The Logistics Performance Index (LPI) introduced by the World Bank provides a standardized framework with crucial metrics for national logistics performance evaluation. However, it notably fails to incorporate sustainability concern in the assessment, which has become a priority and raises significant challenges for the logistics industry. To comprehensively assess the national logistics performance, simultaneously taking the efficiency and sustainability concerns into consideration, this study presents a novel two-stage slacks-based Data Envelopment Analysis (DEA) approach by integrating the LPI criteria with sustainability related indicators. The two-stage framework facilitates a systematic analysis of the logistics industry by distinguishing the capacity-building efforts and service operation performance, while also accounting for environmental externalities led by undesirable outputs. Empirical analysis shows that the LPI top-ranked countries do not always perform as well when sustainability is considered. Only a few countries, such as China, Switzerland, Hungary, and Singapore, achieve high efficiency in both capacity building and service operation stages, while many exhibit imbalanced performance across stages, revealing the significance of the proposed two-stage model in uncovering hidden inefficiencies.
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