006). It provides an approach that is the opposite of fore-
casting, which aims to predict the future based on current conditions.
However, because of the high variability in the set of identified back-
casts, no specific policy recommendation can be made, and the inter-
relationships among the variables cannot be easily observed. Moreover,
as underlined by Wangel (2011), few backcasting studies include the
actors or governance.
Foresight, on the other hand, is an important part of participatory
strategy process helping organisations to make effective long-term
planning under uncertainty. However, the basic drawback of foresight
processes is that they do not take into account certain complication
factors, such as non-linearities and thresholds, in their attempts to
project the future. Scenario analysis, on the other hand, is a well-re-
cognized method in the planning process (Önsel Sahin, Ülengin, &
Ülengin, 2004). Scenarios encourage participants to think through the
consequences of decisions and actions especially when dealing with
the macro environment. Scenario analysis focuses the attention of the
decision makers on a set of different descriptions of the future, which
are explicitly designed to be feasible but are not necessarily the most
likely.
In this study, a new scenario analysis approach is proposed. An
efficient scenario analysis should be composed of a small number of
significantly different, reliable and efficient scenarios (Tietje, 2005).
However, in general, scenario analysis is highly subjective in nature.
Because scenarios are generated based on expert opinions, the basic
motivation of this study is to use objective information rather than
subjective expert judgments during the scenario generation process.
Additionally, a mathematical program is proposed to select sig-
nificantly different, consistent and small number of efficient scenarios.
Finally, on the basis of the selected scenarios, this research proposes a
new approach that is developed to evaluate the performance of stra-
tegies across a series of scenarios. Two measures are suggested to
identify the most important variables to focus on for a given state (i.e.
scenario). As opposed to a correlation analysis where only the sum of
the independent variables is regarded, the proposed approach con-
siders different combination effects of the variables and hence uses
information that is disregarded in traditional linear correlation
approaches.
2
Research in Transportation Economics xxx (xxxx) xxx–xxx
The proposed methodology is applied to analyse the interaction
between logistics and export at a country level. LPI indicators and
export levels of countries are used to select and evaluate scenarios.
Furthermore, Turkey is selected as an example to analyse the impact
of the logistics indicators on international trade by using the proposed
scenario analysis approach. One of the basic reasons for selecting
Turkey specifically is that Turkey, an important logistics centre in
Europe that exhibits high trade values with its regional partners, has a
large population, diversified economy and strategic geographical lo-
cation. It is considered as a critical actor in the trade between Europe,
the Commonwealth of Independent States (CIS) and the Middle East
(ITF, 2015). Subsequently, we have also applied the proposed scenario
approach to selected four countries, namely Burundi, Zimbabwe,
Brazil and Portugal, each having a different export level, to analyse
their logistics performance in relation to international trade. Ac-
cording to the classification of countries that is explained in Section
3.1. (See Table 2), Burundi is an example of countries that have very
low export level. Similarly, Zimbabwe, Brazil and Portugal are ex-
amples of countries that have low, medium and high export levels,
respectively. Policy suggestions are developed for these countries to
underline which logistics indicators should be focused on to improve
their export level.
The main contributions of this study are twofold. Initially, we pro-
pose a new scenario analysis methodology that uses objective in-
formation rather than expert opinions. Subsequently, we apply this
methodology to investigate the interaction between logistics perfor-
mance and export as well as to develop policy suggestions for the se-
lected countries.
The relative advantages of our proposed method can be listed as
below:
• Different from the current literature, our method analyses the in-
teraction between logistics performance and economic development
from a wider spectrum. It does not focus on just one perspective at a
time (like transport infrastructure) but investigates the logistics
performance depending on six different components of LPI.
• In the literature, the interaction between logistics performance and
economic development is generally investigated with deterministic
models that use past data. However, future can be totally different
from the past, making all the models depending on past data useless
in the effort to create road maps for the future. Hence, our proposed
method uses scenario analysis to deal with uncertainty about the
future.
• Scenario analysis methods mostly depend on subjective expert jud-
gement that makes them hard to create and analyse. Our method
proposes to use objective information (LPI data and export levels) to
constitute a sufficient number of plausible and consistent but still
different scenarios.
• Although there are a number of quantitative scenario analysis
methods such as Cross-Impact Analysis or Trend Impact Analysis,
they combine historical trends with expert judgments by using some
analytical methods. However, using historical data makes these
methods similar to deterministic models. Our model also uses past
data about the countries. But, the rationale of using these data is not
to make projections about future but only to generate a set of sce-
narios.
Section 2 underlines the framework of the proposed methodology,
and section 3 presents the results of the application of the proposed
methodology and provides examples from five selected countries with
each having a different level of export, namely Turkey, Burundi, Zim-
babwe, Brazil and Portugal. The interpretations of the results are given
to highlight the key areas of logistics that should be improved in the
first run in each selected country to obtain the highest increase in their
export level. Finally, conclusions and suggestions are presented in
section 4.
Ö. Kabak et al.
2. Framework of the proposed methodology
The proposed methodology aims to analyse the interactions be-
tween the variables in a system for strategic planning by using a sce-
nario analysis-based approach. In this section, we first state the reason
behind the use of scenario analysis and then present our new approach
for scenario analysis.
2.1. Why use scenario analysis?
Scenario analysis provides an important tool in the strategic plan-
ning process. Scenarios are not forecasts, but they give an internally
consistent view of what the future may be. Scenario analysis has
emerged as a useful tool for long-term planning when the future is
perceived as being subject to a high degree of uncertainty and com-
plexity (Nguyen & Dunn, 2009; Tietje, 2005).
Scenario analysis technique is a well-known tool for strategic
planning where uncertain situations for complex systems have to be
analysed. Both qualitative and quantitative approaches are used in
different areas analysed in the literature ranging from simplistic to
complex (Amer, Daim, & Jetter, 2013). The most popular three quan-
titative scenario development methodologies used in the literature are
Interactive Cross-Impact Simulation, Interactive Future Simulations and
Trend Impact Analysis methodologies. Interactive Cross-Impact Simu-
lation methodology was developed by Enzer at the Centre for Futures
Research, University of Southern California, and explores alternative
futures as part of an iterative procedure (Bradfield, Wright, Burt,
Cairns, & Van Der Heijden, 2005). Interactive Future Simulations
technique was developed by the Battelle Memorial Institute in the
1970s. Different from Interactive Cross-Impact Simulation, it does not
use Monte Carlo simulation and does not require an independent
forecast of the key indicators or variables (Huss & Honton, 1987). As
the third well-known quantitative scenario analysis method, the Trend
Impact Analysis has been used since the 1970s (Chermack, Lynham, &
Ruona, 2001). It is a combination of statistical extrapolations with
probabilities and combines historical trends with judgment about the
probabilities and impacts of selected future events. However, all of
them combine historical trends with expert judgments by using some
analytical methods. Fuzzy cognitive maps, which is another popular
scenario development approach combines qualitative storylines with
quantitative models. It can be concluded that, although there are many
quantitative scenario analysis methodologies in the literature, most of
them are based on the combination of qualitative and quantitative
techniques in which subjectivity (expert judgement) has a great role.
For example, Walz et al. (2007) used a participatory scenario analysis
technique for regional planning including landscape and economic
changes, climate change and changes in the region's popularity where
scenarios were defined based on qualitative local knowledge.
Bryan, Crossman, King, and Meyer (2011) have introduced a
‘landscape futures analysis’ method which combines linear program-
ming optimisation with scenario analysis in order to quantify the en-
vironmental, economic and social impacts to identify specific geo-
graphic locations in the landscape for six natural resource management
actions. They developed scenarios with the participation of the stake-
holders and used a linear programming-based approach to develop
landscape futures integrating a variety of detailed spatial information
and models to see the results of several policies under the developed
scenarios. However, the scenario development process is subjective,
that is, based on expert opinions.
There is also a wide use of scenario analysis in transportation and
logistics. In order to provide policy-relevant advice on the consequences
of human-induced climate change in the twenty-first century, the
Intergovernmental Panel on Climate Change (IPCC) developed a series
of scenarios of greenhouse gases and sulphate aerosol emissions up to
the year 2100. The IPCC report accepts that future emissions are the
product of complex interacting systems driven by population change,
3
Research in Transportation Economics xxx (xxxx) xxx–xxx
socio-economic development and technological change (Pittock, 2009).
Cuenot, Fulton, and Staub (2012) have used the International En-
ergy Agency (IEA)'s set of travel projections to 2050 (IEA, 2008), in-
cluding a Baseline and ‘Modal Shift’ scenario, in order to estimate the
potential impact of reducing car and air travel by 2050, relative to the
Baseline in that year. The BLUE scenarios of the IEA aim to reduce
greenhouse gas emissions in the energy sector by reducing individual
motorized modes of transportation and aircraft use. Cuenot et al.
(2012) added the capability to estimate energy use and greenhouse gas
emissions from modal shifting at the national/regional and global level.
However, as they also mention, their study requires a more detailed
policy-oriented analysis at the national/global level. Their study also
fails to provide a broader review of the problem taking into account
socio-economic, demographic and technological variables with a
system approach.
Ülengin, Kabak, Önsel, Ülengin, and Aktaş (2010) discuss a decision
support framework that guides policymakers for analysing the effects of
transportation policies on the environment, society, economy and en-
ergy. A three-stage problem structuring model is developed for this
purpose. Initially, experts' opinions are structured by using a cognitive
map to determine the relationships between transportation and en-
vironmental concepts. Then a structural equation model (SEM) is con-
structed, based on the cognitive map, to quantify the relations among
external transportation and environmental factors. Finally, the results
of the SEM model are used to evaluate the consequences of possible
policies by using scenario analysis.
In fact, logistics and export is a very complex issue having different
stakeholders, interacting with government objectives, institutions and
socio-economic objectives as well as technological objectives.
Therefore, it is not possible to obtain reliable forecasting for such a
complex system. Hence, scenario analysis is selected as a suitable
method of projection for this study.
There are several critics that question the predictive power (Wright,
Cairns, & Goodwin, 2009), credibility, consistency and legitimacy of
scenario planning (Duckett et al., 2017). In fact, the internal con-
sistency of the scenarios, which refers to the way in which levels of
factors in the scenario hold together depending on their plausibility, is
of primary importance. Indeed, long-term planning necessitates an
understanding of multidisciplinary connections among several factors,
such as demographic, technological, economic and political develop-
ments. However, the human mind is limited in mentally processing
these interdependencies (Weimer-Jehle, 2006). Therefore, different
scenario generation techniques are developed that consist of phases of
problem analysis, system analysis and synthesis. Problem analysis helps
the related experts and stakeholders to have a common understanding
of the problem at hand. System analysis defines the problem as a set of
interrelated subsystems, identifying the relevant external influences on
the investigated problem. Brainstorming, brain-writing, the Delphi
technique etc. can be used for these two phases. Finally, the process of
synthesis is used to examine the interdependencies among the influ-
encing factors and to develop scenarios. For this last stage, two different
groups of methods are generally proposed: Non-Bayesian methods (e.g.
Morphological Analysis, Battelle Approach and Field Anomaly Relaxa-
tion) and Bayesian Methods (e.g. Cross-Impact Analysis and Goal Pro-
gramming) (for a detailed overview of these techniques, see Nguyen
and Dunn (2009), Bishop, Hines, and Collins (2007), and Amer et al.
(2013)).
Developing a small number of scenarios that represent possible
states of a system is another appealing alternative. Scenario analysis
provides an important tool in the strategic planning process. A scenario
is a plausible description of some future state with no statement of
probability. Scenarios are alternative pictures of how the future may
develop. They are used to highlight the consequences and thus provide
a basis for policies that may influence future developments or help
governments to address future issues. Projections are sets of future
conditions based on different scenarios.
Ö. Kabak et al.
A scenario selection method that yields consistent scenarios and that
supports the quality of scenario analysis is desirable. Indeed, incon-
sistent scenarios do not draw a realistic image of the future. Therefore,
scenario selection should take into consideration the following rules
(Tietje, 2005):
Significantly different scenarios: The decision maker is interested in a
set of principally possible cases, and small differences between sce-
narios are not very relevant.
A small number of scenarios: The main reason for having a small
number of scenarios is that decision makers can hardly compare nu-
merous qualitatively different scenarios and a large number of scenarios
may indicate a large redundancy.
A reliable set of scenarios: Different scenario analysts should arrive at
the same results when they use different scenarios based on the same
scenario selection procedure.
Efficient scenarios: These are the most consistent scenarios within a
group of similar scenarios because they are the most relevant re-
presentatives (note that a consistent scenario is not necessarily effi-
cient).
In this research, taking into consideration the aforementioned rules,
a new approach is proposed for scenario selection.
2.2. Proposed scenario selection procedure
A scenario describes a possible future state of a system through
impact variables. In order to generate a number of scenarios, for each of
the n impact variables yi, i = 1, …,n, possible different levels are de-
fined, and the combinatorial number of scenarios is constructed by
taking the product of all of the different levels. Linguistic terms can be
used to define the levels of variables.
As proposed by Tietje (2005), the most important characteristic of
an efficient scenario analysis is to work with a small set of consistent
and different scenarios that are reliable and efficient. For this reason, it
is necessary to define the consistency and the neighbourhood of sce-
narios prior to proposing a mathematical program to select the sce-
narios. The selected scenarios are evaluated to identify the important
variables to focus on. Fig. 1 shows the main steps of the proposed
methodology.
2.2.1. Consistency
The key issue in projecting the future on the basis of a scenario is the
consistency of the scenario (Pittock, 2009). The consistency of a sce-
nario refers to the compatibility of combined variations of various
impact factors and is estimated by assessing the consistency of the le-
vels of all pairs of impact factors (Tietje, 2005). The consistency ana-
lysis is the core part of a formative scenario analysis because incon-
sistent scenarios do not draw any realistic image of the future. A
scenario is taken as a set of system variables, each of which is allowed
to take only a small number of different levels. However, the resulting
combinatorial set of scenarios may be very large. Therefore, a scenario
selection method that yields a consistent, reliable, different and small
Fig. 1. Main steps of the proposed methodology.
4
Research in Transportation Economics xxx (xxxx) xxx–xxx
number of scenarios is generally desirable (Tietje, 2005).
In the literature, the consistency is based on a specific scale, namely
the consistency indicator. However, the consistency rating of all pairs of
impact variables is performed by the experts. Subsequently, these rat-
ings, which are summarised in the consistency matrix, are formed, and
different indicators, such as overall consistency, multiplicative con-
sistency, the number of inconsistencies and the minimum consistency
level of a scenario, can be calculated (for the calculation details and
characteristics of these indicators, see Tietje, 2005).
In this research, instead of relying on experts, the consistency of a
scenario as a whole is estimated by assessing the consistency of the
levels of all pairs of variables. The frequency of the levels of variables
generated from past data is used to determine the consistency. The
consistency of the levels of a pair of variables is calculated by the fol-
lowing formula:
mj
⎛ f (yimi , yjmj ) f (yimi , yjmj ) ⎞
c (yimi , yj ) = max ⎜⎜ ; ⎟
f (yimi )
⎝ ( )
f yjmi ⎟
⎠ (1)
where i = 1, …,n are the impact variables, and m is an index for lin-
guistic terms to state the levels of the variables;
m
f (yimi , yj j ) is the number of scenarios where the level of variable i is
mi and the level of variable j is mj ; and f (yimi ) is the number of scenarios
where the level of variable i is mi .
We have provided a hypothetical example in the Appendix to il-
lustrate the proposed scenario selection procedure. Please see that ex-
ample for calculation of consistency level.
After calculating the consistencies in a pairwise manner, the con-
sistency of a scenario Sk = (y1m1 , y2m2 , …, ynmn ) is specified based on the
consistency of the levels of a pair of variables, as given in Eq. (2):
mj
C (Sk ) = min c (yimi , yj )
j = 1, … n,
i = 2, … n,
i>j (2)
In the literature, additive and multiplicative operators have been
used for similar purposes (please see examples in Tietje (2005)). The
rationale underlying our use of the minimum operator is to eliminate
those scenarios with the weakest possibility of occurrence in any pair of
variables within the scenario. Please see example of calculation in
Appendix.
2.2.2. Neighbourhood
To have significantly different and efficient scenarios, the closeness
of the scenarios must be considered. We used the neighbourhood de-
finition of scenarios based on their closeness to each other to ensure
that neighbour scenarios are not selected in the final set of scenarios.
To define the neighbourhood relation, the following general rules
are proposed:
Neighbourhood rules:
Ö. Kabak et al. Research in Transportation Economics xxx (xxxx) xxx–xxx

1) Two scenarios differ at most in the Δ variables; Max ∑k C (Sk ) xk

2) The total linguistic variable difference in all variables is at most δ; subject to
3) The linguistic variable difference in variable i is at most δi; xk + ∑l Nkl xl ≤ 1 ∀k
xk ∈ {0, 1} ∀k (4)
where Δ, δ, and δi (i = 1, …,n) are parameters determined according
to the problem under consideration. The first rule defines the neigh-
where C (Sk ) is the consistency of scenario Sk;
bourhood based on the number of different variable levels. In fact, a
Nkl is a binary parameter to indicate whether scenario k and l are
similar rule is defined in Tietje (2005) — two scenarios are a neighbour,
neighbours; and xk is a binary variable to identify whether scenario k is
if and only if the two scenarios differ only in one variable. We have
selected.
generalized this rule by defining Δ to be used for the cases of a high
The binary program in Eq. (4) is designed to select scenarios that
number of variables. For instance, if there are 10 variables, the differ-
have the basic properties of a well-organized set of scenarios, i.e. being
ence in two or three variables can be acceptable to declare two sce-
consistent, being significantly different, being efficient, having a small
narios as neighbour.
number of scenarios and having a reliable set of scenarios. The objec-
The second and third rules are based on the distance between the
tive function maximizes the total consistency of the selected scenarios
variable levels. The second rule considers the total difference in the
to ensure consistency. Significantly different and efficient scenarios are
variable levels of all variables in consideration. We decided to use this
gathered by the first constraint, in which if scenario k is selected, none
rule due to the fact that although there might be an acceptable differ-
of its neighbours can be selected. The reliability of the scenarios can be
ence in the variables according to the first rule, if the range of the
ensured by a robustness analysis after solving the model.
difference is high (for instance, very high versus very low), then it will
The proposed binary program is a kind of a set packing problem and
not be realistic to define the related scenarios as ‘neighbour’.
thus an NP-complete problem. Therefore, if the number of scenarios
The third rule considers the difference between particular variables
increases due to an increase in the number of variables or levels of
of interest. This rule can be used to give more importance to specific
variables, the solution time can increase considerably. To tackle this
variables in the system. For instance, in our application (Section 3), the
issue, it is suggested to include the scenarios which have consistency
‘export’ is the variable of interest; therefore, a special rule is dedicated
level higher than a threshold. It is noticed that even upon determining
to this variable in order to make a better discrimination among the
the threshold level as 0 (i.e. only the scenarios with non-zero con-
scenarios.
sistency are considered), the number of candidate scenarios decreases
According to the above given rules, the distance between the sce-
dramatically.
narios is calculated as follows:

⎛ n ⎧ 1 if yi (Sk ) ≠ yi (Sl ) 2.2.4. Scenario evaluation

∑ n
⎜ i=1 ⎨
⎩0 otherwise ∑ yi (Sk ) − yi (Sl )
d (Sk , Sl ) = Max ⎜ , i=1 , Despite its advantages, one element of scenario planning that has
Δ δ been underdeveloped is the evaluation of the performance of strategies
⎜
⎜ across a range of scenarios (Goodwin & Wright, 2001). As Chermack
⎝
(2004) has stated, although scenario planning has been applied in or-
⎞ ganisations for years, little or no guiding theory for implementation or
⎟
⎛ yi (Sk ) − yi (Sl ) , i = 1, …n ⎞ means for sound evaluation has been given. The absenteeism of eva-
⎜

δ
⎟
⎟ luation component from the literature of scenario planning is one of the
⎝ i ⎠⎟
⎟ most important drawbacks of scenario analysis. Once the scenarios have
⎠ (3)
been generated, they can be used in the evaluation of proposed stra-
tegies and in the selection of the most appropriate strategy. One pos-
A scenario Sk is a neighbour of scenario Sl if d (Sk , Sl ) ≤ 1. Please see
sible method is to put ticks and crosses in the matrix, where the ticks
examples in the Appendix.
represent the positive performance of a strategy under a given scenario
and the crosses represent negative performance. The strategy that has
the least negative performance may be judged as the most robust op-
2.2.3. Scenario selection
tion. However, this evaluation will need to be performed through
After the consistency assessment, the set of all plausible scenarios
multiple objectives. The integration of scenario planning and multi-
that match specific criteria related to the maximum number of incon-
criteria decision analysis (MCDA) offers the possibility of specifying the
sistencies or a minimum consistency level can be obtained. However, it
strategic options that are necessary to focus on by informing within and
is necessary to underline that, even after this filtering, the number of
across scenario comparisons of options. Ram, Montibeller, and Morton
scenarios left may be in the hundreds or, in some cases, even in the
(2011) measure how each strategic option performs under a given
thousands. Therefore, it is necessary to use an additional procedure to
scenario based on a weighted sum of the preference of each option
find representative scenarios that are distinct from each other. One
against each criterion. Goodwin and Wright (2001, 2014) use Swing
possible method is the use of cluster analysis. However, this approach is
Weight to calculate the weights of the criteria. Srdjevic, Medeiros, and
criticized because it does not provide a good proposal for which sce-
Faria (2004) rank the scenarios with TOPSIS and Compromise Pro-
nario of a cluster to take as a representative. Tietje (2005) proposes
gramming after criteria weights have been derived by the entropy
three different procedures to obtain a set of final scenarios: local effi-
method. Diakoulaki and Karangelis (2007) use multi-criteria and cost-
ciency, distance-to-selected and max-min selection (for details, see
benefit analysis to calculate the economic, technical and environmental
Tietje, 2005).
performances of the examined scenarios.
The objective of using a mathematical model in the scenario selec-
In this study, in order to evaluate the performance of strategies
tion phase of our proposed method is to eliminate the heuristic per-
across a series of scenarios, in the last phase of the proposed scenario
spective that is used in Tietje (2005) and thus provide an optimum set
analysis, we develop measures to identify the most important variables
of scenarios.
to focus on for a given state (i.e. scenario). For this purpose, initially, a
In this study, we propose to use the following binary program to
similarity measure is defined to determine which selected scenario is
select a small set of efficient and consistent scenarios:
more appropriate for a given state.

5
Ö. Kabak et al.
n 2) Customs: the efficiency of customs and border management clear-
∑i = 1 yi (Sg ) − yi (Sk ) 2
σ (Sg , Sk ) = 1 −
n( m − 1)2 (5)
where m is the total number of linguistic terms, n is the total number of
variables and σ (Sg , Sk ) is a similarity measure of a given state g and
selected scenario k. σ (Sg , Sk ) takes values between 0 and 1 and the
greater the σ (Sg , Sk ) value, the greater is the similarity between g and k.
yi (Sg ) − yi (Sk ) is the distance between linguistic variables of state g and
scenario k for variable i. By this measure, we can determine the most
similar selected scenario for a given state and interpret some sugges-
tions accordingly. Please see the Appendix for example of similarity
measure calculation and developing suggestions.
The similarity measure finds the nearest scenario for a given state
and, thus, only some general suggestions can be derived by comparing
the current state with the nearest scenario. However, this information is
insufficient to understand how and by which means to improve this
third variable.
In order to provide more detailed policy suggestions which will
especially take into account the variable of interest in the system, we
propose to combine the selected scenarios for the levels of the variable
of interest and compare the given state and combined scenarios. In this
respect, for each level of the variable of interest, the weighted average
of the other variables is calculated. To that end, the consistencies of
related scenarios are considered as their weights to give more emphasis
to the most consistent scenarios:
∑k y (Sk ) = mj yi (Sk ) C (Sk )
μ (mj , yi ) =
j terials and, hence increase the competitive advantage by instantly
∑k y (Sk ) = mj C (Sk )
j (6)
where j is the variable of interest, mj is the level of variable j and yj is
another variable. μ (mj , yi ) is defined as the weighted average level of
variable j when the level of variable j is mj . Then, values of given state
and μ (mj , yi ) values are compared for the target level of the variable of
interest to develop policy suggestions. Section 3.3 gives the details of
using the weighted average method for scenario evaluation.
3. Application of the proposed methodology to analyse the
interaction between logistics and international trade
In this research, the proposed scenario-based methodology is ap-
plied to the analysis of logistics performance indicators to improve the
export level of a country.
As is underlined in the introduction section, most of the studies that
analyse the impact of logistics on international trade especially focus on
transport infrastructure. However, logistics should be investigated from
a wider perspective. For this reason, in this study, the LPI is used to
represent countries’ logistics performance. The variables considered in
the scenario analysis are presented in Fig. 2.
Logistics performance is central to the economic growth and com-
petitiveness of countries, and the logistics sector is now recognized as
one of the core pillars of economic development. Efficient logistics
connects firms to domestic and international markets through reliable
supply chain networks (Arvis et al., 2016). The World Bank's LPI report
analyses countries based on six components:
1) Infrastructure: the quality of trade and transport infrastructure.
Logistics is not limited to transportation or trade facilitation. It is
part of a broader agenda that includes services, development of
facilities, infrastructure and spatial planning. Infrastructure devel-
opment continues to play an important role in assuring basic con-
nectivity and access to gateways for most developing countries.
However, hard infrastructure is not enough. There also needs to be a
soft component, involving regulatory reform in service markets such
as transport, logistics and telecommunications. Efficient manage-
ment and information technology (IT) solutions in both the private
and public sectors are vital to provide high-quality logistics.
6
Research in Transportation Economics xxx (xxxx) xxx–xxx
ance. Simplifying documentation for imports and exports,
prompting initiatives to bring border agencies together and to create
a single window for trade have always been on the trade facilitation
agenda. Efficient clearance procedures at the border are critical to
eliminate avoidable delays and improve supply chain predictability.
3) International shipments: the ease of arranging competitively priced
shipments. Competitive pricing with the sub-dimensions of port
fees, airport fees, railroad fees, storage/loading fees and agent's fees
will have an important potential in decreasing trade costs.
4) Logistics quality and competence: the competence and quality of lo-
gistics services. Service quality differs substantially at similar levels
of perceived infrastructure quality. This indicates that even high-
quality hard infrastructure cannot substitute or replace operational
excellence, which is based on the professional skills of service pro-
viders, well-functioning soft infrastructure and smooth business and
administrative processes. Higher service quality is driving logistics
performance in emerging and richer economies. Yet, the develop-
ment of services, as in third- or fourth-party logistics, is a complex
policy agenda because the provision of these more advanced ser-
vices cannot be created from scratch or developed purely domes-
tically.
5) Tracking and tracing: the ability to track and trace consignments
concerns a process of determining the current and past locations
(and other information) of a unique item or property. Smart trans-
port systems play an important role in monitoring the flow of ma-
monitoring the speed and routes of vehicles, effective fleet man-
agement, increasing customer satisfaction by providing customers
with information, ensuring flexibility through the monitoring of
cargo on the vehicles and directing new cargo to the closest vehicles
at the time of order.
6) Timeliness: the frequency with which shipments reach consignees
within scheduled or expected delivery times. A useful outcome
measure of logistics performance is the time taken to complete trade
transactions. Logistics performance depends on the availability to
traders of reliable supply chains and predictable service delivery.
Global supply chains are becoming more complex, and the safety,
social, environmental and other regulations affecting traders and
operators are becoming more demanding.
In fact, the six LPI indicators explained above can also be grouped
into two main categories: the topics indicating the main inputs to the
supply chain, namely customs, infrastructure and services, necessitate
policy regulation. On the other hand, time and reliability: timeliness,
international shipments and tracking and tracing correspond to the
supply chain performance outcomes (Arvis et al., 2016).
3.1. Data collection
As stated before, one of the important contributions of the proposed
scenario analysis procedure is the use of objective data instead of expert
opinions. For the application of the procedure to the interaction be-
tween logistics and exports, the logistics performance indicators and
export levels of 154 countries in 2007, 2010, 2012 and 2014 are used.
The related LPI indicator data are provided from World Bank's webpage
(http://lpi.worldbank.org/).
To specify the level of the variables, a 5-term linguistic set, defined
as very high (VH), high (H), medium (M), low (L) and very low (VL), is
used. The determination of the number of linguistic terms in our ap-
plication is rather intuitive. In fact, according to Chen and Hwang
(1992), very few terms will not provide detailed information, while
excess of terms may make the system very complex to be practical.
Additionally, LPI itself is measured in 1–5 scale. Hence, in this study, a
5-term linguistic set is preferred.
The LPI indicators are measured on a scale of 1 (worst) to 5 (best),
Ö. Kabak et al. Research in Transportation Economics xxx (xxxx) xxx–xxx

Fig. 2. Variables in the logistics and exports interaction.

Table 1 are kept for further analysis.

Intervals specified for levelling LPI values. Then, the neighbourhood relations are determined considering
Level Linguistic term LPI values Midpoint values Δ = 2, δ = 3 and δ7 = 1. By this way, if two scenarios differ in more
than 2 variables (i.e. Δ = 2), the total variable difference is more than 3
VL Very Low x<2 1.50 (i.e. δ = 3) and difference in the export variable is more than 1
L Low 2≤x < 2.67 2.33
(δ7 = 1), then we conclude that these scenarios are not neighbour to
M Medium 2.67 ≤ x < 3.33 3.00
H High 3.33 ≤ x < 4.00 3.67
each other. We have identified δ7 = 1 because the export is the variable
VH Very High 4.00 ≤ x < 5.00 4.50 of interest in our application. By using Eq. (3), 67,608 pairs are found to
be neighbours.
Finally, the consistencies of the selected 1395 scenarios and their
where values lower than 2 and higher than 4 are considered very low neighbourhood relation are used in the proposed binary program given
and very high, respectively. Therefore, the values corresponding to the in Eq. (4). As a result, 16 scenarios are selected, as shown in Table 3.
LPI indicators are divided into five categories, as shown in Table 1, These 16 scenarios are the optimum set of scenarios that are consistent,
where values lower than 2 are classified as VL, higher than or equal to 4 reliable, efficient and different from each other in our problem.
as VH and the values in between are divided into three equal intervals.
The export variable is measured by exports per capita to avoid any 3.3. Scenario evaluation and policy suggestions
bias that may occur due to the population size of the country. To take
the effect of inflation into account, the current series of World bank is In the final step of the methodology, initially, the final set of sce-
used. The data (exports of goods and services (BoP, current US$) and narios is evaluated and policy suggestions are developed for the se-
Population, total) provided by the World Bank database (http://data. lected countries, based on the scenario evaluations.
worldbank.org/) are used to construct the export data. When the data
are analysed, it is observed that the data are highly skewed (skew- 3.3.1. Scenario evaluations
ness = 5.74). For this reason, a logarithmic transformation is applied to Scenarios are evaluated to show the interaction between logistics
the data to obtain a more symmetric distribution (skewness drops to performance and export. For this, the average level of the logistics
−0.036). Finally, the categorisation is made using the final transformed variables for each particular export level is calculated, and the weighted
data by dividing the entire range into five equal intervals (see Table 2.). sum of the logistics variables is specified according to Eq. (6). The
midpoint value of each linguistic term (see Table 1) is used to represent
3.2. Scenario selection it as a numerical value. The consistency of each scenario is considered
to be its importance weight of the selected scenarios for each export
Initially, all possible scenarios are generated, considering the com- level. The results are presented in Table 4, which shows that, for ex-
binations of levels of variables. As a result, 57 = 78,125 (i.e. 7 variables ample, due to the fact that scenarios 105, 138 and 938 have a VL export
and 5 linguistic terms) scenarios are identified, and their consistencies level, the weighted average of these three scenarios are calculated for
are calculated according to Eq. (1) and Eq. (2) given in Section 2.2.1. ‘international shipment’ as follows (note that in scenarios 105, 138 and
Scenarios that have a non-zero consistency (a total of 1395 scenarios) 938, the level of international shipment are L, VL and M, respectively):
μ (Export = VL, International Shipment )
Table 2 MP (‘L’) C (S105) + MP (‘VL’) C (S138) + MP (‘M ’) C (S938)
Intervals specified for levelling export data. = C (S105) + C (S138) + C (S938)
2.33 ⋅ 0.273 + 1.50 ⋅ 250 + 3 ⋅ 0.021
Level Linguistic term Export (current US$ per capita) = 0.273 + 0.250 + 0.021
= 1.98
VL Very Low < 77
L Low 77 ≤ x < 564 where MP(mi ) is the midpoint of linguistic term mi (such as L, VL or M)
M Medium 564 ≤ x < 4149
given in Table 1.
H High 4149 ≤ x < 30478
VH Very High ≤30478 According to values given in Table 4, there is a direct relationship
between the logistics indicators and exports. For example, when the

7
Ö. Kabak et al. Research in Transportation Economics xxx (xxxx) xxx–xxx

Table 3
Selected scenarios in the application.
Scenario ID Customs Infrastructure International Shipment Logistics quality and Competence Tracking and Tracing Timeliness Export Consistency

2 H H H H H VH H 0.533
7 VH VH H VH VH VH VH 0.462
8 L VL VL L L M L 0.450
27 L L M M M M M 0.365
45 VL L L VL L L M 0.343
105 L L L L VL L VL 0.273
138 VL VL VL VL VL VL VL 0.250
172 M M M M H H H 0.230
603 M L L M L H L 0.054
725 L L L L VL H H 0.042
858 M M M L M L L 0.029
882 M H H M M M VH 0.027
893 L M M L L M VH 0.022
938 VL VL M L M H VL 0.021
1161 L M L L H VH M 0.010
1382 H M H L L H M 0.009

export level is VH, then the customs, infrastructure, logistics quality Table 5
and competence, tracking and tracing and timeliness are VH (i.e. > 4.0) Similarity measures of selected countries’ current states and scenarios.
and level of international shipments is H (i.e. > 3.33) and when export Scenario ID Turkey Burundi Zimbabwe Brazil Portugal
level is VL, then level of all variables is very low (i.e. ≤2).
2 0.811* 0.457 0.457 0.701 0.866*
7 0.659 0.268 0.268 0.509 0.717
3.3.2. Policy suggestions for Turkey 8 0.537 0.836 0.836 0.673 0.465
After the evaluation of the scenarios for specific export levels, in- 27 0.733 0.750 0.789 0.866* 0.701
itially, Turkey is selected as an example to show how these values are 45 0.518 0.750 0.836* 0.673 0.482
used for policy development and then the methodology is applied to 105 0.509 0.866* 0.811 0.634 0.441
138 0.345 0.717 0.717 0.482 0.280
some other selected countries.
172 0.836* 0.599 0.622 0.836 0.836
Turkey is selected in this study as it is an important logistics centre 603 0.687 0.811 0.769 0.789 0.610
in Europe. Further, in 2009, the Turkish Exports Strategy for 2023 was 725 0.577 0.687 0.750 0.733 0.557
initiated by the Ministry of Economy and Turkish Exporters Assembly 858 0.687 0.769 0.733 0.750 0.634
(TSV, 2015). The main purpose of this strategy is to reach an export 882 0.733 0.509 0.547 0.733 0.811
893 0.634 0.599 0.673 0.750 0.659
volume of 500 billion dollars by 2023, the centenary anniversary of the 938 0.557 0.789 0.789 0.701 0.500
Turkish Republic, with an average increase in exports of 12% annually. 1161 0.733 0.659 0.687 0.811 0.673
In this respect, the exports strategy of Turkey establishes a production 1382 0.687 0.646 0.622 0.750 0.687
plan oriented towards export performance. Basic elements of this
strategy are shifting production from low-technology sectors to high *Indicates the most similar scenario(s) for the related country.
value-added areas and achieving new investments in high-tech sectors.
To reach these goals of the strategy, some crucial actions must be im- better than or equal to the corresponding variable levels. When com-
plemented, including the improvement of logistics facilities. pared to scenario 2, on the other hand, Turkey is underachieving in
Turkey is ranked 30th out of 160 countries in the LPI 2014. It is variables Customs, International Shipment and Timeliness.
above the average of the upper-middle-income economies to which it Second, the indicators that Turkey must focus on are investigated by
belongs. Although Turkey's LPI score showed a significant increase of comparing Turkey's current level of exports (M) with the H and VH
approximately 9% from 2010 to 2012, it showed almost no change levels of exports using the weighted averaging approach. Turkey's LPI
between 2012 and 2014, resulting in a slight decrease in its ranking 2014 values are presented in Table 7, and they are compared with the
during this period (Arvis et al., 2014). average scenario scores for the export level H and VH (see the last two
In order to analyse Turkey's position, initially, similarity measures rows of Table 7). The results show that Turkey should improve all lo-
of Turkey's current state (LPI 2014 scores given in Arvis et al. (2014), gistics indicators to achieve a VH level of exports but should particu-
see Table 6) and the scenarios are calculated based on Eq. (5). Ac- larly focus on customs, international shipment and timeliness for an H
cording to the similarity measures presented in Table 5, Turkey is most level of exports.
similar to scenarios 172 and 2. In both scenarios, export level is high Indeed, in the LPI report, the international shipment indicator is
(H), whereas Turkey's current export level is medium (M) (see Table 6). defined as ‘The ease of arranging competitively priced shipments’ (Arvis
This shows that Turkey has to focus on strategies to improve its un- et al., 2014). Turkey has a score of 3.18, and it ranks 43th out of 160
derachieved export situation. When compared to Scenario 172, which is countries. It is Turkey's lowest score among the 6 LPI indicators. One
the most similar one, Turkey's levels in the LPI related variables are basic method of achieving an improvement in international shipment

Table 4
Weighted average level of variables for the levels of export.
Export Level Related Scenarios Customs Infrastructure International Shipment Logistics quality and Competence Tracking and Tracing Timeliness

VL – Very Low 105, 138, 938 1.92 1.92 1.98 1.95 1.56 2.00
L – Low 8, 603, 858 2.44 1.67 1.67 2.40 2.37 3.03
M – Medium 27, 45, 1161, 1382 1.96 2.35 2.68 2.27 2.69 2.71
H – High 2, 172, 725 3.41 3.41 3.41 3.41 3.55 4.22
VH – Very High 7, 882, 893 4.33 4.39 3.64 4.33 4.33 4.36

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Ö. Kabak et al. Research in Transportation Economics xxx (xxxx) xxx–xxx

Table 6
Turkey's most similar scenarios and current level of Turkey.
Scenario ID Customs Infrastructure International Shipment Logistics quality and Competence Tracking and Tracing Timeliness Export

2 H (4) H (4) H (4) H (4) H (4) VH (5) H (4)

172 M (3) M (3) M (3) M (3) H (4) H (4) H (4)
Turkey M (3) H (4) M (3) H (4) H (4) H (4) M (3)

can be realized through border procedures and time. Indeed, the LPI
measures this factor based on several indicators. The import and export
time is a useful outcome measure of logistics performance that analyses
the time taken to complete trade transactions. The lead time for port or
airport supply chains, which is nearly twice as long in low-performance
countries as it is in high-performance countries, should be improved.
Geographical hurdles, and possibly internal transport markets, continue
to pose substantial difficulties in the country. It is necessary to reduce
time across all dimensions of the border process and enact reforms to
focus on the prevalence of physical inspection, the proliferation of
procedures and red tape. Although the time taken to clear goods
through customs is a relatively small fraction of the total import time,
this time increases when the goods are physically inspected.
Export supply chains typically face fewer procedural burdens than
imports, as evidenced by the shorter lead time for exports than for
imports. Customs is not the only agency involved in border manage-
ment; collaboration among all border management agencies and the
introduction of modern approaches to regulatory compliance are
especially important. Indicators of red tape also illustrate a lack of
coordination at the border and the burden it imposes on private logis-
tics operators. Turkey must reduce the number of government agencies
involved and the documentary requirements. Turkey must also improve
its connectivity to the market through the hierarchical hub-and-spoke
network of international trade. Another problem related to the inter-
national transportation of Turkey is the quotas and transit procedures
that make the movement of goods possible with the payment of duties
and excessive control.
3.3.3. Policy suggestions for selected countries
Subsequently, using the proposed methodology, similar analyses
can be conducted for other countries based on the scenario evaluation
results given in Table 4. For instance, we have considered four coun-
tries, namely Burundi, Zimbabwe, Brazil and Portugal, each having a
different export level (i.e. VL, L, M and H, respectively) (see Tables 5
and 8).
First, we demonstrate the use of similarity measures for the selected
countries. As an example of countries that have very low export level,
initially, Burundi is investigated. Burundi is ranked 107th out of 160
countries. It is also in the top 10 low-income performers on the 2014
LPI and is among the economies that have a statistically significant
positive change in LPI score during 2012–2014 (Arvis et al., 2014).
Burundi's current state is found to be most similar to Scenario 105.
When Burundi's current state and scenario 105 are compared, all scores
of Burundi are higher and/or equal to corresponding scores of Scenario
105. Therefore, it is not possible to generate policy suggestions ac-
cording to similarity analysis.
On the other hand, for Zimbabwe that is selected as one of the ‘low’
export level countries, the most similar scenario is scenario 45.
Zimbabwe is ranked 137th out of 160 countries. Its worst performance is
for Customs (ranked as 154th) and best is for Timeliness (ranked as
104th) (Arvis et al., 2014). It was one of the top 10 low-income per-
formers on the 2012 LPI (Arvis et al., 2012). Zimbabwe is under-
achieving in export compared to scenario 45, while it performs better or
the same for the LPI-related variables. For Brazil, as an example of
medium export level countries, the most similar scenario is scenario 27.
Brazil's is ranked 65th in 2014 LPI report. As a large country, Brazil has
created high level interagency bodies to manage logistics system ef-
fectively (Arvis et al., 2014). It was one of the top 10 upper middle-
income performers on the 2012 LPI (Arvis et al., 2012). Brazil's scores
are higher than or equal to the scores of Scenario 27. Finally, Portugal,
as an example of high-level export countries, has scores most similar to
Scenario 2. Portugal is 27th in the 2014 LPI report (Arvis et al., 2014).
Its worst performance is for Timeliness (ranked as 35th) and best is for
‘Logistics Quality and Competence’ and ‘Tracking and Tracing’ (ranked
as 20th for both) (Arvis et al., 2014). Portugal is underachieving in
Customs and Timeliness compared to Scenario 2. According to simi-
larity analysis, it was difficult to derive policy suggestions by directly
looking at the most similar scenarios. It is required to have a detailed
analysis to specify the policy measures to focus on in order to reach the
target level for the variable of interest (e.g. Export in our analysis).
Because of the insufficiency of the similarity measure to specify such
policies, in this study, the weighted averaging approach is developed.
The results of applying the weighted averaging approach to the
selected countries are given in Table 8. It can be seen for Burundi that it
has to focus on improving ‘Timeliness’ because the only improvement
area with respect to the next export level belongs to this indicator.
Zimbabwe, on the other hand, has to focus especially on two LPI in-
dicators, namely International Shipment and Tracking and Tracing in
order to improve its export level to Medium. Brazil has to improve all of
its LPI values in order to upgrade to the next high export level but
should especially concentrate on Customs and Timeliness where a sig-
nificant difference occurs. Finally, Portugal has to improve all of its LPI
values but especially focus on Customs and Infrastructure.
Note that this analysis recommends evolutionary policies to im-
prove its current export level to next higher level. For instance, from
Low (L) to Medium (M) for Zimbabwe. Because it is not realistic to
expect a sudden jump from low to very high. Rather, the evaluation is
expected to be from low to medium at the first glance.

Table 7
Strategy proposal for Turkey.
Export Level Customs Infrastructure International Shipment Logistics quality and Competence Tracking and Tracing Timeliness

TURKEYc Export level – M 3.23 3.53 3.18 3.64 3.77 3.68

H – Highb 3.41 3.41 3.41 3.41 3.55 4.22
Difference to Export H level 0.17a −0,13 0.22a −0,23 −0,22 0.53a
VH – Very Highb 4.33 4.39 3.64 4.33 4.33 4.36
Difference to Export VH level 1.09a 0.86a 0.46a 0.69a 0.55a 0.67a

a
The variables in which Turkey needs improvement.
b
Weighted average levels presented in Table 4.
c
Source of LPI data: Arvis et al. (2014).

9
Ö. Kabak et al.
Table 8
Strategy proposal for the selected countries.
Export Level Customs Infrastructure
b
Burundi VL 2.60 2.40
Difference to Export L level −0.16 −0.73
Zimbabweb L 1.89 2.25
Difference to Export M level 0.07a 0.10a
Brazilb M 2.48 2.93
Difference to Export H level 0.93a 0.48a
Portugalb H 3.26 3.37
Difference to Export VH level 1.06a 1.02a
a
The variables in which the country needs improvement.
b
Source of LPI data: Arvis et al. (2014).
4. Conclusions and further suggestions
This study makes two significant contributions. First, a novel sce-
nario-based methodology depending on objective information is pro-
posed, and second, this methodology is applied to investigate the in-
teraction between logistics performance and export in a wider
perspective.
The most important part of scenario analysis is generating a con-
sistent, reliable, different and small set of scenarios. In the literature,
consistency checks have been performed using expert judgments, which
are subjective in nature. In the proposed approach, the biases that may
occur due to the subjectivity of the scenario analyst are eliminated by
using the past data. For generating a small number of scenarios, the
literature suggests using a neighbourhood distance. However, calcu-
lating the size of differences between two levels is impossible with a
number of variables that is on a nominal scale (which is the general
case in the literature). To obtain a final set of scenarios, Tietje (2005)
uses three different procedures: the local efficiency, distance-to-selected
and max-min selection procedures. Nevertheless, all these procedures
depend on consistency scores, which, as stated above, are subjective in
nature. The present paper elaborates further Tietje (2005)'s procedures
to remedy the subjectivity. For this purpose, we propose to use a binary
program to select a small set of efficient and consistent scenarios. In-
itially, different from the studies found in the literature, we calculate
consistency with a completely objective method based on observed
frequencies of levels of variables. In addition, because we use an ordinal
scale to generate scenarios, simply taking the difference between two
levels of a variable is an easy and efficient method that we use in the
neighbourhood calculation step. Subsequently, the research proposes a
method to determine the most important variables to focus on to im-
prove the variable of interest in relation to its target value. This task is
performed by finding the scenarios that provide the target level for this
variable and obtaining the weighted average of the levels of the other
variables. In this manner, it becomes possible to find the variables that
are important for improving a specific variable.
The basic disadvantage of traditional quantitative scenario analysis
methodologies is their dependence on historical data extrapolation
without considering the effects of unprecedented future events.
However, our proposed method uses past data not to make projections
about future but only to generate significantly different, reliable and
efficient set of scenarios.
As stated by Amer et al. (2013) ‘both qualitative and quantitative
approaches are complementary and strengthen each other when used
together’. Therefore, our proposed quantitative scenario generation
technique that depends heavily on large-scale data can easily be com-
bined with some qualitative scenario analysis method in order to con-
duct an efficient analysis. However, when the past data are missing and
solely expert judgments are employed for scenario development, it
would not be effective to apply the proposed methodology.
As a further suggestion, if some strategies are generated based on
the most important variables, then a multi-attribute value model, such
Research in Transportation Economics xxx (xxxx) xxx–xxx
International Shipment Logistics quality and Competence Tracking and Tracing Timeliness
2.60 2.51 2.51 2.76
−0.93 −0.11 −0.14 0.27a
2.25 2.50 2.22 2.93
0.44a −0.22 0.47a −0.22
2.80 3.05 3.03 3.39
0.60a 0.36a 0.53a 0.83a
3.43 3.71 3.71 3.87
0.21a 0.61a 0.61a 0.49a
as the one proposed by Goodwin and Wright (2001, 2014) and Stewart,
French, and Rios (2013), can be added to the proposed scenario
methodology in order to provide a formal strategy evaluation process.
By this way, the synergies between scenario-planning and quantitative
decision modelling can also be exploited.
The second contribution of this research is the application of the
proposed methodology to analyse the link between a country's logistics
performance and its export performance. For this purpose, six LPI in-
dicators and the export level of countries are used to find the interac-
tions between them. In fact, the LPI Index provides a general view of the
current state of the countries from the logistics perspective. It does not
provide a roadmap for the countries on their way to improve their lo-
gistics performance. Additionally, it does not give any information
about the interaction between logistic and export activities. This study
highlights how to increase the level of export in a specific country by
improving particular logistics activities. The proposed methodology
allows to develop different strategies for different countries depending
on their LPI and export characteristics.
Subsequently, 16 different and efficient scenarios are generated
using the proposed methodology. After the identification of the scenario
set, initially, Turkey was selected as a case study. The detailed analysis
of the scenarios shows that Turkey should improve all logistics in-
dicators to achieve a very high (VH) level of exports but should parti-
cularly focus on customs, international shipment and timeliness to
reach a high (H) level. Subsequently, in order to show the general ap-
plicability of this methodology, four other countries, each having a
different export level, are also investigated and policy measures to
improve the export level of each to the next higher level are specified.
According to the weighted average level of variables for the levels of
export provided in Table 4, there is an obvious relationship between
logistics variables and export. When the export level is high or very
high, the logistics performance of countries is more than 3.4. This
shows that in order to increase export level of a country to high or very
high level, the performance of a country in logistics indicators must also
be in high or very high level. In order to increase the export level from
very low to low, a country has to focus on customs (1.92 → 2.44), lo-
gistics quality and competence (1.95 → 2.40), tracking and tracing
(1.56 → 2.37) and timeliness (2.00 → 3.03). While moving from low
export level to medium, infrastructure (1.67 → 2.35), international
shipment (1.67 → 2.68), and tracking and tracing (2.37 → 2.69) are the
three most important variables to focus on.
One of the important properties of our proposed methodology is
that it enables to consider the relative priorities according to possible
LPI and export configurations (i.e. scenarios). For instance, see our
analysis for Turkey in Table 7. If only, the LPI scores are considered,
Turkey should focus on international shipment, because it has the
lowest level for this indicator (highest distance to 4.0). But in fact, 4.0 is
an unrealistic target for international shipment due to the fact that even
the countries having high and very high export level have an average of
3.41 and 3.64, respectively. On the other hand, according to our
methodology, timeliness is suggested as the indicator that we have to
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Ö. Kabak et al. Research in Transportation Economics xxx (xxxx) xxx–xxx

concentrate on at the first glance because the countries having high and
very high export level have high performances in terms of timeliness
(4.22 and 4.36, respectively).
In the literature, there is a debate regarding whether logistics and
economic growth have a bidirectional interaction (Nguyen & Tongzon,
2010). This study shows that improvement in some of the logistics
performance indicators has an important positive impact on the export
level of a country. Indeed, improving exports, in turn, is expected to
enhance logistics performance because the increased demand for goods
and services will necessitate investments and improvements in the lo-
gistics indicators (Lean et al., 2014). Therefore, as a further suggestion,
it would be worthwhile to analyse and ascertain the extent to which this
interaction is bidirectional.
As an additional further study, we aim to combine a previous study
(Onsel Ekici, KabakÖ, & Ülengin, 2016) that analyses the relationship
between global competitiveness and the logistics efficiency of a country
with the results of this paper. Thus, we will be able to analyse the effect
of a country's global competitiveness on its export level through logis-
tics performance. To achieve this goal, a Bayesian Network will be used
to combine and analyse the results of the two different studies, both of
which analyse a country's logistics performance from different per-
spectives.

Appendix A. Supplementary data

Supplementary data related to this article can be found at http://dx.doi.org/10.1016/j.retrec.2018.05.007.

Appendix B. A hypothetical example to illustrate the proposed scenario selection procedure

This Appendix presents examples of calculations presented for scenario selection procedure in Section 2. Suppose a hypothetical example where
three variables (y1, y2, y3) are measured in three levels (L - Low, M - Medium, H - High). The observed frequencies of the levels of variables are shown
in Table B1.

Table B1
Frequencies of the scenarios for variables.

y1 y2 y1 y3 y2 y3

L M H Total L M H Total L M H Total

L 3 7 4 14 L 13 1 0 14 L 5 4 3 12
M 6 9 1 16 M 3 12 1 16 M 7 12 3 22
H 3 6 11 20 H 0 5 15 20 H 4 2 10 16
Total 12 22 16 50 Total 16 18 16 50 Total 16 18 16

Consistency

In order to calculate the consistency of scenarios, initially, the consistency of the levels of a pair of variables are calculated using E. (1). For
example, according to the given data in Table B1, the consistency of ‘variable 1 is H, and variable 2 is M’, c (y1H , y2M ) is equal to 0.3, which is
calculated based on Eq. (1) as follows:

f (y1H , y2M ) f (y1H , y2M ) ⎞ 6 6

c (y1H , y2M ) = max ⎛⎜ ; ⎟ = max ⎛ ; ⎞ = 0.3
⎝ f (y1H ) f (y2M ) ⎠ ⎝ 20 22 ⎠

The consistencies calculated for the hypothetical example are shown in Table B2.

Table B2
Consistency of the levels of a pair of variables.

y1 y2 y1 y3 y2 y3

L M H L M H L M H

L 0.250 0.500 0.286 L 0.929 0.071 0.000 L 0.417 0.333 0.250

M 0.500 0.563 0.063 M 0.188 0.750 0.063 M 0.438 0.667 0.188
H 0.250 0.300 0.688 H 0.000 0.278 0.938 H 0.250 0.125 0.625

Consistencies of scenarios are calculated using Eq. (2). For instance; the consistency of scenario S20 , where (y1, y2, y3) = (H, L, M), is calculated as
follows:

C (S20) = C (y1H , y2L , y3M )

= Min (c (y1H , y2L ), c (y1H , y3M ), c (y2L , y3M ))
= Min (0.250, 0.278, 0.333)
= 0.250
The consistencies of all possible scenarios in the hypothetical example are given in Table B3.

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Ö. Kabak et al. Research in Transportation Economics xxx (xxxx) xxx–xxx

Table B3
Consistencies of the scenarios.

Scenario ID (k) y1 y2 y3 c (y1m1 , y2m2 ) c (y1m1 , y3m3 ) c (y2m2 , y3m3 ) C (Sk )

1 L L L 0.250 0.929 0.417 0.250

2 L L M 0.250 0.071 0.333 0.071
3 L L H 0.250 0.000 0.250 0.000
4 L M L 0.500 0.929 0.438 0.438
5 L M M 0.500 0.071 0.667 0.071
6 L M H 0.500 0.000 0.188 0.000
7 L H L 0.286 0.929 0.250 0.250
8 L H M 0.286 0.071 0.125 0.071
9 L H H 0.286 0.000 0.625 0.000
10 M L L 0.500 0.188 0.417 0.188
11 M L M 0.500 0.750 0.333 0.333
12 M L H 0.500 0.063 0.250 0.063
13 M M L 0.563 0.188 0.438 0.188
14 M M M 0.563 0.750 0.667 0.563
15 M M H 0.563 0.063 0.188 0.063
16 M H L 0.063 0.188 0.250 0.063
17 M H M 0.063 0.750 0.125 0.063
18 M H H 0.063 0.063 0.625 0.063
19 H L L 0.250 0.000 0.417 0.000
20 H L M 0.250 0.278 0.333 0.250
21 H L H 0.250 0.938 0.250 0.250
22 H M L 0.300 0.000 0.438 0.000
23 H M M 0.300 0.278 0.667 0.278
24 H M H 0.300 0.938 0.188 0.188
25 H H L 0.688 0.000 0.250 0.000
26 H H M 0.688 0.278 0.125 0.125
27 H H H 0.688 0.938 0.625 0.625

Neighbourhood

Suppose that if two scenarios differ in more than 2 variables (i.e. Δ = 2), the total variable difference is more than 3 (i.e. δ = 3) or difference in
variable 3 is more than 1 (δ3 = 1), then we conclude that these scenarios are not neighbour to each other.
For instance, Scenario 1 and 2 are neighbours because they are different in one variable (i.e. their y1 and y2 levels are the same, y3 level is
different), total linguistic variable difference is 1 (i.e. difference of L and M in y3 is 1) and their difference in y3 is 1 (i.e. difference between M and L).
However, scenario 1 and 12 are not neighbours because although they are 2 different variables (i.e. their y2 level is the same, y1 and y3 levels are
different), and total linguistic variable difference is 3 (i.e. difference of L and M in y1 is 1 and difference of L and H in y3 is 2), their difference in y3
which is equal to 2 (i.e. difference of L and H in y3 is 2) is more than the threshold. Neighbourhood relations between selected scenarios are given in
Table B4.

Table B4
Neighbourhood relation between selected scenarios.

Scenario ID (k) y1 y2 y3 Scenario ID (l) y1 y2 y3 Rule 1 Rule 2 Rule 3 Neighbour?

Variable difference Total difference Difference in variable 3

1 L L L 2 L L M 1 0 + 0+1 = 1 1 Yes
1 L L L 12 M L H 2 1 + 0+2 = 3 2* No
3 L L H 23 H M M 3* 2 + 1+1 = 4* 1 No
3 L L H 5 L M M 2 0 + 1+1 = 2 1 Yes
19 H L L 27 H H H 2 0 + 2+2 = 4* 2* No
19 H L L 20 H L M 1 0 + 0+1 = 1 1 Yes
*shows a violation of a rule for Δ = 2, δ = 3, and δ3 = 1.

Scenario selection

In order to select scenarios, the mathematical program defined in Eq. (4) is used. To apply the proposed program to the hypothetical example, 21
scenarios which have consistency higher than 0 (scenarios 3, 6, 9, 19, 22 and 25 were eliminated) and for the neighbourhood-related parameters
Δ = 2, δ = 2, and δ3 = 0 are considered. When the proposed program is applied, scenarios 4, 14 and 27 are selected (see Table B5).

12
Ö. Kabak et al.
Table B5
Selected scenarios in the hypothetical example.
Scenario ID y1
4 L
14 M M
27 H H
Scenario evaluation
In order to evaluate scenarios, the first approach is the similarity measure given in Eq. (5). We calculate the similarity measure between a given
state and selected scenarios to develop suggestions. Suppose a given state is Sg = (y1H , y2H , y2M ) , then the similarity measure to the selected scenario 4
(see Table B5) is calculated as follows:
3
σ (Sg , S4 ) = 1 − ∑i = 1 yi (Sg ) − yi (S4 ) 2 / 3(3 − 1)2
2 2 2
= 1− y1H − y1L + y2H − y2M + y3M − y3L / 12
= 0.29
for scenarios 14 and 27, similarity measures are calculated as σ (Sg , S14 ) = 0.59 and σ (Sg , S27) = 0.71, respectively. According to the calculated
similarity measures, the given state is most similar to scenario 27. When we compare Sg and S27 , although the first two variables are the same,
performance of Sg in the third variable is lower than S27 ’s. Therefore, we can recommend focussing on the third variable for the given state.
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