The 2019 Agility Emerging Markets Logistics Index has found that logistics industry executives worry about global trade tensions and geopolitical threats.
Other findings were that the logistics industry sees emerging markets growing at a healthy five per cent pace in 2019, but a surprising percentage of executives are bracing for a crisis amid US-China trade friction, interest rate and currency volatility, and Brexit uncertainty.
In Agility’s annual survey of more than 500 supply chain industry professionals, 55.7 per cent say a growth rate of five per cent for developing economies is “about right.” Emerging markets expanded by 4.7 per cent in 2018, and the International Monetary Fund now forecasts 4.5 per cent expansion for 2019.
At the same time, 47.1 per cent of logistics executives surveyed say an emerging markets crisis is “likely” or “highly likely.” Simmering tensions and tariffs could shave 10 per cent off of US-China trade volumes this year, the survey shows.
The Index ranks 50 countries by factors that make them attractive to logistics providers, freight forwarders, shipping lines, air cargo carriers and distributors. The top 10 are: China, India, United Arab Emirates, Indonesia, Malaysia, Saudi Arabia, Mexico, Qatar, Turkey and Vietnam.
China, India and Indonesia rank highest for domestic logistics; China, India and Mexico are tops for international logistics; and UAE, Malaysia and Qatar have the best business fundamentals.
Among the biggest fallers, Brazil, in the midst of a severe economic downturn and political upheaval, tumbles from number nine to 15 in the Index, ranking behind smaller Latin economies Mexico (seven) and Chile (13).
The Index also found e-commerce is driving logistics opportunities in emerging markets. 60 per cent of industry executives expect more outsourcing of last-mile delivery by retailers; 47.4 per cent expecting more e-fulfilment outsourcing.
The Index also found Brexit could benefit emerging markets. 59 per cent of executives surveyed expect emerging markets to seek trade concessions and new deals from the UK. 70 per cent think emerging markets will be unaffected by Brexit.
Agility Global Integrated Logistics chief executive officer, Essa Al-Saleh said: “Companies looking for opportunity are finding it in emerging markets, where small and medium-sized enterprises with access to technology and mobile banking are increasingly driving growth.
“At the same time, logistics professionals worry that these markets are vulnerable to ripple effects from big geopolitical setbacks.”
The Index found that the UAE and Malaysia are top for business fundamentals. Gulf countries Qatar, Oman and Saudi Arabia also score high. Among the 50 Index countries, it’s hardest to do business in Venezuela, Angola, Myanmar and Libya. Venezuela, which holds the world’s largest oil reserves, ranks last (number 50) overall and 50th for business fundamentals and international logistics opportunities.
As for Sub-Saharan Africa the Index found a mixed picture. South Africa (24) is an underperformer. But in rankings of business fundamentals, Ghana and Kenya do relatively well at number 19 and number 21. Nigeria, which vies with South Africa to be the region’s largest economy, suffers from poor business conditions, an area where it ranks 44th.
The Index also found several countries would surge in the rankings if they could improve business conditions: Brazil, Philippines, Argentina, Bangladesh, Nigeria, and Bolivia. African economies with relatively strong logistics markets and potential – Uganda, Libya, Mozambique, Angola – are severely hamstrung by weak business fundamentals.
“Concerns about emerging markets in 2019 are valid, especially in countries with significant dollar-denominated debt, but as a group these markets are growing at roughly twice the rate of developed economies,” said Al-Saleh.
“What’s most heartening is that many now appear resilient enough to avoid the sort of contagion we saw spreading among emerging markets in 2013 and 2008.”
Analysis and research firm for the logistics industry – Transport Intelligence (Ti) – compiled the Index.
The 2019 Agility Emerging Markets Logistics Index, is Kuwait company’s 10th annual snapshot of industry sentiment and ranking of the world’s 50 leading emerging markets.