Agility’s Emerging Markets Logistics Index marks India, China and Indonesia as top emerging market

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The 12th annual Agility Emerging Markets Logistics Index says that Asia-Pacific nations lead all emerging market regions with China, India and Indonesia being the world’s top emerging markets.  

The Index which ranks 50 countries by factors that make them attractive to logistics providers, freight forwarders, shipping lines, air cargo carriers and distributors.

Among ASEAN countries, Vietnam climbs three spots to No. 8 overall. Indonesia (3), Malaysia (5) and Thailand (11) are strong; the Philippines rises one spot to No. 21.

Amidst being hit by the pandemic only two nations namely China and Vietnam were posting positive GDP growth for the year.

The disruption caused to supply chains after being hit by the pandemic brought up questions on the relocation of the supply chain from China to other nations. But, as per the index 1,200 logistics industry executives indicate little desire to uproot from China or other markets, preferring by a two-to-one margin to protect their supply chains by accelerating adoption of digital tools and technology (41.3%) as opposed to pursuing multi-shoring, near-shoring or reshoring strategies (21.9%).

Those who are looking to relocate their supply chains from China chose Vietnam as a preferred production hub than any other country (19.6%). The preferable Asian Markets which were looked upon for relocation are India (17.4%), Indonesia (12.4%), Thailand (10.3%) and Malaysia – are the next leading choices.

The index reveals that only 7.8% of industry executives say relocating production from China would mean reshoring to their home countries.

As per respondents, Asia-Pacific is likely to make a recovery from the pandemic by the end of 2021. Of those surveyed, 55.9% predict an Asia-Pacific economic recovery in 2021; 53.1% believe Europe will rebound and 51.5% of supply chain executive say they don’t expect a full recovery until 2022-2024. They see Latin America and Sub-Saharan Africa as the last regions to bounce back

“Asia Pacific experienced great turmoil in the beginning of 2020 due to the COVID-19 crisis, but it has rebounded strongly, led by the powerful performance of China and Vietnam. The region is on track for a full recovery this year. India, Indonesia, Malaysia, Thailand and Vietnam continue to improve their supply chain infrastructure and capabilities, showing why they are leaders in domestic and international logistics.”

Andy Vargoczky, SVP of Sales & Marketing Asia-Pacific, Agility GIL

Across 50 countries, China, India and Indonesia rank highest in the Index for domestic logistics. China, India and Mexico are on top for international logistics with Vietnam 4th, Indonesia 5th, and Malaysia 7th. UAE, Malaysia and Saudi Arabia have the best business fundamentals.

2021 Index and Survey Highlights

  • While total cost is driving overall shifts in production supply chains, today low-cost labor is barely a consideration for emerging market investment — with only 2.2% of industry executives saying it’s important. Executives say the most important factors are government bureaucracy and regulation (25.8%); infrastructure quality (14.1%); and supply of skilled labor (8.0%). As companies examine new production locations, they say their biggest concerns are inadequate infrastructure (14.5%) and additional cost (13.5%).
  • Of the executives surveyed, 19.1% say 2020 sales decreased as a result of the pandemic. But only 9.4% say COVID-related employee safety measures have decreased efficiency.
  • The sustainability movement has momentum. More than a quarter (26.9%) of executives surveyed say their companies are boosting implementation of environmentally sustainable practices in the wake of the pandemic. Another 45.2% say their plans are unchanged, suggesting they have no intention of retreating from sustainability commitments.
  • The most competitive emerging markets are manufacturing powerhouses in Asia and the business-friendly economies in the Gulf region. From Asia, China (1), India (2), Indonesia (3), Malaysia (5) and Vietnam (8) made the top 10. Gulf nations United Arab Emirates (4), Saudi Arabia (6), Qatar (9) also ranked in the top 10. Mexico came in at 7th; Turkey was No. 10.
  • In Latin America, Mexico is the strongest emerging market, ranking 7th overall. Argentina (36) and Venezuela (50) continue to be plagued by chronic economic dysfunction. Notably, though, eight countries in Latin America improved their business fundamentals: Uruguay, Mexico, Peru, Colombia, Ecuador, Brazil, Paraguay, and Bolivia. The region’s best business climate is in Chile, which ranks 5th out of 50 countries in that category.
  • Nigeria improved its competitiveness more than any country in the 2021 Index, moving up five spots to No. 30, the highest climb for any market in Sub-Saharan Africa in the 12 years of the Index. Nigeria improved its relative position in all three areas of the Index: business climate, international logistics and domestic logistics.
  • The countries improving their domestic logistics strengths the most were Malaysia, Nigeria, Vietnam, Iran, Uruguay, Myanmar and Cambodia. The biggest strides in international logistics came from Morocco, Ukraine, Kenya, Myanmar and Paraguay.

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