Agility Emerging Markets Logistics Index2017
Agility Emerging Markets Logistics Index 2017
www.ti-insight.com
Contents
2
Section 1: The Agility Emerging Markets Logistics Index 4
Section 2: Sources 7
Section 3: Methodology 8
Section 4: Key Findings 11
EmergingMarkets:HowLogisticsExecutivesSeeThem 11
MarketsontheMove 12
TradeLanes 15
Section 5: The 2017 Agility Emerging Markets Logistics Index 17
OverviewandOutlook 17
TheTop10 21
ChangesOutsidetheTop10 28
The2017Index 32
EmergingMarketsQuadrant 43
Section 6: Emerging Market Trade Lanes 45
TradebyAir 50
TradebySea 60
Section 7: The 2017 Agility Emerging Markets Logistics Survey 72
PerceivedMajorLogisticsMarketsoftheFuture 73
FactorsbehindthePotentialEmergenceofMarkets 75
ProblemsAssociatedwithDoingBusinessinEmergingMarkets 76
SupplyChainRisk 78
LeastAttractiveEmergingLogisticsMarkets 82
ProspectsforEmergingTradeLanes 84
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Contents
VerticalSectors 85
MarketsforPotentialInvestmentovertheNextFiveYears 88
PerceivedEffectofChina’sEconomicSlowdownontheTransportation&LogisticsMarket 90
StrategiesforSub-SaharanAfrica 92
Sub-SaharanAfrica’sMostPromisingMarkets 93
DriversbehindtheEmergenceofSub-SaharanAfrica’sEmergingMarkets 95
StrategiesforIndia 97
BarrierstoGrowthinBrazil 98
MostSignificantDriversintheGlobalEconomy 99
TheFutureofFreeTrade 100
CommodityPriceDevelopment 101
ProspectsforEmergingMarketGrowth 102
Section 8: About Agility and Transport Intelligence 104
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The Agility Emerging Markets Logistics Index
Essa Al-Saleh, CEO & President Agility Global Integrated Logistics (GIL)
Summary:
•Biggeopoliticaleventsacrosstheglobehavean
impactonemergingmarkets
•EMsremainanessentialareaforgrowthand
investmentdespiteglobalrealities
•China,IndiaremaintheleadingcountriesontheIndex
giventheirsizeanddynamism
•MorethaneverAgilityEMIndexhelpsclearthefogon
EMdynamics.
TheUKBrexitvoteandtheUSpresidentialelection
broughtatorrentofspeculationabouttheireffecton
emergingmarkets.TypicalwasaBloombergNews
headline:“EmergingMarketWinnersandLosers
afterTrump.”Thereisnothingwrongwiththatsortof
analysis.Biggeopoliticaleventsinevitablyripplethrough
emergingeconomies,affectingportfolioflows,interest
rates,exchangerates,commodityprices,manufacturing
demandandforeigndirectinvestment,amongother
things.
John Manners-Bell, CEO Transport Intelligence
Thegrowthofemergingmarketshasoverthepastfew
decadesbeenpredicatedontheirintegrationwiththe
consumermarketsoftheWest.Foryearsthisrelationship
hasgoneunchallenged,withconsumersenjoyinglower
pricesanddevelopingmarketsbenefitingfromjobs
andrisinglevelsofdisposableincome.Yet,theimpact
ofglobalisationhasnotbenefitedeveryone.Fears
havegrownoverthelossofjobsinEuropeandtheUS,
particularlytoAsia,andbubblingresentmentfinally
manifesteditselfinpoliticalchangein2016.
Potentiallythiscouldhavesignificantconsequencesfor
thefutureofemergingmarkets.Growingprotectionism,
especiallyintheUS,couldhindereconomicdevelopment
inregionssuchasAsiaandLatinAmericainparticular.
LongatargetofthenewTrumpadministration,theTrans-
PacificPartnershipagreement(involvingtheUSand
manyotherAsiancountries)isregardedasalreadydead
inthewaterandspeculationisrifethatUScompanies
whichinvestabroadcouldbesubjecttopunitivetaxation.
Takingastepbackandassessingwhathastranspiredin
One
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Butforcompaniesfocusedonemergingmarketsover
thelongterm,instantanalysisisnosubstituteforcloser,
morecarefulexamination.Companiesthatarelooking
atindividualmarketsorweighingtherelativemeritsof
differentdevelopingeconomiesshouldfindthe2017
AgilityEmergingMarketsLogisticsIndexusefulfor
perspective,contextandinsights.
Thisisthe8thyearwehaveproducedtheIndexin
partnershipwiththeleadinglogisticsresearchfirm
TransportIntelligence.WiththeadditionthisyearofIran,
Myanmar,Ghana,AngolaandMozambique,theIndex
hasgrownto50countries.Weputoffplanstoadda
sixthnewmarket,Cuba,despitetheexcitementabout
itsprospectsandpotential.Fornow,thereisashortage
ofsounddatafromtrustedsourceswhenitcomesto
Cuba’seconomyandinfrastructure.
IndiaisanIndexdarlingforthesecondconsecutiveyear.
Inoursurveyofmorethan800supplychainindustry
executives,Indiawastheleadingpickasaninvestment
destination,anindicationoftheenthusiasmgenerated
bysomeofthereformsundertakenbytheModi
government.InthedataportionoftheIndex,robust
economicgrowthpropelledIndiatotheNo.2spot
overallbehindonlyChina.Lookinginto2017,however,
thereisuncertaintyasaresultofthegovernment’s
surprisedecisioninNovembertotake500-rupeeand
1,000-rupeebanknotesoutofcirculation.Thatmove
willundoubtedlybejarringintheimmediatetermfora
societywhereuseofmobilepayments,creditcardsand
othercashlessformsofpaymentisnotwidespread.
Twocountriesemergingfrominternationaleconomic
isolation–IranandArgentina–performedwellinthe
2017Index.TransportIntelligencecalculatedaprior-
yearscoreforbothcountriesinordertoofferabasis
foryear-on-yearcomparison.Theresultswerestartling:
IndexnewcomerIranranked18th,whichwouldhave
meantayear-on-yearleapofeightspotsintherankings.
Argentina,whichistryingtore-integratewiththe
globaleconomyafterturningitsbackoninternational
creditors,climbedthreespotstoNo.28.Elsewhere,
Bahrain,damagedbysectarianunrestinrecentyears,
appearstohavebenefittedfromrecentstability:itrose
fivespotsto23rd.Africa’slargesteconomies,Nigeria
andSouthAfrica,performedpoorlythisyear,tumbling
lowerintheIndexamidpoliticaluncertaintyandlow
pricesforoil,mineralsandothercommodities.Smaller
theyeargoneby,itseemsappropriatetodescribe2016
asachallengingyearforemergingmarkets.
China’seconomyisstilltrendingdownfromthe
historicgrowthratesseenoverthelasttwodecades,
withanalystsconcernedaboutbothofficialgrowth
numbersandtherateatwhichtheeconomy’stransition
isprogressing.Thefortunesofemergingmarkets
worldwideremainboundupwithChinatoo,inLatin
Americawherecommodityexportdependantmarkets
likeBrazil,ChileandPerusendbetween15%and25%of
alltheirexports,forexample.
Otherdriversofuncertaintyincludeoilprices,with
lowerrevenuespromptingawiderangeofoutcomes.
InVenezuela,aneconomyalmostentirelydependent
onincomefromitsoilsectorhaseffectivelygroundto
ahalt,whileinSaudiArabia,wide-rangingeconomic
transformationplanshavebeenintroducedalongsidethe
removalofsubsidies,oneofthekeymechanismsthrough
whichtheKingdomsharedoilwealthwithcitizens.
Inaddition,emergingmarketcurrenciesremain
vulnerable.Lesscertaintythatemergingmarketswill
sustainrapidgrowthratesasdemandfortheirexports
declinehasbeenmatchedwiththeloomingspectreof
interestraterisesintheUS.Vastsumsofcreditmade
availabletoemergingmarketsduringthe2000sis
denominatedinUS$.Weakercurrenciesmeannotonly
thatrepaymentsaremoreexpensive,butcapacityto
investineconomicdevelopmentisreduced.
Inawidercontext,emergingmarketsmustdealwith
theseissuesagainstabackdropofslowingglobal
growth.FiguresfromtheIMFindicatethat2016willbe
thefifthconsecutiveyearwithglobaleconomicgrowth
belowitslong-termaverageof3.7%,anditsprojections
suggest2017willbethesixth.Moreover,thereisthe
addedpressureofaslowdowninglobaltrade.WTOdata
predictsthat,forthefirsttimein15years,tradegrowth
willbeslowerthaneconomicgrowth.
While,inaggregate,thesechallengeshavecontributed
toaslowdownineconomicgrowthmorewidelyacross
emergingmarkets,notallarestruggling.Indiahasseen
boominggrowthofmorethan7%inrecentyears,with
vastdemographicadvantagessettocoincidewith
reforms,suchasthelong-awaitedGoods&Services
Tax,thatlookssettointroduceefficienciesandunlock
valueinthemarket.Iran,too,onthebackofre-
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Africaneconomies–Uganda,TanzaniaandEthiopia–all
improvedtheirIndexrankingssignificantly.
Brazilheldsteadyintherankings,butinthesurvey,
industryexecutivesputblameforitsrecenteconomic
woessquarelyon“poorgovernance.”Inashortspan,
BrazilhashostedtheWorldCupandtheOlympics,and
witnessedthehistoricimpeachmentofPresidentDilma
Rousseff–allofwhichtookplacewiththecountryin
recession.Investorsandsupplychainprofessionals
areeagertoseegrowthandstabilityrestoredinLatin
America’slargesteconomy.
The50Indexcountriesarerankedbyweightedsets
offactors.Thefactorsusedtocalculatemarketsize
andattractivenessaccountfor50%;infrastructureand
transportconnectionsprovidea“connectedness”score
weightedat25%;“compatibility”dataofferapictureof
theoverallbusinessandtradeclimate,andalsocountfor
25%.Twenty-fourofthe50countriesinthisyear’sIndex
experiencedyear-to-yearerosionintheiroverallscores.
It’sunclearwhetherthatisananomalyorthestartofa
trend,butit’sworthwatching.
TheIndexandsurveyofferasnapshot,alookathow
these50countriesstackupagainstoneanother
inthedataandasenseofsentimentaboutthem
amonglogisticsindustryexecutives.TheIndexisnot
meanttotaketheplaceofin-depthmarketresearch
intoanemergingmarket.Norwillitsubstitutefor
longconversationsandcarefulscrutinyofpotential
commercialandgovernmentpartners.Evenso,we
believeitwillproveusefultocompanieslookingfor
adeeperunderstandingoftheworld’smostvibrant
markets–andtherisksandrewardsthatawaitthere.
Thankyouforreading.
emergenceontotheglobaleconomylookssettoprovide
significantopportunitiestothelogisticssectoroverthe
nextfewyears.Thecountry’ssizeableandrelatively
wealthypopulation,aswellasitsoil&gassectorand
manufacturingbase,willbenefitfromrenewedinterest
ininvestment.Indeed,Iranlookssettobecomeamajor
subjectonboardroomagendasacrossthelogistics
industry–inthedata-drivenIndex,thecountryentered
thetop20forthefirstevertimethankstoariseofeight
rankingpositions,thehighestofanyofthe50markets
assessedthisyear.Iranalsoenteredthetop10emerging
marketswiththemostpotentialtogrow,accordingto
surveyrespondents,andbecametheemergingmarket
withtheeighthmostplannedinvestments.
Overall,emergingmarketsretainmuchofthecapacity
forgrowthandthedynamismwithwhichtocreateand
capturevaluethatmuchoftheinvestmentinthemwas
builton.Intheyearahead,though,apotentmixof
challenges,downwardpressuresandrisksthreatensto
revealwhichemergingmarketshavefoundationsbuilton
sand.
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Sources
TheAgilityEmergingMarketsLogisticsIndexhasthree
maincomponents.FirstistheIndexcountryrankings,a
lookatthecompositescoresofthe50Indexcountries
basedonacombinationoftheirmarketsizeand
attractiveness;marketcompatibilityoroverallbusiness
climate;andmarketconnectednessortransport
infrastructureandcustoms/borderefficiency.Second,
isanexaminationbyvolumeandmodeoftransport
ofmajortradelaneslinkingemerginganddeveloped
markets.Thirdisasurveyoftradeandlogisticsindustry
professionals.
DatafortheIndexcountryrankingscomesfromthe
InternationalMonetaryFund,OrganizationofEconomic
CooperationandDevelopment,WorldBank,government
statisticalagencies,UnitedNationsandUNagencies,
WorldEconomicForum,InternationalTradeCentreand
InternationalAirTransportAssociation.
TradelanedatacomesfromtheUnitedStatesCensus
BureauandEurostat.
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Methodology
Definition of ‘Emerging Markets’
Theterm‘emergingmarkets’wasfirstcoinedbythe
WorldBank’sInternationalFinanceCorporation(IFC)in
1981.Accordingtoitsdefinition,anemergingmarketis
acountrymakinganefforttoimproveitseconomywith
theaimofreachingthesamelevelofsophisticationas
nationsdefinedas‘developed’.Anemergingmarketis
furthercharacterisedbytheIFCasmeetingatleastone
ofthetwofollowingcriteria:
1.Itisalowormiddleincomeeconomy,asdefinedbythe
WorldBank
2.Itsinvestablemarketcapitalisation(IMC)islowrelative
toitsmostrecentGrossDomesticProduct(GDP).
The Agility Emerging Markets Logistics Index
TheAgilityEmergingMarketsLogisticsIndexusesthree
metricstoassessandrank45emergingmarkets.The
metricsmeasurethecountries’:
•MarketSize&GrowthAttractiveness(50%ofoverall
Indexscore)
•MarketCompatibility(25%ofscore)
•MarketConnectedness(25%ofscore).
MarketSize&GrowthAttractiveness(MSGA)ratesa
country’seconomicoutput,itsprojectedgrowthrate,
financialstabilityandpopulationsize.
MarketCompatibilityratesemergingmarketsaccording
totheirmarketaccessibilityandbusinessregulation,
foreigndirectinvestment(FDI),marketriskandsecurity
threats,aswellastheleveloflikelydemandforlogistics
servicesbasedonthecountry’seconomicdevelopment.
MarketCompatibilityisablendof:
•Acountry’sdevelopmentthroughtheimportanceofits
servicesector–indicativeofthelevelofoutsourcingof
logisticsservices
Thre
e
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•Urbanisationofpopulation–adriverofmanufacturers’
centraliseddistributionstrategiesandthelikely
consolidationofretailing
•Distributionofwealththroughoutthepopulation–
indicativeofthewidespreadneedforhighervalue
goodsoftenproducedbyinternationalmanufacturers,
asmeasuredbytheGiniIndex
•ForeignDirectInvestment(FDI)–anindicatorofthe
penetrationofaneconomybyinternationalcompanies
•Marketaccessibility–howeasyitisforforeign
companiestoenterthemarketanddealwithexisting
bureaucracyandregulation
•Security–thismeasurestherisktocompanies’
operationsfromthreatssuchastheft,piracyand
terrorism.
MarketConnectednessassessesacountry’sdomestic
andinternationaltransportinfrastructureandhowwell
theyconnect.
Specifically,thisinvolves:
•Thefrequencyandrangeofdestinationsofitsliner
shippingconnections
•Thelevelofairportinfrastructurerelativetothemarket’s
size
•Aratingofitsoveralltransportinfrastructure
•Aratingoftheefficiencyofitscustomsandborder
controls.
The Agility Emerging Markets Logistics Index for Countries with GDP more/less than US$300bn
GDPismeasuredincurrentUS$.GDPdatahasbeen
obtainedfromtheWorldBank.
New Countries in Agility Emerging Markets Logistics Index 2017
Thisyear’sAgilityEmergingMarketsLogisticsIndex
hasbeenexpandedto50countrieswiththeaddition
offivemarkets:Iran,Ghana,Myanmar,Angolaand
Mozambique.
AsIranemergesfrominternationalisolation,theglobal
logisticsindustryhastakenmuchinterestinthecountry,
nowwidelyregardedasanemergingmarketoffering
significantopportunities.Myanmarhasalsogarnered
greaterinterestfromlogisticsprovidersinrecentyearsas
anumberofmajorLSPshaverampeduptheiroperations,
manyestablishingtheirownofficesthereforthefirst
timeratherthanusingagents.ThethreeAfricanmarkets
ofAngola,GhanaandMozambiquewereaddedinpart
togivesub-SaharanAfricaagreaterpresenceinthe
Index.Thoughtheyarealsointerestingmarketsintheir
ownright:Angolaisoneofthelargesteconomiesinthe
regionthankstoitsoilwealth,Ghanaisalsoasizeable
economywithconsiderablemineralandoilriches,while
MozambiqueisvyingwithKenyaandTanzaniatobecome
aregionalhubinEastAfrica.Cubawasalsoconsidered
forpossibleinclusioninthe2017Index.Transport
IntelligenceandAgilitydecidedagainstaddingCuba
untilthereismorereliabledataontheCubaneconomy,
infrastructure,customsregimeandbusinessclimate.
Restatement of 2016 Index Data
Withtheinclusionofthefivenewcountries,Indexscores
andrankingsfor2016havebeenrestated.Thisisbecause
themodelhasanelementofrelativescoringtoit.Inother
words,foreachmetric,wheneveranewcountryisadded
totheoverallgroupofcountriesbeingexamined,the
scoresofalltheothercountrieschange.
Thismethodidentifiesimportantdifferencesbetween
emergingmarkets.ConsideracomparisonofGDPin
absoluteandrelativemodels.
Inanabsolutemodel,assumingChinagetsascoreof10,
ChileandMozambiquewouldgetscoresof0.21and0.01
respectivelyastheirGDPsare47and755timessmaller
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thanChina’s.Clearlythen,mostcountrieswouldhave
verylowandclosetogetherscores.
WiththerelativeIndexmodelthatisused,Chinastill
scoresveryhighlyasitisaverylargemarket,but
crucially,theothercountriesareattributedhigherscores
tomorefairlyandaccuratelyrepresenttheeconomic
opportunitiesavailablewithinthem.Overall,suchan
approachmakesforamoreusefulandinsightfulIndex.
Trade Lanes
Thetradelanesectionmeasuresthevolumeofgoods
shippedbyairandseabetweentheemergingmarkets
includedintheIndexandtheUS/EU.Thetradelane
sectionincludestwoparts:
1. Top 10 Trade Lanes – Air and Sea, Import/Export
Alistoftradelaneswiththehighestvolumes,as
measuredbytons,splitbyairandsea,andbyimport
andexport(fromemergingmarketstotheEU/USandto
emergingmarketsfromtheEU/US).
2. Fastest Growing Trade Lanes – Air and Sea, Import/Export
Forairandsea,byimportsandexports,the25fastest-
growingtradelanesforeachcasehavebeenranked
bytheirgrowthin2016.Inaddition,anindexhasbeen
calculatedwithabaseyearof2005toofferalong-term
perspectiveoneachtradelane’sperformance.
2005-2015dataare‘actual’figures,whereas2016data
areforecastfiguresbasedonactualmonthlydatafrom
January-August2016.Aforecastmodelwhichaccounts
forseasonalityhasbeenappliedtoestimatefull-year2016
figures.Forseafreight,tonnagerelatingtoHS2product
group27“mineralfuels,mineraloilsandproductsoftheir
distillation;bituminoussubstances;mineralwaxes”has
beensubtractedfromtotalfigures.Noproductgroups
areexcludedfromairfreightfigures.Toqualifyasoneof
the25fastestgrowingtradelanes,acertainvolumemust
bereached.Forseafreighttradelanesthisthresholdis
1milliontonnes.Forairfreight,itis10,000tonnes.This
preventsrelativelyinsignificanttradelanesenteringthe
rankings.
CAGRshavebeenusedtomeasureeachtradelane’s
performance.CAGRstandsforCompoundAnnual
GrowthRate.Itmeasurestheconstantannualpercentage
growthrateofatimeseriesbetweenaparticularstartand
endpoint.WhileCAGRscanbeaquickandusefulway
toanalysemediumandlong-runperformance,caution
shouldbetakenastheycanoftendisguisevolatility.
Inspectionofeachyear’sindexvalueovertimereveals
volatility.
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Key Findings
Emerging Markets: How Logistics Executives See Them
More than 800 supply chain and logistics executives
worldwide shared their views on the 2017 global
economic outlook, prospects for emerging markets, key
growth drivers and trends affecting emerging markets
countries.
•Asignificantminorityoflogisticsexecutives(42.8%)
thinktheIMFforecastfor4.6%emergingmarkets
growthistoooptimistic.Thatcompareswith35.9%
whothoughttheIMF’s4.7%forecastfor2016wastoo
rosyayearago.Nearly69%saytheyareconcerned
or“veryconcerned”thattheUK’sBrexitvoteandthe
failureofregionalandglobaltradeinitiativessuchasthe
Trans-PacificPartnershipsignalathreattofreetrade.
•Ayearago,supplychainexecutiveswerepreoccupied
withlowoilprices,whichwereidentifiedby27.1%as
thefactorlikelytohavethemostsignificantimpact
onglobaleconomicandtradegrowth.Inthe2017
Index,thereisnodominantfactor.Instead,opinionis
splitamongavarietypotentialdrivers:10.5%citethe
directionofChina’seconomyastheleadingdriver;
9.4%pickoilprices;5.7%saythedirectionoftheUS
economywillhavethegreatestimpactonglobalgrowth.
Nearly57%saytheyexpectoilpricestoincreaseat
leastsomewhat.
•Forthesecondconsecutiveyear,industryexecutives
pickedIndiaasthecountrywiththemostpotential
togrowasalogisticsmarket.Theyalsoindicated
Indiawastheleadingemergingmarketsdestination
forinvestmentbytheircompaniesoverthenextfive
years.ThatupbeatsentimentwasparalleledbyIndia’s
improvingperformanceinthedata-drivenportionof
theIndex.IndiaclimbedtoNo.2intheoverallrankings
behindonlyChina.Moresurprisingly,itleapfrogged
ChinatotoptheMarketSize&GrowthAttractiveness
portionoftheIndex,ashock,giventhefactthatChina’s
annualGDPisroughlyfivetimesthatofIndia’s.
•Thegloballogisticsindustryclearlyisfascinatedby
Iranandtheimplicationsofitsemergencefromyearsof
internationalisolation.Supplychainexecutivesranked
Iran9thamongcountrieswiththemostpotentialto
growaslogisticsmarkets,upfrom15thayearago.
Amongothercountriesselectedbysurveyrespondents,
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onlyKenya(up3spotstoNo.17)andKazakhstan(up
2placestoNo.20)rosemorethanonespot.South
Africa,hobbledbypoliticalandeconomicdifficulties,
fellthreespotstoNo.12.Qatar,whichisinthemidst
ofadrivetolessenitsrelianceonenergy,alsodropped
threespotstoNo.19.Egyptslippedoutofthetop20in
thesurvey.
•Economicgrowthandforeigninvestmentlevelscontinue
tobetheoverridingfactorsininvestmentdecisionsby
globallogisticscompanies,butexecutivesaregiving
closerscrutinytodemographiccharacteristics.Survey
respondentscitedcheaplabour(No.3)andpopulation
growth(No.5)amongotherleadingdriversofthe
importanceofindividualemergingmarkets.Corruption
andpoorinfrastructurearethefactorsthatmostinhibit
growth,whilearangeofefficiency-sappingbureaucratic
impedimentsarealsohavingasignificanteffect.
•Supplychainexecutivesconsistentlyvieweconomic
shocksastheNo.1threattogrowthinAsiaPacificand
asoneofthetopthreatsinotherregions.Theyidentified
corruptionastheleadingthreatinLatinAmericaand
terrorismintheMiddleEast&NorthAfrica.
•Syria,LibyaandIraq–allinthegripofextremist
violenceandwar–wereseenbyindustryexecutivesas
thethreecountrieswiththeleastpotentialaslogistics
markets.Othercountriesconfrontingextremismalso
rankedamongthosewithleastpotential:Bangladesh
(5),Egypt(7),Algeria(8).Ethiopia,whichisinthemidst
ofacrackdownfollowingmonthsofanti-government
protests,wasNo.4.SurveyrespondentsrankedIran
asNo.6amongcountrieswiththeleastpotential–
reflectingadeepsplitamonglogisticsexecutives,who
alsopickeditasoneofthecountrieswiththemost
logisticspotential.
•SlowinggrowthinChinahashurtthetransportand
logisticsindustry,accordingto76%ofsupplychain
executivesinthesurvey.Still,fewseethisasareasonto
altertheirplansfortheworld’slargestemergingmarket:
nearly66%saytheirbusinesseswillcarryonwithplans
inChinadespitetheslowingeconomy.(Roughly22%
saytheywillmoderateentryorexpansionplansinChina
asaresultofitsslowdown.)ChinarankedNo.2,after
onlyIndia,asafutureinvestmentdestinationandasthe
mostpromisingemergingmarket.
•InBrazil,consumedwithapoliticalcrisisthatledto
theimpeachmentofPresidentDilmaRousseff,poor
governanceistheoverwhelmingpickasthebiggest
impedimenttogrowth.Itwasthetopselectionof
46%ofsurveyrespondents,followedbycorruption,
thepickof21%ofthosewhoresponded.Inthedata
portionoftheIndex,Brazilwasremarkablyresilient:it
remainedtheNo.7emergingmarketandwasseenby
industryexecutivesasthemarketwiththethird-ranking
destinationforinvestmentandformostinvestment
potential.
Markets on the Move
•Stagnationinglobaltradegrowthandturbulencein
emergingmarketsarereflectedinthe2017Index.
Twenty-fourofthe50countriesexperiencedayear-
over-yearerosionintheiroverallscores,whichcouldbe
consideredabroadgaugeoftheircompetitivenessthat
includesgrowth,marketattractiveness,infrastructure
andtransportconnections,andbusinessclimate.All
of2016’semergingmarketsremaininthetop10,but
scoresforsevenofthe10countriesdeteriorated:China
(1),Malaysia(4),SaudiArabia(5),Indonesia(6),Brazil
(7),Mexico(8),Russia(10).
•ChinaremainedatoptheIndexrankingsbyalarge
margin.Amongcountriesinthetop10,themarkets
changingplacesfromtheprioryearwereIndia(upto
No.2fromthird),UAE(downtoNo.3fromsecond),
Turkey(uptoNo.9from10th)andRussia(downtoNo.
10fromninth).
•Iranwasthemostimprovedemerginglogisticsmarket,
climbingeightspotsto18thoverallasitreintegrates
withtheglobaleconomyandbecomespartoflogistics
providers’strategies.Iranisoneoffivecountriesadded
totheIndexin2017.Theothers–Ghana(39),Myanmar
(48),Angola(49)andMozambique(50)–struggledto
perform.
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• Nigeriasufferedthelargestlossintermsofbothscore
(-0.43)andrankingpositions(downnine)andended
in24thoverall.Slashedeconomicforecasts,lowoil
prices,recessionandinstabilityallcontributedtothis.
South Africawasalsoamongthecountrieswiththe
sharpestdrops:itfellfourpositionstoNo.21,hurt
bydecreasingFDIacrossmanufacturingandmining,
stallinginfrastructuredevelopment,andsocialissues
thatweigheddowngrowth.Asaresult,nosub-Saharan
countryranksamongthetop20intheIndex,although
fiveothermarketsfromtheregion–Ethiopia(37th),
Tanzania(38th),Ghana(39th),Uganda(41st)andKenya
(43rd)–sawtheirrankingscoresimprove.
•Asnoted,IndiamovedaheadofChinatotopthe
MarketSize&GrowthAttractivenesssub-Indexin2017,
thanksinlargeparttoitssuperioreconomicgrowth
forecastsoverthemedium-term.Othercountries
makingmovesinthecategoryofMarketSize&Growth
Attractiveness:thePhilippinesrosefourspotsto12th;
Egyptclimbedfourpositionsto10th.Argentinawasup
sixto22nd,andIranrosefiveto16th.
•Whenitcomestothebestbusinessclimate–or
MarketCompatibility–theMiddleEast&North
Africaistheplacetolook.Sevenofthetop10ranked
marketsforCompatibilitynowcomefromtheMiddle
East&NorthAfricaregion,upfromfivein2016.
Forthethirdconsecutiveyear,theUAEboaststhe
bestbusinessconditionsamongemergingmarkets.
Amongitsattractions:anetworkoffreetradezones,
nocorporationtax,theofferoffullownershipand
unlimitedrepatriationofprofits–conditionsthatsetthe
benchmarkforemergingmarkets.Qatar(2nd)hasmore
orlesshalvedthegapbetweenitselfandtheUAEin
termsofscore,astradebarriersandinvestmentthere
continuetobeeroded.
•Transportinfrastructureandfrequencyofoceanand
airconnectionsdrivethecompetitivenessofemerging
markets.Inthatarea–calledMarketConnectedness–
UAE,Malaysia,ChinaandChileremainedatthetop.
Russiaregressedfrom10thto13thbecausetheoverall
qualityofitsinfrastructureisjudgedtohaveworsened,
ashastheburdenofitscustomsprocedures.Replacing
Russiainthetop10wasKazakhstan,whichjumped
upto9thonthestrengthofinfrastructureandcustoms
improvements.
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BIGGEST MOVERSPOS COUNTRY PLACES
BIGGEST MOVERSPOS COUNTRY PLACES
1 Iran +82 Uganda +63 Bahrain +54 Kazakhstan +45 Pakistan +36 Argentina +37 Ethiopia +38 Tanzania +39 Kenya +210 Bolivia +2
UP
1 Nigeria -92 Tunisia -53 South Africa -44 Uruguay -45 Paraguay -46 Kuwait -37 Libya -38 Lebanon -39 Thailand -210 Sri Lanka -2
DOWN
1
2
34
5
678
9
10
8
72
6
5
1
10
9
4
3
Source: Transport Intelligence
Markets on the Move
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Summary
Tradevolumesarestrugglinginemergingmarkets.If2015
wasayearoflowgrowthornogrowth,then2016issetto
beworsestill,theworstsincetheglobaleconomiccrisis
of2008.Importandexportvolumegrowthfigureshave
turnednegative.
Thefuturelooksnobrighter.Lastyear,annualforecasted
tradevolumegrowthratesstretchingto2020foremerging
marketswereexpectedtoreturntoratesexperienced
from2012to2014–intheregionof5%.Inthelatestset
ofIMFforecasts(October2016),theexportandimport
CAGRsfor2015to2020foremergingmarketshave
edgeddowntomorelike4%.Andtheforecastsdon’t
considertheimplicationsofthesurpriseoutcomeofthe
USelections.
Butifyoulookhardenough,brightspotscanbefound.
Withinternationalsanctionseasing,Iran’stradeprospects
arenowfarstronger.Argentinahasenjoyedabounce
thankstothenewgovernment’smoreorthodoxeconomic
policies.Vietnamhasseeminglymovedfromanalready
strongpositiontoanevenbetterone.
Withanincreasinglydifficultexternalenvironmentthough,
logisticsproviderswillhavetoworkhardertomakethe
mostoftheopportunitiesthattradeinemergingmarkets
presents.
Air Freight to Emerging Markets
Thebusiestemergingmarketsairfreightlanesoriginating
intheEUorUStendtoconnecttolargermarketsinthe
Index:China,UAE,India,Mexico,Turkey,SaudiArabia,
BrazilandSouthAfrica.Volumegrowthalongtheselanes
in2016appearstobesubdued.OnlyEU-Indiaislikelyto
showdouble-digitgrowth(forecast10.5%),withthenext
bestbeingEU-Mexico(7.6%).Forallotherlanesinthe
top10,growthisexpectedtobeinthelowsingledigits
ornegative.Brazillookstohavesufferedbadly(EU-Brazil
down6.7%,US-Brazildown11.6%).
Theeightfastest-growinglanesinvolveEUorigins.The
topfiveareEU-Vietnam(up37.2%),EU-Pakistan(up
31.0%),EU-Colombia(up18.7%),EU-Oman(up14.4%)
andEU-India(up10.5%).
EUairshipmentstoemergingmarketsareonpaceto
decreaseby1.8%for2016,whileUSairshipmentsto
thosesamemarketslooksettoshrinkby6.3%.
Air Freight from Emerging Markets
Flowingintheotherdirection–fromemergingmarkets
totheEUandUS–thepictureismixed.Lookingatthe
twobusiestlanes,exportstotheEUin2016arebeing
proppedupbyChina-EUgrowthof4.8%;andexportsto
theUSarebeinghamstrungbya10.5%declineinChina-
USvolumes.
Amongtheremainingtop10busiestlanes,Mexico-EU
(up22.3%)andBangladesh-EU(up20.7%)arethetop
performers,andinfactarethefastestgrowinglanesof
all.Cambodia-EU(up17.8%),Pakistan-EU(up15.8%),
Brazil-US(up11.0%),Tanzania-EU(up10.8%)and
Ecuador-EU(up10.1%)alsoshoweddouble-digitgrowth.
Forecastsindicatethatairfreightshipmentsfromthe
Index’s50emergingmarketscountriestotheEUwill
increase3.3%,butshipmentstotheUSwilldecline
6.2%.
Ocean Freight to Emerging Markets
Inoceanfreight,thelargestlaneconnectsUSoriginswith
destinationsinChina.Tradealongthatlanedecreasedby
7.1%.EU-Chinaoceanfreightisdownby4.8%.
Elsewhere,EU-Morocco(up25.9%)isthebestperformer
amongthetop10lanes,followedbyUS-Mexico(up
12.1%),EU-SaudiArabia(up12.1%)andUS-Brazil
(11.7%).
Amongthe25fastest-growinglanes,growthis
overwhelminglydrivenbyhighervolumesofcerealcrops,
withafewnotableexceptions.AmongEU/USorigin
oceanfreightlanes,itisalmostalwaysbulkgoodsthat
drivevolumegrowthswings.
Overall,EU-origintradelanesaresetforgrowthof0.7%
in2016,whilethecorrespondingfigureforUSlanesis
3.0%.
Trade Lanes
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Ocean Freight from Emerging Markets
Asalientfeatureofemergingmarketsseafreight
exportsisthattheyaremuchmorediversifiedcompared
toimports,whichareoverwhelminglycomprisedof
agriculturalgoods.
Thisisbestexemplifiedbythelargestexporterofall,
China,whosemostimportantexportgroupsincludea
vastarrayofmanufacturedgoods.For2016,China-US
oceanfreightvolumeisexpectedtofallby3.0%,but
China-EUwillseegrowthof3.3%.
Therestofthetop10areamixedbag:Argentina-EU
(up13.1%),SouthAfrica-EU(up6.9%)andTurkey-EU
(up6.4%)aresomestrongperformers,butMexico-
US(-13.1%),Russia-EU(-7.6%)andBrazil-US(-6.8%)
volumesareforecasttocontract.
Thelistoftradelanesthathavegrownrobustly(morethan
5%)bothin2016andoverthelastdecadeorsoincludes
Vietnam-US,whichstandsoutasaleadinglane,followed
byUruguay-EU,Qatar-US,Turkey-US,UAE-US,Algeria-
EU,Nigeria-EUandBangladesh-EU.
Overall,EUoceanfreightfromemergingmarkets
originsispredictedtogrow1.8%in2016,buttheUSis
projectingadeclineof4.5%.
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The 2017 Agility Emerging Markets Logistics Index
Entering2017,theglobaleconomylooksvulnerabletoa
rangeofdownsiderisks.China’sslowingeconomy,falling
oilprices,weakerinvestmentandvolatilecurrencieshave
allhadanunsettlingeffectondevelopedandemerging
marketsalike,aswellastheprivatesector.Inthisclimate,
thereisuncertaintyaboutemergingmarkets’abilityto
providehighlevelsofreturnoninvestment.Asaresult,
thestatusofemergingmarketsinthemindsofinvestors
haschanged,andthedaysofunboundedoptimism
aboutthesemarketshasbeentempered.Inrecentyears,
investorshavelookedtoemergingmarketstoprovidethe
greatestreturns.Itisunclearifthatwillremainthecase.
As2015drewtoaclose,andwiththeyuanalready
devalued,therewasconcernthatChinawasnotmaking
progressquicklyenoughinitseconomictransition.
Thatfearledtoturbulenceinfinancialmarketsacross
theworld.China’sdomesticmarketishighlyindebted,
anditisstrugglingtodealwithvastoversupplyand
overcapacityacrosskeymanufacturingandrealestate
sectors.Astheworld’ssecond-largesteconomy,other
countriesfindtheyarenowintrinsicallylinkedtoChina’s
fortunes.China’sslowingeconomyanditsreorientation
towardsaservices-ledeconomyaresignificantfor
anumberofemergingmarkets,manyofwhichrose
onthebackofChinesedemandforcommodities
andrawmaterialstosupplyitsvastconstructionand
manufacturingexpansion.AsChinesedemandforsuch
importsfell,anowfamiliarchainofeventsbeganto
unfold.Lowerdemandmeantthepriceofcommodities
declinedalongsideexportvolumesandrevenues,putting
jobsandeconomicgrowthinexportingnationsatrisk.
Morewidely,theuncertaintydentedconfidence,and
ledtovolatilityincurrencymarkets.Thiscompounded
thechallengesfacinganumberofemergingmarkets–
notonlywastherelessmomentumintheireconomies,
thedebttheytookontofundgrowthbecamemore
expensivetoserviceastheircurrenciesbecame
increasinglessvaluableagainsttheUSdollar.The
interventioninMarch2016oftheBeijingadministration
andtheNationalDevelopmentandReformCommission
witha$721.8bninfrastructurestimuluspackageto
fund303projectsacrossrail,road,waterways,airports
andmetrosystemsinChinawaswelcomerelieffor
thosesupplyingthematerials.Alsowelcomehasbeen
Five
Overview and Outlook
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thelackoffurtherinterestratehikesintheUS,which
allowedemergingmarketstocapturethevalueoftheir
morestablecurrencies.Thatsuchdevelopmentswhich
primarilyappearrelatedtodomesticchallengesinChina
andtheUShaveheldsomuchswayoverthefortunes
ofemergingmarketsinrecentyearsgoessomeway
toillustratinghowintegratedthesemarkets,andtrade
withandbetweenthem,havebecomewiththeglobal
economyoverthelastdecade.
Thisappearanceofstabilityledtoacalmer,more
favourablebackdropforemergingmarketsinthe
secondhalfof2016.Notallbenefitedfromit,however,
anddownwardpressuresremain.Formanymarkets,
adjustingwillnotbesimpleandwilllikely“bedifficult
andprotracted.Insomecases,itcallsforachangein
theirgrowthmodel,”accordingtoChristineLagarde,
headoftheIMF.Suchaprocessis,forexample,already
underwayintheoilexportingemergingmarkets,which
havehadtomakeeconomicadjustmentsinorderto
copewithlowenergyprices.Subsidiesonenergyand
utilities,longafeatureofmanyGCCcountries,havebeen
eliminatedorreduced,andtheintroductionofasalestax
lookslikelyinseveralcountrieswiththeUAEseemingly
firstinline.
Someemergingmarketscontinuetopoststrong
growthdespiteheadwinds,whileothersaresinking
intorecession,self-inflictedorotherwise.Onesuccess
storyisIndia,whereeconomicgrowthtopped7%in
eachofthelasttwoyears,andwhereapro-business
governmenthas,atlast,passedreformstounlockvalue,
increaseefficiency,easeforeigninvestmentrulesand
boostmanufacturingcapacity.Anotherfabledemerging
market,Brazil,presentsatextbookexampleofwhatcan
gowrong.WoefuleconomicmismanagementfedBrazil’s
budgetdeficits,causedinflationandunemploymentto
risetounsustainablelevels,andallowedcorruptionto
sapthecapacityofgovernmenttoaddresstheproblems.
Theresult:Brazil’sworsteconomicdownturnsince
theGreatDepression.Asagroup,though,emerging
marketsaregrowingmoreslowlyinrecentyears.Having
averagedgrowthof6.6%annuallybetween2000and
2007,emergingmarketslookedtohavebouncedback
when2010saweconomicexpansionhit7.5%.Sincethat
time,however,growthslowedineachyearto2015,when
a5.0%riseinoutputwasrecorded.TheIMFexpects
growthtohavereachedjust4.2%in2016.
Alongsidethechallengesemergingmarketshavefaced
inrecentyearscomestheaddedpressureofawider
slowdowninglobaltrade.WTOforecastsshowthat,
forthefirsttimein15years,tradegrowthislikelyto
beslowerthanoveralleconomicgrowth.Elsewhere,
figuresfromtheIMFindicatethat2016willbethefifth
consecutiveyearwithglobaleconomicgrowthbelowits
long-termaverageof3.7%.TheIMFpredictsthatgrowth
willlagtheaverageagainin2017.Meanwhile,as2016
progressed,adimensionhasbeenaddedtoslowing
tradegrowth.Risinganti-globalisationsentiment,from
oppositiontotradeagreementslikeTPPandTTIP,to
BrexitandtheprotectionisttonesoftheUSpresidential
election,appearsmotivatedbyadrivetoundomuchof
theintegrationthathasspurredtradegrowthsincethe
mid-1990s.Butwhiletradescepticsmayhavefounda
newformofexpressionandhighprofileleadersin2016,
anti-tradesentimentisnotlimitedtothesefewheadline-
grabbingstories.Norisitarecentphenomenon.Analysis
fromQuartzshowsthatofthe1,855trademeasuresG20
governmentshaveintroducedsince2009,some74.5%
havebeenprotectionistinnature.
Thisanti-globalisationsentimentcomesatatimeofslow
growthfordevelopedandemergingmarketsalike.When
economicgrowthisstrong,tradetendstoriseandtofuel
furthereconomicgrowth.Butasconsumptionhasfallen
andinvestmenthasslowed,sluggishgrowthhaslessened
thejobandeconomicprospectsofmiddleclassesinboth
developedandemergingmarkets.Despitetwodecades
ofunprecedentedprosperitybasedonfreetrade,the
distributionofgainshasbeenunevenandunequal.Soat
thestartof2017,thefutureofglobaltradeisuncertain.
TheWTOexpectsglobaltradetogrowby1.7%in2016,
downfromearlierforecastsof2.8%.TheWTOsays2017
tradegrowthcouldbeanywherebetween1.8%and
3.1%,highlightingitsuncertainty.“Thedramaticslowing
oftradegrowthisseriousandshouldserveasawake-up
call,”saidRobertoAzevêdo,Director-GeneraloftheWTO.
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“Itisparticularlyconcerninginthecontextofgrowing
anti-globalisationsentiment.Weneedtomakesurethat
thisdoesnottranslateintomisguidedpoliciesthatcould
makethesituationmuchworse.”
Insummary,2016wasadifficultyear.Itcamewitha
moderationinexpectationsforthefutureandfurther
indicationsthattheemergingmarketsgoldrushwas
comingtoanend.Thankfully,thestepstakenbykey
partiesincludingtheChineseandUSadministrations,
aswellasgovernmentsinmanyemergingmarkets
managingtransitionsandeconomicdiversification
projectsoftheirown,havehelpedtaketheheatoutofa
challengingyear.Whetherenoughhasbeendone,and
whethersolutionshavemovedquicklyenough,remains
tobeseen.Emergingmarketsretainmuchofthecapacity
forgrowthandthedynamismwithwhichtocreateand
capturevalue.Intheyearahead,though,apotentmixof
challenges,downwardpressuresandrisksthreatensto
revealwhichemergingmarketshavefoundationsbuilton
sand.
Asia Pacific
AsiaPacificmarkets’aggregatescoreisthehighest
acrosstheregionscoveredbytheIndex.In2017,eight
ofthetop20rankedemergingmarketsarefromtheAsia
Pacificregion,upfromsevenin2016.Itshouldbenoted,
however,thatonlytwomarkets–IndiaandPakistan
–roseintheranking,withVietnamtheonlyotherAsia
Pacificmarkettojointhetwoinincreasingitsscoreyear-
on-year.
TheAsiaPacificregionwillremaintheengineofglobal
economicgrowthwithanexpectedeconomicexpansion
of5.3%,accordingtotheIMF.Thereareanumberof
challengesintheregionwhichwillneedtobeaddressed
andeithermitigatedorovercomeiftheregionistofulfil
itspotential,however.Sluggishglobalgrowthisreducing
demandforitsexportsasvolumegrowthtomajorglobal
marketsandregionalpartners,suchasJapan,slows.
Weakinvestmentgrowthacrosstheregionhasfollowed
thevolatilityinfinancialandcurrencymarketswith
commodity-exportingmarketsmostaffected.Highlevels
ofcorporatedebtarealsoacauseforconcernasthe
prospectoftighteningfinancialconditions,particularlyin
theUS,looms.
Therealsoareanumberofpositivesintheregion.
Despitethegenerallylowerexportvolumes,anumber
ofmanufacturingsectorshaveshownresilience,while
othershaveseenvolumesgrow.Thisincludeselectronics,
anareawithsignificantpotentialforcountriessuchas
VietnamandIndonesia,marketswithstrongpotentialto
moveupthevaluechain.Creditgrowthremainshealthy,
suggestingconfidenceremainshighforthoseableto
identifyopportunities,whiledomesticdemandand
consumerconfidencearebroadlyhealthyinmarkets
acrosstheregionincludingIndia,China,Thailandandthe
Philippines.
LesspredictableforAsiaPacific,though,istheeffectthat
arisingtideofanti-globalisationsentimentwillhavein
keydestinationmarkets,mostnotablytheUS.TheTPP
tradedeallooksdeadintheUS,andamoreprotectionist
UScouldmeanreducedaccessforexportingnations.
ApotentialalternativerouteforAsiaPacificemerging
marketscouldbetopursuegreaterregionalcooperation
andintegration.TheASEANSingleWindowcanbe
improvedtobetterfacilitatecustomsandexport
procedures,whiletheRegionalComprehensiveEconomic
Partnership–aproposedfreetradeagreementbetween
theASEANnations,Australia,China,India,Japan,South
KoreaandNewZealand–couldtakeonnewimpetusas
analternativetoTPP.
Latin America
BrazilandMexico,LatinAmerica’slargesteconomiesand
topIndexperformers,maintainedtheirpositionsinthetop
10ofthe2017Indexdespitedifficultyears.Bothrecorded
lowerscoresyear-on-year,making2017thesecond
consecutiveyearthatnoLatinAmericamarketcracked
thetop5.Theregion,whichcontinuestounderperform,
gotaboostfromArgentinaandBolivia,bothofwhichsaw
theirrankingscoresrise.Still,LatinAmericawastheonly
regiontorecordadeclineinaveragescoreinthe2017
Index.
Expectationsofa0.5%contractionineconomicactivity
acrosstheregionin2016highlightthescaleofthe
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challengefacingLatinAmerica.Suchadeclinewould
markthefirsttimesince1982-1983thattwoconsecutive
yearsofnegativegrowthwillhavebeenrecorded.Within
theregion-wideforecastisahighdegreeofvariation.
Brazil,forexample,isinadeeprecession,dueto
significantcorruptionandeconomicmismanagementover
muchofthelastdecade.InVenezuela,thecollapseofoil
priceshashighlightedalackofdiversityintheeconomy
andtheabsenceofalternativemeansofvaluecreation.
Assuch,rapiddeclinesinGDPandhighlevelsofinflation
lookssettocontinueinVenezuelafortheforeseeable
future.Argentinamadegainsinthisyears’Indexand,
whilethecountrystillfacesalongandpotentiallypainful
journey,earlyindicationsofprogressundertheMacri
administrationarepromising.Elsewhere,ChileandPeru
looksettocontinuegrowth,andtheIMFexpectsPeru’s
economytoexpandby3.75%in2016,partiallyasaresult
ofongoinginvestmentintheminingsector.
LatinAmericaoverallremainsvulnerable,though.Itis
heavilyexposedtoChina.Theworld’ssecond-largest
economyisdestinationfor15%to25%ofallexportsfrom
Brazil,Chile,Peru,UruguayandVenezuelaaccordingto
IMFfigures.LatinAmerica’smarketsarealsovulnerable
tofurthervolatilityordeclinesincommodityprices.
Mexico,too,couldhavenewchallengestoovercome
shouldmanufacturershavetoconfrontnewbarrierstothe
USmarket.LatinAmericaalsomustaddressproblemsof
itsownmakingifitistoprogressoverthemedium-term.
Brazil’scurrentsituationcanbroadlybetracedbackto
thefailureofbothPresidentsLulaandRoussefftoreform
outdatedinstitutions.Brazilhascounterproductivelabour,
taxandbusinessregulationandhasshownawiderfailure
toimproveproductivityintheeconomy.
Middle East & North Africa
TheMiddleEast&NorthAfricacontinuestobea
strongperformer.Twomarkets–UAEandSaudi
Arabia–makethetopfive,despitehavingsignificantly
smallereconomiesthanotherelitemarkets.Suchsolid
performance,though,doesnotremovetheneedfor
furtherprogressoneconomicdiversification.Sevenofthe
region’s15Indexmarketsimprovedtheiroverallscores.
AmongthemwasIran,whichleapedmorespotsthanany
othercountryinthe2017Index.Manyoftheregion’sless
stablemarketssawscoresfallyear-on-year,although
Egyptcontinuedtoperformwell,risingonthebackof
post-ArabSpringreformsandstability,gainingtwospots
torank20th.
Perhapsthemostsignificantdevelopmentsintheregion
focusonhowitwilladjusttothe“newnormal”oflow
oilprices.EvenwiththepossibilitythatanewOPEC
productionagreementwilltakeholdin2017,lowoilprices
havehadamajoreffectacrosstheregion.Governments
havebeenforcedtodiversifytheireconomiesand
introducenewmethodsofrevenuecollection.Inmany
ways,thisischangingtheroleofthestateintheMiddle
East’soilexportingnationsfromonewhichsupportsthe
populationthroughvariouspublicspendinginitiativesand
subsidiestoonethatemphasisesthecreationofprivate
sectorjobsaswellasencouragingcompetitionand
choiceforconsumers.Thetransitionwillnotbepainless.
Itwillrequiresignificantinvestmentatatimewhenpublic
resourcesarestretchedandbudgetdeficitswidening.
AccordingtoWorldBankdata,theregion’soilexporters
haveseencashreservesswingfromasurplusof$128bn
in2013toadeficitof$264bnin2016,whilethoseinthe
GCC,sawoilrevenuesdeclineby$157bn2015,with
another$100bndeclineexpectedin2016.SaudiArabia
appearsmostchallengedwithreservesdown$178bn
sincemid-2014.Whilelossescouldnarrow,creatingnew
productivecapacityisatleastamedium-termproject.
Theprocessisalsopainfulforcitizenswhohavetoadjust
tonewtaxationalongsidethelossofsubsidiesinSaudi
Arabia,Kuwait,Bahrain,Oman,QatarandtheUAE,all
ofwhichplantointroduceasalestaxtooffsetdwindling
energyrevenues.
Increasedcompetitionwithintheregionisalsolikely
tobecomeafeatureoftheeconomicdiversification
process.Asthenationsseeknewsourcesofinvestment
andworktonurturethegrowthandexpansionofnon-
oilindustries,theywillhavetoremainvigilanttoensure
theyofferthecombinationofanopenandefficient
businessenvironmentandaccesstoaskilledworkforce.
Followingpoliticaldevelopmentsintheregion,too,Iran
willaddtothecompetitiveforcesintheyearsahead.
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Iran’sreintegrationwiththeWestislikelytobehaltingbut
couldchangebothmarketandtradingpatternsasIran
becomesanattractiveoptionforbusinessesfromtheUS
andEurope.Iran’sleapuptheIndexrankingsthisyear–
eightspotsto18thoverall–reflectsnotonlythepotential
ofitslargeeconomyandrelativelywealthypopulation,
butalsotherapiditywithwhichitmaycapitaliseonits
newfoundopportunities.WorldBankestimatessuggest
thatsanctionsreducedIranianexportsbyatotalof$17bn
between2012and2014,equaltoapproximately4.5%of
GDP.
Sub-Saharan Africa
WiththedecliningprospectsandperformanceofSouth
AfricaandNigeria,sub-SaharanAfricahasnomarkets
insidethe2017Index’stop20.Perhapsillustratingthe
diverseeconomicandlogisticsperformanceandpotential
acrosstheregion,however,wasthechangeinscores
oftheregion’smarketscollectively.WhileAngolaand
Mozambique–49thand50thoverall,respectively–both
recordedlowerscoresyear-on-yearin2017,fiveother
Africanmarkets–Ethiopia,Tanzania,Ghana,Ugandaand
Kenya–allsawscoresrise.Indeed,Uganda,recorded
thethirdstrongestyear-on-yearperformanceacrossthe
entire2017Indexbasedonscoredevelopment.
Anumberofmarketsexperiencedsignificantchallenges
in2016.SouthAfrica,forexample,slippedoutofthetop
20associaltensions,corruptionandfallinginvestment
grounddowneconomicgrowth.Nigeriadroppednine
spots–themostofanycountryinthe2017Indexto
24th.Nigeriaissufferingfromrecession,slashedgrowth
prospects,loweroilpricesandadepreciatingcurrency.
Evenseeminglypositivestoriesareweigheddownby
recentevents.Ethiopiarosethreepositionsto37thonthe
backofeconomicgrowththataveraged10.8%from2006
to2015,accordingtoIMFfigures.ButEthiopiahasbeen
besetbyanti-governmentprotestsanddemonstrations
thatincludedattacksonbusinessesaswellasstrikesand
boycotts.
Despiteproblems,Africa’sgrowingprosperityis
alsoevident.Consumersandbusinessesarebeing
empoweredbynewtechnologyandmobilebanking,
whichisdrivingconsumption.SpendingbyAfrican
consumersandbusinessestodaytotals$4trillion.
Householdconsumptionisexpectedtogrowatan
average3.8%ayeartoreach$2.1trillionin2025,fuelled
bothbypopulationgrowthandrisingincomes,according
toMcKinsey.Businessenvironmentsareimprovingand
regionalintegrationeffortsarecreatingnewopportunities,
particularlyinlandlockedcountries.Moreover,population
growthinsub-SaharanAfricawillexpandtheworkforce
toeclipsethoseofbothChinaandIndiaoverthenext
fewdecades.Significantly,jobgrowthintheregionis
outpacingpopulationgrowth.Sub-SaharanAfrica’s
populationisalsourbanisingatarapidpace.Totake
advantageofthis,widespreadinfrastructuredevelopment
mustoccurbecausegrowingcitiesandrapidurbanisation
haveledtosprawlingslumsandleftgroupsofthe
populationtrappedinlow-incomejobs.
Alltooofteninrecentyears,headlineperformanceacross
theregionhasdeterminedperceptionsofindividual
performance.Tosomeextent,realGDPfiguresshowing
growthat3.3%peryearbetween2010and2015,down
fromthe5.4%averageoverthe2000-2010period,
partiallyexplainthis,asdoeventsinanumberofthe
region’sindividualcountries.Thedivergingperformance
ofsub-SaharanAfrica’semergingmarketsinthe2017
Indexshow,however,thattreatingallofitsdiverse
marketsasonemeansmissingoutonmanymarketsthat
displaysignificantpotential.
The Top Ten
Despitearangeofturbulentforceswithintheglobal
economy,thetop10rankingpositionsinthe2017Agility
EmergingMarketsLogisticsIndexdisplayedasurprising
levelofcontinuityyear-on-year.Sixmarketsretained
theirpositionsandtherewasnochangeinthelistthat
madeuptheelitegrouping.Withinandacrossmarkets,
however,afargreaterdegreeofchangeisatworkthan
therankingssuggest.
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Atthetopofthe2017Index,Chinaretainsthetopspotit
hasoccupiedsincebeingintroducedtotheIndexin2011.
China’stransitiontoaconsumption-basedeconomyhas
beenrockybothinternallyandexternally.Itsreduced
demandforcommoditieshashadawidespreadimpact
acrosstheglobe,anditsslowingpaceofeconomic
expansionhasledtouncertaintyoverprospectsforthe
medium-andlong-term.Thishasprimarilybeendrivenby
weaknessintheverysectorsthatdroveitsrapidgrowth
–mostprominentlyconstructionandmanufacturingfor
export.Chineseauthoritiesrevaluedtheyuan,amove
whichcontributedsignificantlytocapitaloutflowsof
$900bnin2015,andsparkedaturbulentfewmonthsuntil
furtherinterventioninFebruary2016.Astimuluspackage
atthattimebroughtasenseofcalmtothemarket,
althoughthepackageleanedheavilyonencouragingand
incentivisingactivityinmanufacturingandrealestate,
sectorsalreadyoversupplied.Consumptionandservices
haveperformedwellsince,though.Growthhasoutpaced
investment.Otherlogisticsserviceproviders,particularly
thosespecialisinginlast-miledelivery,arelikelytofollow
ZTOExpress’movetoraisefundsviaanIPOinorder
toboostscaletoserveChina’sboominge-commerce
sector.Asitmovestowardsdomesticdemandasthe
primarydriverofeconomicdevelopment,Chinahasa
numberoffactorsinitsfavour.Primeamongstthese
areurbanisationandrobustlabourmarketsinitscities
withrapidlygrowingdisposableincomes.Unwinding
oversupplyandovercapacityinseveralmanufacturing
sectorsandintherealestatemarketremainsan
importantaspectofChina’stransition.Overall,while
Chinaseemstohaveweatheredthestorm,ifitcannot
movequicklyenough,itmayhavemerelypushedthe
inflectionpointfurtherout.
“The economic slowdown in China
is real and we are seeing it in our
China business. That said, China is
such a huge market that there are still
opportunities for everyone, big and
small. Its fragmentation is part of its
enduring resilience. We feel there’s
room to grow market share, even in
the face of an overall slowdown.”
“The fact that manufacturing is on
the move from China to other parts
of Asia is well-established. The Indian
subcontinent and Vietnam are taking
market share when it comes to retail
and high-tech manufacturing. They
continue moving the value chain in
ways that have ongoing implications
for China.”
“It’s both about price and
government policy: the average
factory worker in Vietnam earns less
than a quarter of what a factory
worker in China gets paid per day,
according to The Economist. At the
same time, both India and Vietnam
have taken important steps to ease
investment and tax rules and improve
their infrastructure.”
“People don’t appreciate what
e-commerce is doing to change
China. McKinsey says China’s online
retail market is the biggest in the
world – 80% bigger than that of the
United States. In 2015, it accounted
for $630 billion, which was about
13.5% of all retail spending in China.
And the market is growing every
day.”
“E-commerce in China is driving
inbound freight volumes in a
country that has been an export-first
economy for three-plus decades.
Cross-border e-commerce accounts
for 6% of China’s total consumer
e-commerce, a figure that is growing
at 50% or so annually. Chinese
consumers have stepped up their
purchase of imported goods.”
“Chinese e-commerce entrepreneurs
are looking to tap into the
expertise, systems, technologies,
and warehousing and distribution
networks of established logistics
players as they scale up their
operations. Not the established
e-commerce giants, but the
next generation of e-commerce
companies for whom logistics has
the potential to either be an Achilles’
heel or a major driver of growth and
profitability. They want to work with
logistics companies that already have
a strong set up. They are also willing
to learn-as-they-go in partnership
with their logistics providers, because
it’s an evolving space for everyone.”
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Indiaclimbedto2ndin2017,itshighestrankingsince
2013.Ithasreachedareformsstageinitstransition
withchangeneededatbothstateandcentrallevels,
accordingtoNitiAayog,apolicythink-tankestablished
byPrimeMinisterNarendraModi.TheGoods&Services
Taxistheheadlinereformsofar,andonethatshould
radicallyimproveboththeproductivityandintegrationof
thecountry’seconomybyremovingphysicalandtrade
barriersbetweenstates.AlongsidetheGSTarereforms
thatfocusoneasingaccesstofinanceandlendingfor
IndianbusinessesandarelaxationofrulesaroundFDI,
whilerisingwagesandpensionsinthepublicsector
haveincreasedspendingpower.Thesustainabilityof
investmentsisunderscrutiny,however,astherecent
growthseeninIndiahasbeenlargelyfundedbythe
publicsector,withprivatesectorinvestmentdescribed
as“listless”bytheAsianDevelopmentBank.Outsideof
reforms,India’sabilitytoraisethespendingpowerofits
vastpopulationandtodeveloptheskillsandproductivity
ofitsworkforcewillbeadeterminantofhowsuccessful
thetransitionis.Indiaisrapidlyurbanising,with
significantpotentialforthecountry.Analysisundertaken
byMcKinseyshowsthathistorically,Indiancitieshave
seenGDPpercapitaandproductivityrisemarkedlywhen
urbanisationreaches35%.By2030,theurbanisation
rateacrossthewholeofIndiaisexpectedtoreach35%,
creatingbothhugeopportunitiesandturningsomeof
India’sstatesintoeconomicentitieswiththesizeand
wealthofsomemiddle-incomecountries.Onesector
alreadyseeingthebenefitsofrisingwagesandincreased
urbanisationise-commerce,wheredomesticonline
retailersFlipkartandSnapdealarecompetingformarket
sharewithglobalgiantsAmazonandAlibaba.Seeking
tobeapartofthisgrowth,DHL,throughsubsidiary
BlueDartExpress,hasinvested€70mtostrengthen
itsnetworkinthecountrythatwillexpandairhubsin
MumbaiandNewDelhi.Downsiderisksremain,however.
Skillsareinshortsupply,andin2015,astaggering90%
ofIndia’sworkforcewereemployedintheinformalsector.
Perhapsmostsignificantly,whileeconomicgrowthof8%
istheenvyofmany,Indiarequiresdouble-digitgrowth
tocreateenoughjobstosupportthemillionsjoiningthe
workforceeachyear.
“India is one of the world’s fastest
growing economies, but its decision
to take high-value currency notes out
of circulation is already causing pain
and likely will cause more through
2017. It’s a cash-based consumer
economy, and people are going to
spend less until they understand
what’s going on and gain some level
of comfort.”
“The impact of demonetization will
have to play out. We’re seeing some
of our logistics customers shutting
down production for days at a time
and calling it ‘annual maintenance.’
The reality is that they’re trying to
reduce inventory. We’re seeing trucks
stranded and drivers who can’t afford
to buy tea or food while they’re idle.”
“Pharma is one of the brightest spots
in the Indian economy. Western life
sciences companies are increasingly
buying from India, and high-quality
Indian generic makers continue to
grow exports. India’s pharma exports
are expected to grow more than 60%
in 2017.”
“Goods & Services Tax (GST) reform
is a potential game-changer. It’s
ambitious and complex, but its
impact could be enormous. So many
industries in India are tax-optimized
rather than supply chain optimized or
strategically structured and operated.
GST will allow companies operating
in different states to consolidate,
expand and rationalize as dictated
by demand and opportunity, rather
than as part of a complex strategy to
minimize taxes.”
“Companies will have to re-gear
themselves to adjust to GST. Those
with flexible, strong systems have an
inherent advantage. One example:
Today, if a logistics company is slow
to invoice, customers don’t mind
because it gives them more time to
pay. After GST, quick billing will be
essential to customers so they can
claim their GST input credits.”
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Alsocharacterisedbytransitionarethetop10’smost
prominentoilexporters.BoththeUAE,whichslipsto
3rdthisyear,andneighbouringSaudiArabia,which
retainedits5thoverallranking,areundertakingaprocess
ofeconomicdiversification,privatesectorjobcreation,
andreformsdesignedtobuildabusinessenvironment
inwhichcorporations,domesticorinternational,can
succeed.TheUAE’sopeneconomy,networkoffree
tradezones,logisticsinfrastructureandtradesurplus
havehelpedgiveitastrongstartingposition.Theoil
sectoronlyaccountsforaround25%ofoutput.Other
macroeconomicindicatorsarehealthy,too.Iran’sre-
emergencewilllikelybenefittheUAE–andDubaiin
particular–iftheEmiratesmaintaintheirroleasatransit
pointforgoodsmovinginandoutofIran.Itshouldbe
notedthatnon-oilsectorgrowthhasslowedrecentlywith
someofthedeclinesaresultofmeasuresintroducedto
widenthestate’srevenuebase,suchasthederegulation
offuelprices.Theplannedintroductionofasalestax
couldseefurtherdampeningofdomesticdemand.
SimilardiversificationprojectsareunderwayinSaudi
Arabia,althoughthepressuretomovequicklyismore
acute.TheSaudistatehasusedoilrevenuestosupport
economicgrowthwithvastinfrastructureprojectsand
socialspendingprogrammes.Indeed,itsspending
commitmentsaresovastthatanalystssuggestoilprices
of$100perbarrelarerequiredinordertobreakeven.
Withpriceslikelytoremainbelowthispointforsometime
tocome,theSaudistatealreadyfaceschallengeswith
abudgetdeficitaround20%ofGDPandcentralbank
reservesdwindlingbysome$70bnannually.Bidstoboost
thenon-oilsectoroftheeconomyappeartobestruggling
–growthwasjust0.07%year-on-yearinthesecond
quarterof2016,downfrom3.5%forthesamequartera
yearearlier.Moreover,thisiscoincidingwithdemographic
challenges–SaudiArabia’slabourparticipationrateis
41%,officialstatisticsputunemploymentofthoseaged
15-24at30%,while37%ofallSaudisare14-years-old
oryounger.Thismeans,againstaweakeningbackdrop,
SaudiArabiamustfindtheeconomicmomentum
tocreateatleast3millionnewjobsby2020,while
diversifyingitseconomyandwideningitsrevenuebase.
“Low oil prices slowed regional
growth and forced Gulf countries
to adjust their fiscal strategies and
focus on economic diversification.
The slump in energy prices was a
catalyst to further explore alternative
revenue sources. Governments across
the region are at various stages in this
process.”
“The UAE began to move away from
reliance on energy some time ago.
Its economy is affected by the ebb in
global trade flows and a drop in the
construction and real estate market,
but its diversification policies will
stand it in good stead in the current
climate.”
“Saudi Arabia’s Vision 2030 is a
hugely ambitious plan to remake the
entire economy. It’s a roadmap for
the kingdom’s transformation that
bears watching in the next few years.”
“Qatar’s energy exposure is mainly
on the natural gas side, so the decline
in oil prices has had a limited impact.
Qatar has a diversification strategy of
its own. Having won the 2022 FIFA
World Cup, it is focused on hosting
showcase international sporting
events as it seeks to grow its tourism
industry.
“Qatar’s World Cup plans involve
$70bn worth of projects. Qatar’s goal
is to host 50 sporting events by 2020.
It’s a strategy based on a belief that
these events will have a multiplier
effect on the wider economy.”
“In Kuwait, we see a steady rise in
government spending and expect a
surge in projects over the coming two
years as Kuwait starts to implement a
number of infrastructure projects.”
“There has been a collective
acknowledgement in recent years that
more meaningful economic measures
are required if these countries are to
be competitive and sustain growth.
You’ve seen that with the adoption of
a GCC-wide Value Added Tax.”
Agility’s Take / GCC Countries
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Elsewhereinthetop10,anumberofmarketsdisplayed
ahealthydegreeofcontinuity,ifnotnecessarilythe
strengthofmomentum.Malaysia,whichretainedits4th
placeranking,isanexampleofamarketwithanopen
economythathaspositioneditselfasahighlyattractive
exportlocation.At148%from2010to2014,itstrade-to-
GDPratiodwarfsEastAsia’saverageof58%,and40%
ofalljobsaresupportedbytheexportsector,according
toWorldBankdata.Itisonthisbase,alongsideadiverse
manufacturingsector,thatMalaysiahassetitsambitions
ofreachinghigh-incomestatusby2020.Therewillbe
challengesahead.Externally,thepotentialdisappearance
ofTPPwillhurtanationasinvestedintradeasMalaysia.
SlowprogressonfurtherintegrationwithitsASEAN
partnersandsubdueddemandinkeyexportmarkets
suchasEuropeandChinaalsoweighdowngrowth.
Domestically,the1MBDcorruptionscandalaffecting
PrimeMinisterNajibRazakcontinuestothreatenthe
credibilityofacountryseekinginvestmentandtrading
relationshipswithothernationsandforeigninvestors.
Growthhasslowedto4.4%in2016,withaforecastfor
aslightincreaseto4.8%in2017,accordingtotheIMF.
Indonesia,meanwhile,remainedin6thpositionlargelyon
thebackonadomesticmarketthatdrivesaround60%of
economicactivity.TheslowdowninChina’seconomyand
weakeneddemandhurtIndonesia’sexportsandhitthe
widereconomyashouseholdspendingfell.Medium-term
reformsannouncedbyPresidentWidodofocusoneasing
bureaucracyandeliminatingcorruptioninordertoboost
efficiencyandstrengthenthebusinessenvironment,as
wellasanextensiveinfrastructurebuildingprogramme.
Intheprivatesector,roomexiststopushIndonesia’s
manufacturingcapabilityupthevaluechain.Exports
currentlyaredominatedbylow-techproductsand
operationsfocusedonassembly,leavingthecountry
vulnerabletothelocationstrategiesofmultinationals.The
IMFforecastsgrowthof5.3%in2017,butfallingdemand
willseevolumegrowthsubdued,buthouseholdincomes
areexpectedtogrowslowly.
Turkeyisalsohometoastrongdomesticmarketthat
contributesalmosttwo-thirdsofitsGDPgrowth.With
GDPpercapitaataround$10,000,itisanattractive
marketforbothdomesticandforeignretailers.Itsmove
upto9thinthe2017Indexistheresultoflong-termgains
–since2002.TheproportionofTurkey’spopulationliving
belowthepovertylinehasfallenfromaround30%toless
than2%,whilesocialandeconomicindicatorssuchas
lifeexpectancy,yearsofschooling,outputandformal
employmenthaveallimproved.Inaddition,thecountry
showedresiliencefollowingthesharp2008downturn.
Growthrecovered,despitelowerdemandforexports.
Turkeyisstilldependentonexternalfunding,whichleaves
itsprivatesectorvulnerabletocurrencyfluctuations,
especiallytoastrengtheningUSdollar.Despiteitslarge
consumersector,large-scaleretailmodelshavefailed
totakeoff,limitinglogisticsopportunities.Anattempted
coupandtheresultingcrackdownledtopoliticalstability
in2016.TheEuropeanParliamentvotedtoimposea
‘temporaryfreeze’onTurkey’saccessiontotheEUasa
result.Elsewhere,Mexicoalsoappearsatriskoflosing
momentum,despiteremainingin8thspotforasecond
year.ThecountryhascloselinkswithNorthAmerica’s
consumerandmanufacturingsectorsthroughNAFTAand
thepresenceofmultinationalsacrossarangeofhigh-
valuemanufacturingsectors.Itisalsoanoilexporterand
hasweatheredthefallinoilpriceswell,partlybecause
ithasreduceditsdependencyonthesector,which
accountedfor39%oftotalstaterevenuesin2012but
makesuponlyabout20%today.Therearepressing
challengesforMexico.Itreliesheavilyontradewiththe
US,DonaldTrump’spre-electionrhetoricaboutbuilding
physicalandregulatorywalls,introducingtariffs,and
renegotiating,orevenleaving,NAFTA,seemlikelyto
strainrelationsandputtradetiesinjeopardy.Morethan
80%ofMexico’sgoodsexportsbyvaluein2015went
totheUS.Noothercountryintheworldcomescloseto
thatfigure.ThevolatilityoftheMexicanpesoincurrency
marketswillalsocauseconcernforaprivatesectorthat
borrowsextensivelyindollars.Despitefaringwellduring
thewiderrecessionof2008-2009,itseconomyhas
averagedgrowthofonly2%peryearsince2010.FDIhas
stagnatedataround2%ofGDP,halfthelevelofother
LatinAmericanmarketsincludingColombia,Braziland
Peru.
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Theremainingemergingmarketsinthetop10–Brazil
andRussia–arecharacterisedbysignificantlevels
ofuncertainty,althoughbothretainpositionsinthe
elitegroupingthankstovast,ifshrinking,economies.
Brazilretainedits7thpositionin2017despiteayearof
economicandpoliticalturmoil.Widespreadcorruption
andeconomicmismanagementaretoblameforBrazil’s
currentstateasanunderperformingeconomy.There
arepositivestobefound,however.Thecountryretainsa
largeandrelativelydiverseeconomywiththepotentialfor
newproductiveactivities.Whileeconomicactivityremains
weak,signsofimprovementareslowlybecomingvisible.
Inthegrocerymarket,modernsupermarketsaccountfor
aroundhalfofallsales,requiringsophisticatedlogistics
support,whileinthewiderretailsector,e-commerceand
m-commerce(transactionsconductedviamobilephones)
aregainingtractionwiththemarketestimatedat$14bn,
accordingtotheUSDepartmentofCommerce.Brazil’s
pharmaceuticalindustrysaw2015salesof$28bn,a36%
riseover2010sales,highlightinganeedforcoldchain
facilitiesinthecountry.Furthergrowthisexpectedas
taxesonsuchproductsfall.Agriculturealsohasroomto
grow,eventhoughitalreadyaccountsforabout23%of
GDP.
“The economic crisis of the past two
years is the worst in Brazilian history.
Brazilians are optimistic that they
have seen the bottom and that the
trajectory from here is an upward
one. Interest rates are around 14%,
inflation at 6.5%, so it is a difficult
climate. The key is political stability.”
“The impeachment of President
Dilma Rousseff was a critical test for
Brazil’s institutions. They were able to
weather the situation without major
confrontations, without widespread
unrest, without risk of civil war. That’s
a sign they are strong, especially in
the context of Latin America.”
“Economic forecasts suggest the
Brazilian economy could grow slightly
in 2017 and expand 2% in 2018.
Inflation has come under control
and interest rates are starting to
come down. That would make Brazil
attractive again for investors.”
“Macro-economic factors are starting
to trend in the right direction, in part
because there are new mechanisms
to control public spending, to
modernise pension laws, to begin
privatisation. The big unknown is
whether there will be any political
surprises, particularly as the giant
anti-corruption campaign known
as Operation Carwash unfolds.
Prosecutors are pursuing big Brazilian
companies that they believe have
bribed as many as 200 members of
the congress and other politicians.”
“Operation Carwash could create
more short-term instability, but be
very good for the long term, creating
a strong, much-needed corporate
compliance mentality.”
“In a stable climate, logistics
investment could be very attractive.
Brazil desperately needs infrastructure
investment – road, rail, ocean, air,
storage, distribution.”
Agility’s Take / Brazil
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Bycomparison,Russia,whichfellto10th,appearsto
haveweathereditseconomicwoesfornow.Facedwitha
combinationofeconomicsanctionsandthefallingprice
ofoil,Russiaallowedtheroubletodepreciate,amove
thatactedasabufferagainstanyimmediateshocks.
Theweakerroubledidlowerthepurchasingpowerof
ordinaryRussiansandincreasethepriceofimports.
Russiansultimatelysawrealwagesfallforthefirsttime
underPutin.Russiahastriedtoincreaseitsattractiveness
tolong-terminvestorstosoftenorreversetheeffectsof
capitalflight.Ithastakenastrategicapproachtousing
itsreservestofillgapsinrevenues,targetingspecific
amountsofbailoutsandaidtowardsspecificcompanies,
institutionsorgovernmentministries.However,Russia’s
budgetshavebeenbasedontheassumptionthatitcan
selloilat$50perbarrel.Withpricesbelowthat,aswell
assanctionsandrecession,analystsexpectRussia’s
optionstobecomeincreasinglylimited.Morewidely,the
recessionisthreateningtoundomanyofthegainsin
livingstandardstheaverageRussianhasseeninthelast
twodecades.TheEconomicsMinistryhasdowngraded
itsgrowthforecaststhroughto2019,whilereportingin
August2016,thatrealincomeshaddropped8.3%year-
on-year.Overthewholeof2015,averagemonthlywages
inRussiafell9.5%,tobelow$450,lessthaninChina,
RomaniaandSerbia.WorldBankfiguressuggestthat
GDPfellfrom$2.03trillionin2013to$1.33trillionin2015,
afallof40%,highlightingboththelossofmomentumin
theeconomyaswellasthefallingvalueoftherouble.
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Iran
Iran’sabsolutescoregainof0.38issubstantial.Iran
climbedmorespots–eightpositionsto18th–thanany
countryinthe2017Index.
Iranrepresentsaneweconomicopportunity,aswellas
anewcentreofgravityinregionalissues,asitemerges
fromWesternandinternationalsanctions.Abigreason
foritsimprovementintheIndexisupwardrevisionofits
GDPforecasts.TheIMF’sprojectionsforthenextfive
yearsorsohaveincreasedfromanaverageofroughly
2%growthtoover4%.
Whilethecountryistakingstepstofindaplaceinthe
globalandregionaleconomiclandscape,creating
sustainablegrowthonthedomesticfrontmayproveto
bethemoreimportantpillar.Achievingthiswillrequirea
policymixthatemphasisesandincentivisesjobcreation
inthenon-oilsector.Iranmustencourageentrepreneurial
activity,anincreaseininvestment,andhigherproductivity
tocreatejobs,raisinglivingstandardsandspending
power.Short-termgainscanbemadebyopeningup
marketstonewdomesticandinternationalplayersand
removingbarrierstocompetitionandforeigninvestment,
therebyfurtheringintegrationwiththeworldeconomy.
FreetradezoneprojectssuchasKishIslandmaybe
aquickwaytoboostinternationalactivity.Nineteen
kilometresofftheIraniancoastintheGulf,itisgearing
uptobecomeoneofIran’snewestinternationalbusiness
hubs.Itisalreadyexperiencingafootfallofamillion
visitorsannuallytoitsduty-freezones,positioningitself
asahavenforforeigninvestors,freefromtherulesand
regulationsofthemainland.
ForeignLSPsseemtobeincreasinglycastingtheireye
towardsIran,particularlyEuropeanroadfreightoperators.
DHLFreight,DelamodeandGebruderWeisshaveall
announcedthelaunchofnewservicesbetweenEurope
andIranin2016.
“Even after years of international
sanctions and isolation, Iran has
the second-largest economy in the
Middle East. It’s got an educated
workforce and good infrastructure,
although it needs investment. Foreign
companies are extremely interested.”
“The signs are positive for Iran, but
we haven’t seen the same optimism
reflected in demand from our
customers. Most are taking a more
tempered, pragmatic approach to
the market. Shell recently agreed to
look at potential investments in three
of Iran’s largest oil and gas fields – a
sign that the nuclear agreement is
generating interest and building
confidence. But at this stage, it’s too
early to judge the impact that easing
of sanctions is having.”
“Companies are very eager to visit,
to look closely at the market and talk
to the government and potential
partners. Most are not ready to be
operational there for now. Payments
and banking remain a concern
because there are still constraints that
prevent Iran’s full reintegration into
the international banking system.”
Agility’s Take / Iran
Changes outside the Top 10
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Argentina
Argentinamovedupthreespotsto28thintheIndex.Its
rawscorerose0.38,matchingthegainpostedbyIran.
Improvementwasbroad-basedacrossallthreefacets
oftheIndex,asGDPprospectsbettered,FDIwas
higheryear-on-year,tradebarriersreducedandoverall
infrastructureisjudgedtohaveimproved.Asnotedinlast
year’sIndex,thedepartureofPresidentKirchnerandthe
electionofthemoreorthodoxMauricioMacriwasalways
likelytoleadtoanimprovement.
FDIsurgedby130%in2015althoughthiswasskewedby
onetransactionthatledtoabnormallylowflowsin2014.
Excludingthis,growthwasamoremoderate15%.Still,
policychangestoattractfurtherFDIareencouraging.
Argentinahasadoptedacrudeoilproductionand
stimulusprogrammeprovidingfinancialsubsidiesfor
oilproductionandexports.Thetaxregimehasbecome
morefavourable.ChevronandPetronashaverecently
initiatedprojectsofmorethan$1bn.
Argentinahasadopteda“muchneededtransitionto
amoreconsistentandsustainableeconomicpolicy
framework,”accordingtotheIMF.Whileinflictingsome
short-termpain,growthshouldstrengthento2.7%in
2017thankstomoderatinginflationandmoresupportive
monetaryandfiscalpolicystances.
Attheendof2015,Argentinaterminatedorreduced
theimpactofseveralmeasuresthathadasubstantial
adverseeffectontrade.Thesemeasuresincludeda
systemofimporterdeclarationsforgoods,foundtobe
incompatiblewithWTOrules,exporttaxes,aluxurytax
forvehiclesandaccesstoforeigncurrencies.
Uganda
UgandahasmovedupsixspotsintheIndexto41st,with
itsscorerisingby0.33.
Itsadvanceislargelythankstoimprovementsinits
Connectednesssub-index.Ugandaappearstohave
bettereditsunderlyingstructuressupportinginternational
trade–lowertradebarriers,significantimprovementsto
customsproceduresandsuperiorinfrastructure.
Aten-yearinfrastructureoverhaulworth$11bnisplanned,
whichisexpectedtohavepositivespilloversonagro-
processing,manufacturingandtrade,accordingtoan
IMFreport.Upgradingitstransportationnetworkand
electricitygenerationcapacityisitstopeconomicpriority.
Onthedownside,2016wasanelectionyear.Yoweri
Museveni,whohasruledUgandafor30years,wasre-
electedaspresidentamidarrestsofoppositionpoliticians
andallegationsofrigging.Themainoppositionleaderhas
beenarrestedmultipletimessincetheelection.
Nigeria
Nigeriawastheworstperformerinthisyear’sIndex,
fallingbyninespotsto24thasitsscorefellby0.43
points.
Theprimarydriverofitscollapseisthatitseconomic
growthforecastshavebeenslashed.IntheIMF’sOctober
2014WorldEconomicOutlook,GDPgrowthratesfor
2015-2020averagedaround7%.Thefollowingyear,they
werecutto4%,andthelatestroundofforecastshas
thefigureintherangeof1-2%,withrecessionoverall
for2016.Theeconomyshrankinthefirsthalfof2016,
signallingthatNigeriaisexperiencingitsfirstrecession
since2004.
Lowoilpricesareinteractingwithdifficultdomestic
politicalandeconomicconditions.Economicactivityis
beingdisruptedbyshortagesofforeignexchange(thanks
toloweroilrevenues),militantactivityintheNigerDelta,
andelectricityblackouts.
Theactivitiesoftheso-calledNigerDeltaAvengers,
includingthedestructionofpipelinesandsabotageof
wells,havecontributedtoafallinoilproduction.Forthe
secondquarterof2016,productionwasdownbynearly
20%year-on-year.InJune,withthevalueofthenaira
underpressure,theNigerianCentralBankabandoned
itspegof197perUSdollar.ForAugust,Septemberand
October,thevalueofthenairahasaveragedover300per
dollar.Theeffectofoiltroublesonthe‘real’economyis
evident,particularlybadforthosereliantonimportsgiven
theweakeningexchangerate,orthosewithgovernment
contracts.
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PresidentMuhammaduBuharitookuntilNovember2015
toformanewgovernment,havingbeenelectedinspring
ofthesameyear.Thebudgetfor2016wasn’tapproved
untilMay2016,delayinginfrastructurespending,further
suppressinggrowth.
Thailand
Thailand’sscorefell0.24points,pushingthecountry
downtwospotsto15thintheIndex.
Broad-baseddeclineacrossallthreesub-indiceshas
beenrecorded,asGDPgrowthprospectsandquality
ofinfrastructureworsenedyear-on-year.Onamore
positivenote,thegovernmentismullingoverdoublingthe
infrastructurebudgetto$102bn.
IMFdatasuggestsGDPforecastsforthenextfiveyears
haveslippedfromthe4%-5%rangetoanaverageof3%.
Thailandappearstobestuckintheso-calledmiddle-
incometrap.Itisadevelopingeconomythatgrewquickly
thankstocheaplabourandheavycapitalinvestment,
buthassincefailedtoadvanceastheseadvantages
havedriedup.Growthwasfuelledbyexports,butmajor
exportsfromThailandsuchashard-diskdrivesare
becominglessandlessimportant.Ithasn’tinnovatedand
progressedupthevaluechain,likeChina.
South Africa
SouthAfricaslippedfourplacesintheIndexto21st.
CertainMarketCompatibilitysub-Indexmeasures,such
asrisksofcrime,violenceandterrorismhurtSouthAfrica.
Furthermore,FDI,alsopartoftheMarketCompatibility
sub-Index,felltoa10-yearlowin2015,according
toUNCTADdata.FDIdecreasedby69%to$1.8bn.
UNCTADattributedtheweakperformanceto“lacklustre
economicperformance,lowcommoditypricesand
higherelectricitycosts”.Sell-offsofnon-coreassets
inmanufacturing,mining,consultingservicesand
telecommunicationscontributedtothedeclineinFDI.
Evenexcludingdivestments,however,inflowswere
considerablylowerowingtotheeconomy’scontinued
relianceonmineral-basedexports.
Aparticularconcernisthatinfrastructuredevelopment
appearstohavestalled,bothintransportandelectricity,
withpowershortagesstillchronic.
TheIMFprojectedthatGDPwouldremainflatin2016
withonlyamodestrecoveryin2017ascommodityand
droughtshocksdissipateandpowersupplyimproves.
Biggest movers by rank
Thetwolargestmoversupbyrank,Iran(+8)andUganda
(+6),arealsotwoofthethreelargestmoversbyscore.
Bahrain(+5)hashadthethirdhighestjumpinrank,with
itsscorerisingby0.21points.Itsimprovementslargely
stemfrombroad-basedgainsinitsMarketCompatibility
sub-Index.HigherFDI,lowertradebarriersandlower
businesscostsofcrime,violenceandterrorismwere
reported.
ThelargestmoversdowninrankareNigeria(-9),
Tunisia(-5),Paraguay(-4),Uruguay(-4)andSouth
Africa(-4).Tunisia’sscorefell0.12,asthecountry
lostgroundinCompatibilityandConnectedness.Its
customsproceduresarejudgedtobeconsiderably
moreburdensomethisyear.Theremainingtwomarkets,
Paraguay(-0.05inscore)andUruguay(-0.13inscore),
bothconsiderthemselvesvictimofthewidereconomic
malaiseinSouthAmerica,theepicentrebeingBrazil.In
2015,BrazilianimportsfromSouthAmericadroppedby
28%.Around30%ofParaguay’sexportsgotoBrazil,
whileforUruguaythefigureisaround20%.
New Index Entrants
Iranisthemostimprovedemergingmarketinthis
year’sIndex,risingeightpositionsto18thoverallas
itincreasinglybecomespartoftheglobaleconomy
andlogisticsproviders’strategies.AlongsideIran,four
otheremergingmarketswereaddedtotheIndexfor
2017–Ghana(39th),Myanmar(48th),Angola(49th)and
Mozambique(50th).Asrelativelysmallmarketswith
difficultbusinessenvironmentsorpoorinfrastructure,it
isnotsurprisingthattheyranktowardthebottomofthe
Index.
TheIndexscoresofMyanmar,AngolaandMozambique
allfellmodestlyyear-on-year,whileGhana’sscore
improvedby0.13,adecentifnotspectacular
performance.Thesemarketsobviouslypresent
challengesforanylogisticsprovider,buttherearealso
opportunitiesforthemtotaketheleadinofferingmore
advancedservices.
Agility Emerging Markets Logistics Index 2017
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31
Cubagarneredmuchinterestin2016becauseofthethaw
initsrelationshipwiththeUSandinitialstepsaspartofa
gradualliftingofthe56-yearUStradeembargoonCuba.
USPresident-electDonaldTrumphassuggestedhe
mightreversecourseandtakeatougherlineoneconomic
tieswithCuba,soprospectsareuncertainfornow.
Cubawasconsideredforpossibleinclusioninthe2017
Index.However,TransportIntelligenceandAgilitydecided
againstaddingCubauntilmorereliabledataisavailable.
ComparedtoemergingmarketsintheIndex,Cubalacks
comparabledataforfinancialstability,FDI,prevalence
oftradebarriers,qualityofinfrastructure,efficiencyofits
customsandborderregime,andthebusinesscostsof
crime,violenceandterrorism.
WhatcanwesayaboutCuba’sbusinessclimate?It
appearstobechallenging.TheCubangovernment
controlsmorethanthree-quartersoftheeconomy.
Someassertthatprivateenterpriseisontheincrease,
thoughcriticsmaintainthatsmallbusinessesmustobtain
licencestooperate,givingthestatealmostfullcontrol.
Cubancitizenshaverelativelylowpurchasingpower,and
Cuba’sphysicalinfrastructureisbadlyoutdated.Despite
allofthis,someCanadianandEuropeancompanies
havebeenoperatingsuccessfullyinCubaforovertwo
decades.Amovethatinterestedmanyin2014wasthe
creationofaspecialeconomiczoneatthePortofMariel.
Thegovernmenthopestoattract$8.2bnofFDIandmore
than300ventures.
WhatdoesavailabledatatellusaboutCubainrelation
tothe50Indexmarkets?Cubaisarelativelysmall
market,ranking39thinbothGDP(PPP)andpopulation.
Itseconomicgrowthforecastisbetterthanmost,
ranking17thhighest,althoughthisiscloudedwithmore
uncertaintythanmanyotheremergingmarketsgiventhe
uncertaincourseofitsrelationshipwiththeUS.Perhaps
theclosestavailableproxyfortheCompatibilityand
Connectednesssub-IndicesistheWorldBank’sLogistics
PerformanceIndex.Bythismeasure,Cubaranks47th.
ItisclearthenthatCubawouldnotentertheEmerging
MarketsIndexasimpressively,forinstance,asIran.More
likely,itwouldbeamongthelowerechelonsoftheIndex
alongsidetheothernewentrants,intherangeof30th
to45thplace.Itisnotappropriatetoofferanarrower
estimategiventheconsiderableuncertaintysurrounding
thisintriguingmarket.
Cuba: A Market Turning Heads
“When you hear that multi-nationals
are betting on Cuba, it gives you a
level of comfort, but Cuba remains
largely opaque as a market. There
is very little reliable information
about the market – no business or
competitive intelligence, no data or
government reporting. There is a
need for greater transparency.”
“If you go to events with Cuban
delegations and inquire about
opportunities, you inevitably
get assigned to a government
company as your partner. There is
still strong state control. The need
for infrastructure development is
creating pressure to free up pieces
of the logistics market, but it’s still
premature.”
“Major freight forwarders are
intrigued by Cuba but generally
have not established an operational
presence there. You still have an
environment where all the steps
of the supply chain are under
government control.”
Agility’s Take / Cuba
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Ranking Country 2017 Index 2016 Index Change in Ranking1 China 7.88 8.00 -
2 India 7.14 6.83 1
3 UAE 7.07 7.02 -1
4 Malaysia 6.66 6.71 -
5 Saudi Arabia 6.48 6.67 -
6 Indonesia 6.41 6.50 -
7 Brazil 6.23 6.46 -
8 Mexico 6.15 6.25 -
9 Turkey 6.09 6.05 1
10 Russia 6.09 6.23 -1
11 Chile 5.88 6.01 -
12 Qatar 5.78 5.88 -
13 Oman 5.62 5.63 1
14 Kazakhstan 5.60 5.34 4
15 Thailand 5.53 5.77 -2
16 Philippines 5.42 5.48 -
17 Pakistan 5.39 5.21 3
18 Iran 5.35 4.97 8
19 Vietnam 5.33 5.25 -
20 Egypt 5.29 5.16 2
21 South Africa 5.26 5.43 -4
22 Morocco 5.23 5.19 -1
23 Bahrain 5.16 4.95 5
24 Nigeria 5.07 5.50 -9
25 Colombia 4.99 5.05 -1
26 Kuwait 4.98 5.12 -3
27 Bangladesh 4.94 4.96 -
28 Argentina 4.94 4.56 3
29 Uruguay 4.90 5.03 -4
30 Peru 4.78 4.85 -1
31 Algeria 4.73 4.55 1
32 Sri Lanka 4.67 4.67 -2
33 Jordan 4.58 4.40 1
34 Ecuador 4.44 4.44 -1
35 Ukraine 4.14 4.26 -
36 Bolivia 4.03 3.84 2
37 Ethiopia 4.00 3.78 3
38 Tanzania 3.98 3.76 3
39 Ghana 3.97 3.84 -
40 Paraguay 3.86 3.91 -4
41 Uganda 3.81 3.48 6
42 Tunisia 3.78 3.90 -5
43 Kenya 3.76 3.55 2
44 Venezuela 3.72 3.74 -2
45 Cambodia 3.58 3.55 1
46 Libya 3.57 3.70 -3
47 Lebanon 3.50 3.62 -3
48 Myanmar 3.45 3.46 -
49 Angola 3.38 3.40 1
50 Mozambique 3.38 3.46 -1
Source: Transport IntelligenceNote: In 2017, Iran, Ghana, Myanmar, Angola and Mozambique have been added to the Index. As such, scores for 2016 have been restated to include these emerging markets.Note: For further explanation, please refer to Section 3: Methodology.
The 2017 Index
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ChinaIndiaUAE
MalaysiaSaudi Arabia
IndonesiaBrazil
MexicoTurkeyRussia
ChileQatarOman
KazakhstanThailand
PhilippinesPakistan
IranVietnam
EgyptSouth Africa
MoroccoBahrainNigeria
ColombiaKuwait
BangladeshArgentina
UruguayPeru
AlgeriaSri Lanka
JordanEcuadorUkraineBolivia
EthiopiaTanzania
GhanaParaguay
UgandaTunisiaKenya
VenezuelaCambodia
LibyaLebanon
MyanmarAngola
Mozambique
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00
Source: Transport Intelligence
The 2017 Index
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Whilethereremain16economieswithGDPabove
$300bn,newlyintroducedIranmovesinto11thinthe
groupingandreplacesMalaysiawhich,duetolower
growthandcurrencyvolatility,slipsintothelower
grouping.AlsofallingoutofthetopgroupisColombia,
whileEgyptrisesfromthesecondgrouping.Despitethis,
itremainstruethatthereisastrongcorrelationbetween
sizeofeconomyandhighpotentialasanemerging
logisticsmarket.
Todependsolelyonmarketsize,however,wouldpainta
misleadingpictureofwhattruelogisticsmarketpotential
lookslike.AmongstthisgrouparetheUAEandSaudi
ArabiawithGDPjust3.4%and5.9%thesizeof1st
rankedChina,whilebothoutperformthemuchlarger
economiesofBrazilandRussia,forexample.
Note: GDP here is measured in current US$. Venezuela is included here based on the latest available GDP data for the country, which reflects 2013.
Agility Emerging Markets Logistics Index for Countries with GDP more than US$300bn
Ranking Country Market size and growth sub-index
Market compatibility sub-index
Market connected-ness sub-index
Total Index
1 China 9.23 6.91 6.80 7.88
2 India 9.39 5.39 5.43 7.14
3 UAE 5.73 8.77 7.74 7.07
4 Saudi Arabia 6.48 6.88 6.25 6.48
5 Indonesia 8.64 4.52 4.79 6.41
6 Brazil 7.65 5.95 4.72 6.23
7 Mexico 7.42 4.75 5.41 6.15
8 Turkey 6.76 5.67 5.53 6.09
9 Russia 6.80 5.45 5.59 6.09
10 Thailand 6.53 4.27 5.02 5.53
11 Iran 5.98 5.09 4.76 5.35
12 Egypt 6.77 2.82 4.88 5.29
13 South Africa 5.52 4.25 5.49 5.26
14 Nigeria 7.07 3.37 3.63 5.07
15 Argentina 5.16 5.25 4.51 4.94
16 Venezuela 3.55 3.74 3.91 3.72
Source: Transport Intelligence
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Thetwomarketsthatfellintothisgrouping–Malaysia
andColombia–experienceddifferentfortuneshere.
Malaysia’seconomyisstilllarge,anditsopennessto
tradeandhighvalueexportsmeansitranksasthetop
market.Colombia,however,despiteaneconomywhich
rivalsthatofMalaysia,hasperformedmuchlesswellin
openingitsmarkettointernationaltrade,withexports
heavilyreliantonoilandagriculturalproducts.
Comparingthescoresofthecountriesherewiththose
inthegroupingwithGDPabove$300bnrevealsthat28
ofthe34outperformVenezuela,while13wouldbetteror
matchArgentina.WithMalaysiarankedhereasaresult
ofcurrencyfluctuations,itismoreinsightfultolookat
Chile’scomparativescore–theLatinAmericanmarket
wouldhaverankedinthetop10,dueprimarilytoalower
rankingintheMarketSize&GrowthAttractivenesssub-
Index.Indeed,Chile’sCompatibilityandConnectedness
scoresrivalthoseofSaudiArabiaandChina.
Agility Emerging Markets Logistics Index for Countries with GDP less than US$300bn
Ranking Country Market size and growth sub-index
Market compatibility sub-index
Market connected-ness sub-index
Total Index
1 Malaysia 6.65 6.22 6.91 6.66
2 Chile 5.29 6.25 6.38 5.88
3 Qatar 4.71 8.26 5.71 5.78
4 Oman 4.12 7.80 6.22 5.62
5 Kazakhstan 4.81 6.95 5.80 5.60
6 Philippines 7.03 4.36 4.08 5.42
7 Pakistan 7.25 2.95 4.51 5.39
8 Vietnam 5.73 5.32 4.87 5.33
9 Morocco 4.34 6.41 5.65 5.23
10 Bahrain 3.45 6.99 6.20 5.16
11 Colombia 5.94 2.89 5.01 4.99
12 Kuwait 4.69 6.33 4.60 4.98
13 Bangladesh 6.05 4.52 3.85 4.94
14 Uruguay 3.56 6.83 5.45 4.90
15 Peru 4.94 4.31 4.84 4.78
16 Algeria 5.02 4.96 4.26 4.73
17 Sri Lanka 3.44 5.77 5.51 4.67
18 Jordan 3.05 5.98 5.64 4.58
19 Ecuador 2.92 4.73 6.06 4.44
20 Ukraine 3.62 4.31 4.66 4.14
21 Bolivia 3.01 5.83 4.27 4.03
22 Ethiopia 3.72 4.00 4.32 4.00
23 Tanzania 3.44 4.72 4.21 3.98
24 Ghana 3.12 5.16 4.33 3.97
25 Paraguay 3.06 4.75 4.32 3.86
26 Uganda 3.18 3.75 4.59 3.81
27 Tunisia 3.28 4.09 4.19 3.78
28 Kenya 3.61 2.29 4.71 3.76
29 Cambodia 2.80 4.61 3.95 3.58
30 Libya 2.97 2.20 5.01 3.57
31 Lebanon 2.71 4.37 3.97 3.50
32 Myanmar 3.69 2.67 3.60 3.45
33 Angola 3.31 3.39 3.46 3.38
34 Mozambique 2.78 3.61 3.95 3.38
Source: Transport Intelligence
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Source: Transport Intelligence
Agility Emerging Markets Logistics Index – Sub-Indices
Ranking Country Market size and growth sub-index
Market compatibility sub-index
Market connectedness sub-index
Total Index
1 China 9.23 6.91 6.80 7.88
2 India 9.39 5.39 5.43 7.14
3 UAE 5.73 8.77 7.74 7.07
4 Malaysia 6.65 6.22 6.91 6.66
5 Saudi Arabia 6.48 6.88 6.25 6.48
6 Indonesia 8.64 4.52 4.79 6.41
7 Brazil 7.65 5.95 4.72 6.23
8 Mexico 7.42 4.75 5.41 6.15
9 Turkey 6.76 5.67 5.53 6.09
10 Russia 6.80 5.45 5.59 6.09
11 Chile 5.29 6.25 6.38 5.88
12 Qatar 4.71 8.26 5.71 5.78
13 Oman 4.12 7.80 6.22 5.62
14 Kazakhstan 4.81 6.95 5.80 5.60
15 Thailand 6.53 4.27 5.02 5.53
16 Philippines 7.03 4.36 4.08 5.42
17 Pakistan 7.25 2.95 4.51 5.39
18 Iran 5.98 5.09 4.76 5.35
19 Vietnam 5.73 5.32 4.87 5.33
20 Egypt 6.77 2.82 4.88 5.29
21 South Africa 5.52 4.25 5.49 5.26
22 Morocco 4.34 6.41 5.65 5.23
23 Bahrain 3.45 6.99 6.20 5.16
24 Nigeria 7.07 3.37 3.63 5.07
25 Colombia 5.94 2.89 5.01 4.99
26 Kuwait 4.69 6.33 4.60 4.98
27 Bangladesh 6.05 4.52 3.85 4.94
28 Argentina 5.16 5.25 4.51 4.94
29 Uruguay 3.56 6.83 5.45 4.90
30 Peru 4.94 4.31 4.84 4.78
31 Algeria 5.02 4.96 4.26 4.73
32 Sri Lanka 3.44 5.77 5.51 4.67
33 Jordan 3.05 5.98 5.64 4.58
34 Ecuador 2.92 4.73 6.06 4.44
35 Ukraine 3.62 4.31 4.66 4.14
36 Bolivia 3.01 5.83 4.27 4.03
37 Ethiopia 3.72 4.00 4.32 4.00
38 Tanzania 3.44 4.72 4.21 3.98
39 Ghana 3.12 5.16 4.33 3.97
40 Paraguay 3.06 4.75 4.32 3.86
41 Uganda 3.18 3.75 4.59 3.81
42 Tunisia 3.28 4.09 4.19 3.78
43 Kenya 3.61 2.29 4.71 3.76
44 Venezuela 3.55 3.74 3.91 3.72
45 Cambodia 2.80 4.61 3.95 3.58
46 Libya 2.97 2.20 5.01 3.57
47 Lebanon 2.71 4.37 3.97 3.50
48 Myanmar 3.69 2.67 3.60 3.45
49 Angola 3.31 3.39 3.46 3.38
50 Mozambique 2.78 3.61 3.95 3.38
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Market Size & Growth Attractiveness
ThemostsymbolicdevelopmentwithintheMarketSize
&GrowthAttractivenesssub-IndexthisyearisthatIndia
hassurpassedChinatotakethetopspotintheranking
forthefirsttime.ThisismainlythankstoIndia’ssuperior
economicgrowthforecastsoverthemedium-term.
Anothermajordevelopmentintheyearisthedeclineof
Nigeria’sscoreandrank–itseconomicoutlookhasbeen
substantiallydowngradedfollowingtheoilpricecrash
amongotherthings.Othermajoroilproducershave
alsosufferedtoonedegreeoranother,thoughNigeria
appearstohavebeenthehardesthit.
Givendifficultglobaleconomicconditions,therearen’t
toomanymarketsmakingdecentstridesforward,but
thePhilippinesisoneofthem,movingupfrom12thto
8th.Egyptisanother,upfrom14thto10th,asitsscore
hasimprovedto6.77.Argentinahasjumpedfrom28thto
22ndprimarilybyvirtueoftheMacrigovernmentsetting
outacredibleeconomicplan.
OfthefivecountriesincludedintheIndexforthefirst
time,Iranentersat16th,sandwichedbetweenitsregional
rivalsSaudiArabia(14th)andUAE(19th).Iranalso
madesubstantialgainsinthissub-Indexyear-on-year,
movingupfrom21stto16th.Theremainingfournew
entrants,Angola,Ghana,MozambiqueandMyanmar,are
unsurprisinglyalltowardsthebottomoftheranking.Their
scoresandranksdidnotchangemuchcomparedtolast
year.
Source: Transport Intelligence
Ranking Country Market size and growth sub-index
1 India 9.39
2 China 9.23
3 Indonesia 8.64
4 Brazil 7.65
5 Mexico 7.42
6 Pakistan 7.25
7 Nigeria 7.07
8 Philippines 7.03
9 Russia 6.80
10 Egypt 6.77
11 Turkey 6.76
12 Malaysia 6.65
13 Thailand 6.53
14 Saudi Arabia 6.48
15 Bangladesh 6.05
16 Iran 5.98
17 Colombia 5.94
18 Vietnam 5.73
19 UAE 5.73
20 South Africa 5.52
21 Chile 5.29
22 Argentina 5.16
23 Algeria 5.02
24 Peru 4.94
25 Kazakhstan 4.81
26 Qatar 4.71
27 Kuwait 4.69
28 Morocco 4.34
29 Oman 4.12
30 Ethiopia 3.72
31 Myanmar 3.69
32 Ukraine 3.62
33 Kenya 3.61
34 Uruguay 3.56
35 Venezuela 3.55
36 Bahrain 3.45
37 Sri Lanka 3.44
38 Tanzania 3.44
39 Angola 3.31
40 Tunisia 3.28
41 Uganda 3.18
42 Ghana 3.12
43 Paraguay 3.06
44 Jordan 3.05
45 Bolivia 3.01
46 Libya 2.97
47 Ecuador 2.92
48 Cambodia 2.80
49 Mozambique 2.78
50 Lebanon 2.71
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IndiaChina
IndonesiaBrazil
MexicoPakistan
NigeriaPhilippines
RussiaEgypt
TurkeyMalaysiaThailand
Saudi ArabiaBangladesh
IranColombiaVietnam
UAESouth Africa
ChileArgentina
AlgeriaPeru
KazakhstanQatar
KuwaitMorocco
OmanEthiopia
MyanmarUkraine
KenyaUruguay
VenezuelaBahrain
Sri LankaTanzania
AngolaTunisia
UgandaGhana
ParaguayJordanBoliviaLibya
EcuadorCambodia
MozambiqueLebanon
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00
Market Size & Growth Attractiveness Sub-Index
Source: Transport Intelligence
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Market Compatibility
Sevenofthetop10rankedmarketsforCompatibility
nowcomefromtheMiddleEast&NorthAfricaregion,
comparedtojustfivelastyear.TheUAEretainsits
positionatthetopforathirdconsecutiveyear,with
itsabundanceoffreetradezones,nocorporationtax,
theofferoffullownershipandunlimitedrepatriationof
profitsstillsettingthebenchmarkforemergingmarkets.
Thatsaid,Qatar(2nd)hasmoreorlesshalvedthegap
betweenitselfandtheUAEintermsofscore,astrade
barrierscontinuetobediminished.
WhileOman’sscorealsoimproved,Bahrain’sgainwas
muchmorepronounced.Ithasmovedfrom11thto4th
onthebackoflowertradebarriersandbusinesscosts
ofcrimeandterrorism.Morocco(9th)wastheothernew
entrytothetop10,asChileandMalaysiafelloutside.
Russiacontinuesitsdescentdowntherankings
from16thto18thasitsrelationshipswithmostofthe
internationalcommunitycontinuetobefrosty,though
therelationshipbetweenPutinandTrumpwillbeoneto
watchgoingforward.
Indiahasprogressedfrom21stto19thasFDIhas
increasedandtradebarriershavelowered.Enhanced
internationalinvestmentwillnodoubtdependon
improvementstothecountry’sregulatoryand
bureaucraticstructure.ThenewsaroundGSTappears
tohavegeneratedrenewedhopethatmeaningful
improvementscanandwillbemade.
AmongthefivenewentrantstotheIndex,Ghanaranks
highestat22nd,oneplacebetterthanIranat23rd.
Ghanahasimprovedyear-on-yearthankstolowertrade
barriersandbusinesscostsofcrimeandterrorism.Its
aboveaverageoverallscoresinthesefacetsarecore
driversbehinditsdecentranking.Mozambique,Angola
andMyanmaralllanguishbelow40thplace.
Source: Transport Intelligence
Ranking Country Market Compatibility sub-index
1 UAE 8.77
2 Qatar 8.26
3 Oman 7.80
4 Bahrain 6.99
5 Kazakhstan 6.95
6 China 6.91
7 Saudi Arabia 6.88
8 Uruguay 6.83
9 Morocco 6.41
10 Kuwait 6.33
11 Chile 6.25
12 Malaysia 6.22
13 Jordan 5.98
14 Brazil 5.95
15 Bolivia 5.83
16 Sri Lanka 5.77
17 Turkey 5.67
18 Russia 5.45
19 India 5.39
20 Vietnam 5.32
21 Argentina 5.25
22 Ghana 5.16
23 Iran 5.09
24 Algeria 4.96
25 Mexico 4.75
26 Paraguay 4.75
27 Ecuador 4.73
28 Tanzania 4.72
29 Cambodia 4.61
30 Indonesia 4.52
31 Bangladesh 4.52
32 Lebanon 4.37
33 Philippines 4.36
34 Ukraine 4.31
35 Peru 4.31
36 Thailand 4.27
37 South Africa 4.25
38 Tunisia 4.09
39 Ethiopia 4.00
40 Uganda 3.75
41 Venezuela 3.74
42 Mozambique 3.61
43 Angola 3.39
44 Nigeria 3.37
45 Pakistan 2.95
46 Colombia 2.89
47 Egypt 2.82
48 Myanmar 2.67
49 Kenya 2.29
50 Libya 2.20
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UAEQatarOman
BahrainKazakhstan
ChinaSaudi Arabia
UruguayMorocco
KuwaitChile
MalaysiaJordan
BrazilBolivia
Sri LankaTurkeyRussia
IndiaVietnam
ArgentinaGhana
IranAlgeriaMexico
ParaguayEcuadorTanzania
CambodiaIndonesia
BangladeshLebanon
PhilippinesUkraine
PeruThailand
South AfricaTunisia
EthiopiaUganda
VenezuelaMozambique
AngolaNigeria
PakistanColombia
EgyptMyanmar
KenyaLibya
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00
Market Compatibility Sub-Index
Source: Transport Intelligence
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Market Connectedness
Aswasthecaselastyear,thetop10rankingpositions
forMarketConnectednessexhibitalargeamountof
continuityyear-on-yearasthemarketstooccupythetop
fourpositions–UAE,Malaysia,ChinaandChile–were
identical,whilenineofthe10retainedtheirpositionsin
thetop10.
Russiaregressedfrom10thto13thastheoverallquality
ofitsinfrastructureisjudgedtohaveworsened,ashas
theburdenofitscustomsprocedures.Itwasreplacedin
thetop10byKazakhstan,whichhasjumpedupto9th
onthebackofascoregainofalmost0.7,thankstobetter
infrastructureandcustomsprocedures.
Twomajormarkets,IndiaandBrazil,appeartobegoing
indifferentdirections.Indiaisclearlytakingstepsto
addressitsinfrastructuredeficit,havingmovedupto
18th,whileBraziliscontinuingitsslideintomediocrityas
ithasfallento28th.
AmongthefivenewIndexmarkets,Iranranksbestat
27th,followedbyGhana(35th),whileMozambique(44th),
Myanmar(49th)andAngola(50th)areamongthepoorest
connectedemergingmarkets.
Source: Transport Intelligence
Ranking Country Market Connectedness sub-index
1 UAE 7.74
2 Malaysia 6.91
3 China 6.80
4 Chile 6.38
5 Saudi Arabia 6.25
6 Oman 6.22
7 Bahrain 6.20
8 Ecuador 6.06
9 Kazakhstan 5.80
10 Qatar 5.71
11 Morocco 5.65
12 Jordan 5.64
13 Russia 5.59
14 Turkey 5.53
15 Sri Lanka 5.51
16 South Africa 5.49
17 Uruguay 5.45
18 India 5.43
19 Mexico 5.41
20 Thailand 5.02
21 Colombia 5.01
22 Libya 5.01
23 Egypt 4.88
24 Vietnam 4.87
25 Peru 4.84
26 Indonesia 4.79
27 Iran 4.76
28 Brazil 4.72
29 Kenya 4.71
30 Ukraine 4.66
31 Kuwait 4.60
32 Uganda 4.59
33 Pakistan 4.51
34 Argentina 4.51
35 Ghana 4.33
36 Paraguay 4.32
37 Ethiopia 4.32
38 Bolivia 4.27
39 Algeria 4.26
40 Tanzania 4.21
41 Tunisia 4.19
42 Philippines 4.08
43 Lebanon 3.97
44 Mozambique 3.95
45 Cambodia 3.95
46 Venezuela 3.91
47 Bangladesh 3.85
48 Nigeria 3.63
49 Myanmar 3.60
50 Angola 3.46
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UAEMalaysia
ChinaChile
Saudi ArabiaOman
BahrainEcuador
KazakhstanQatar
MoroccoJordanRussiaTurkey
Sri LankaSouth Africa
UruguayIndia
MexicoThailand
ColombiaLibyaEgypt
VietnamPeru
IndonesiaIran
BrazilKenya
UkraineKuwait
UgandaPakistan
ArgentinaGhana
ParaguayEthiopia
BoliviaAlgeria
TanzaniaTunisia
PhilippinesLebanon
MozambiqueCambodiaVenezuela
BangladeshNigeria
MyanmarAngola
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00
Market Connectedness Sub-Index
Source: Transport Intelligence
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Theemergingmarketsquadrantdisplaystherelative
positionsofthecountriesintheIndex.Thechartis
dividedintofourareasbasedonsizeandpotential
barrierstoentry(anaverageofMarketCompatibilityand
MarketConnectedness).
Countriesinthetoprightquartile,suchasChina,
representthebiggesttargetsforlogisticsinvestments
aswellastheeasiestmarketstooperatein.Inthetop
leftquartilearethosecountriesthatrepresentsmaller
opportunities,butareeasilypenetrated.OmanandQatar
representthesetypesofopportunities.
Thebottomhalfofthechartincludescountriesinwhich
therearesignificantbarrierstoentryanddifficultiesin
operating.Astheseeconomiesmatureandconnect
morewithglobalmarketstheyarelikelytomovetowards
theupperquartiles.NigeriaandKenyaareexamplesof
thesetypesofopportunities.
10.00
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00Market Size and Growth
Smaller markets but good prospects and easy entry High market potential with few barriers to entry
Low potential except niche markets, challenging market environment Large markets but potential constrained by barriers to entry
Mar
ket C
ompa
tibili
ty a
nd C
onne
cted
ness
Oman Qatar
Iran
UAE
MalaysiaSaudi Arabia
RussiaBrazil
Mexico
Pakistan
Philippines
Nigeria
Indonesia
India
China
Turkey
South AfricaBangladesh
Colombia
Egypt
ThailandPeru
Vietnam
Algeria
Uruguay
Bahrain
Sri LankaJordan
Ecuador
Paraguay
Myanmar
Tunisia
Angola
Ethiopia
Tanz
ania
Ukraine
Argentina
MoroccoKazakhstan
Kuwait
Chile
VenezuelaKenya
Bolivia
LebanonCambodia
Libya
UgandaMozambique
Ghana
Emerging Markets Quadrant
Source: Transport Intelligence
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45
Emerging Market Trade Lanes
Tradevolumesarestrugglinginemergingmarkets.The
followinggraphtrackstheiryear-on-yearexportand
importvolumegrowth.Specifically,itmeasuresthetotal
valueoftradeovertime,butholdsthepricesofallgoods
constant,sothatchangesareonlydrivenbyvariationin
thequantityofgoodsexportedorimported.
If2015wasayearoflowornogrowth,then2016issetto
beworsestill.ForJanuary-August2016,emergingmarket
importvolumesaredownby2.6%year-on-year,while
forexportsthedrophasbeen0.3%.Alargepartofthe
storyisweaknessinAsia,specificallyChina.Emerging
Asiaimportsandexportsaredownby1.4%and2.0%
respectivelyoverthesameperiod.Importvolumesin
LatinAmerica(-3.9%)andAfrica&MiddleEast(-11.9%)
arefaringfarworsestill,thoughtheirexportvolumesare
doingconsiderablybetter(4.9%and2.2%).Overall,2016
hasbeenaverypooryearforemergingmarkettrade,the
worstsincethecrisis.
Six
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25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
-5.0%
-10.0%
-15.0%
-20.0%
2008 2009 2010 2011 2012 2013 2014 20162015
Imports Exports
Emerging market merchandise trade volumes, six-month average, % change on a year earlier
Source: Ti calculations, using data from CPB World Trade Monitor
Inlastyear’sIndex,itwasnotedthatwhilethesituation
wasdirein2015,atleastemergingmarkettradewas
predictedbytheIMFtopickupoverthenextfiveyears
orso.Tradevolumegrowthratesto2020foremerging
marketsoverallwereexpectedtoreturntosomething
likethoseexperiencedfrom2012-2014,intheregionof
5%.Certainlyshortoftheratesexperiencedpriortothe
crisis(typicallyintherangeof5-10%),butstillbetterthan
thelow/nogrowthperformanceof2015.Inthelatestset
ofIMFforecasts(October2016),theexportandimport
CAGRsfor2015-2020foremergingmarketshaveedged
downtomorelike4%.
Thismasksquitesubstantialdifferencesacrosscountries
however,asthenextchartillustrates.Overthecourse
ofthelast18months,theIMFhasdowngradedChina’s
importandexportvolumegrowthforecastsfromboth
measuresbeingover6%tonowbeingjustover2%.With
FactoryAsiafeedingChina,thishasverymuchputthe
brakesonemergingmarketsgenerally.Elsewhere,Brazil’s
importvolumeforecastisnownegative,asisNigeria’s.
Itisnotalldoomandgloomthough.Withinternational
sanctionseasing,Iran’stradeprospectsarenowfar
stronger.Argentinahasenjoyedasimilarbouncethanks
tothenewgovernment’seconomiccompetence.Vietnam
hasmovedfromanalreadystrongpositionofgrowth
inthehighsingledigitstodouble-digitgrowthinboth
importsandexports.
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Trade Volume Forecasts for Selected Emerging Markets 2015-2020 CAGRs
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
-2.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0
Import Volume Forecast 2015-2020
Expo
rt V
olum
e Fo
reca
st 2
015-
2020
Import ExportChina 6.6% 6.5%India 7.8% 8.1%UAE 11.0% 8.7%Indonesia 5.7% 7.0%Brazil 3.0% 5.6%Mexico 6.7% 6.8%Nigeria 3.8% 1.6%Argentina 0.8% 1.4%Iran -0.2% 0.4%Vietnam 6.7% 6.1%
Import ExportChina* 2.5% 2.4%India* 7.3% 6.8%UAE* 5.0% 4.1%Indonesia* 7.5% 7.3%Brazil* -0.3% 3.9%Mexico* 5.1% 5.6%Nigeria* -1.3% 1.8%Argentina* 5.5% 4.8%Iran* 5.4% 5.6%Vietnam* 11.9% 12.7%
Soifyoulookhardenough,brightspotscanbefound.
Thatsaid,giventhelatestCPBdata,theIMFpredictions
for2016emergingmarketimportandexportvolume
growthof2.5%and3.0%respectivelylookliketheywill
beover-estimates.Havetheyalsoover-estimatedtrade
volumegrowthto2020?Onefactornotincludedintheir
forecastswillbetheimplicationsoftheelectionofDonald
Trump.
WhatdoesPresidentTrumpmeanforemergingmarket
trade?Basedonhisrhetoric,hemaywellbethesingle
biggestrisktoemergingmarketandworldtradeoverthe
medium-term.Atthisstage,itseemsprudenttoputin
theobligatoryprovisothattryingtopredictthecourseof
actionofDonaldTrumpisdifficult,butitisworthwhileto
lookatafewpotentialscenarioswithsomeharddatain
thebackgroundforcontext.
ThemostobviouswaythatTrumpcanimpactemerging
marketsisthroughtradepolicy.Lookingatthe
importanceoftheUSasanexportpartnertoarangeof
emergingmarkets,itcomesasnosurprisethatMexico’s
exportprofileismoreexposedtotheUSthananyother
emergingmarket.Over80%ofitsgoodsexportsbyvalue
in2015weretotheUS.Noothercountrycomesclose
tothatfigure,thoughthereisagooddealofvariation
amongotheremergingmarkets.Thelabelsonthegraph
displayanestimateofnon-bulkgoodsexportstothe
USasaproportionofeachcountry’stotalnon-bulk
goodsexports.Inmostcases,thedifferencebetween
thisandtheshareofallgoodsissmall,althoughthere
isa5-percentagepointdifferenceforbothBraziland
Indonesia,suggestinglogisticsprovidersexposed
tonon-bulkgoodsinthesemarketscouldbehit
disproportionatelyhard.
Source: Ti calculations, using IMF dataNote: Countries whose names appear without a * are IMF 2015-2020 forecasts released in their April 2015 World Economic Outlook. Countries whose names appear with a * are IMF 2015-2020 forecasts conducted in their October 2016 World Economic Outlook.
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Goods Exports to US as a % of Total Goods Exports for Selected Emerging Markets
Goods Exports to US as a % of GDP for Selected Emerging Markets
Source: Ti calculations, using International Trade Centre data
Source: Ti calculations, using International Trade Centre and IMF data
Mexico
Colombia
Cambodia
Vietnam
China
India
Philippines
Brazil
Indonesia
South Africa
Turkey
Nigeria
0%
All Goods Non-Bulk Goods
20%
84%
31%
26%
21%
19%
17%
15%
18%
16%
8%
5%
3%
40% 60% 80% 100%
Mexico
Vietnam
Cambodia
China
Colombia
Philippines
India
Indonesia
South Africa
Brazil
Turkey
Nigeria
0% 5%
27%
15%
12%
4%
3%
3%
2%
2%
2%
1%
1%
1%
10% 15% 20% 25% 30%
LookingathowimportantUSexportsaretoemerging
marketeconomiesoverall,itisclearjusthowpotentially
gravethesituationisforMexico.Morethanaquarterof
itseconomyisaccountedforbygoodsexportstotheUS.
ForVietnamandCambodia,thefiguresareinexcessof
10%.Forprettymuchallothermajoremergingmarkets
though,exposureisnotnearlyashigh.
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AlthoughitisnotclearwhichcountryTrumpmay
targetthemostwithhistradepolicy(hehassuggested
withdrawingfromtheWTO),itseemsagoodbetthat
Mexicoisattheheadofthelist.
HehasthreatenedtoscrapNAFTA,blamingthe
agreementforshippingAmericanjobsoverseas.Hehas
talkedaboutimposingtariffsof35%onMexicangoods
(althoughChinahasbeenthreatenedwith45%).Mexican
centralbankgovernorAgustinCarstenshasstatedthan
an“adverse”resultintheelectioncouldhitthecountry
likea“hurricane”.
Andthisdoesn’tevenconsidertheimpactthatanyother
TrumpcommentsorpossiblepoliciesrelatingtoMexico
hemighthave.Whileemergingmarketseverywherewill
likelybebuffetedby‘Trumptrade’,themiseryforMexico
seemssuretobemanytimesgreaterthanelsewhere.
Fornowthough,aswillbecomeclearbytheendofthe
chapter,anexaminationofemergingmarketairandsea
freighttradefor2016appearstoconcurwiththeCPB’s
ratherdowncastestimationofthestateofemerging
markettradeintheyear.Asisalwaysthecasewith
emergingmarketshowever,2016hasstillseensomevery
stronggrowthoncertaintradelanesdrivenbyexceptional
volumegrowthinparticularcommoditygroups.More
thaneversincethecrisisthough,thosestoriesseemto
befewandfarbetween.Withanincreasinglydifficult
externalenvironment,logisticsproviderswillhavetowork
everhardertomakethemostoftheopportunitiesthat
tradeinemergingmarketspresents.
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Rank Origin Destination 2015 Tons 2016* Tons 15-16 Growth
1 EU China 708,817 722,237 1.9%
2 US China 308,168 308,936 0.2%
3 EU UAE 237,317 242,409 2.1%
4 EU India 156,631 173,090 10.5%
5 EU Mexico 109,240 117,500 7.6%
6 EU Turkey 113,909 116,258 2.1%
7 EU Saudi Arabia 124,538 101,867 -18.2%
8 EU Brazil 99,373 92,730 -6.7%
9 EU South Africa 97,106 87,344 -10.1%
10 US Brazil 96,871 85,680 -11.6%
n/a EU All 50 EM 2,546,513 2,500,547 -1.8%
n/a US All 50 EM 1,091,857 1,023,509 -6.3%
n/a EU and US All 50 EM 3,638,370 3,524,056 -3.1%
Air Freight Top 10 Trade Lanes – EU/US to Emerging Markets
Air Freight EU/US to Emerging Market Top 5 Trade Lanes 2005-2016 Growth
Note: 2016* figures are forecasts Source: Transport Intelligence
400
350
300
250
200
150
100
50
0
2005 2006 2007 2008 2009 2010 2011 2012 20142013 2015 2016
EU-China
2005
= 1
00
US-China EU-UAE EU-India EU-Mexico Source: Transport Intelligence
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The100airfreighttradelanesgoingfromtheEU/US
tothe50selectedemergingmarketsintheIndexare
forecasttonnagegrowthof-3.1%in2016.EUtradelanes
arepredictedgrowthof-1.8%,whereasUStradelanes
areanticipatedvolumegrowthof-6.3%.Thetop10lanes
areexpectedtoaccountforapproximately58%oftotal
airtonnagein2016.Thisforecastimpliesanincreaseof
1.7percentagepointsyear-on-year,signallingthatthetop
10emergingmarketairfreightdestinationsarebecoming
relativelymoreimportantcomparedtothechasingpack.
Chinacontinuestooccupythetoptwospots.Outofall
airfreightgoingfromtheEUtothe50emergingmarkets,
Chinaisexpectedtobetherecipientof28.9%oftonnage
in2016.FortheUS,thecorrespondingfigureis30.2%.
EU-Chinaairfreighttonnageisonceagaincomfortably
morethantwiceaslargeasUS-Chinatonnage,with
thegapwideningfurtherin2016asEUgrowth(1.9%)
exceedstheUS’performance(0.2%).Bothgrowthrates
wereweakhowever.
Bycommodity,EU-Chinaairfreightisenduringamixed
year.Coremanufacturingsub-sectorgroupssuch
asmachinery&machineryparts(141,000tonnesin
2015)andelectronics(97,000tonnes)-whichtogether
accountedforoverathirdoftotalairfreighttonnagein
2015–haveperformedpositivelyintheyear-to-date.For
January-August2016,volumesfortheseproductgroups
haveincreasedby11.7%and4.8%respectivelyyear-
over-year.Otherimportantsectorslikeplastics&plastic
articles(+22.9%)andoptic,photo,medicandsurgical
instruments(+9.2%)arealsodoingwell,thoughvehicles
&vehiclepartstonnageisdown(-6.5%).Theoverall
growthfigurehoweverispulleddownbyweakvolumes
ofdairyproducts(69,000tonnesin2015)andfertilisers
(55,000tonnes).ForJanuary-August2016,volumeshave
collapsedby24.3%and63.6%respectivelyyear-on-year.
US-Chinaairfreightisdominatedbymachinery&
machineryparts(53,000tonnesin2015),electronics
(41,000tonnes),optic,photo,medicandsurgical
instruments(26,000tonnes)andplastics&plasticarticles
(25,000tonnes),whichtogethercomprisedalmosthalfof
airfreighttonnagein2015.ForJanuary-August2016,the
fourgroupshadmixedperformances.Machinery(-3.8%)
andplastics(-14.1%)volumeshavedeteriorated,though
electronics(+8.6%)andoptic,photo,medicandsurgical
instruments(+9.6%)haveincreased.Fruitstonnageis
continuingitsrapidascentseenoverthepastfewyears
andisup39.2%year-on-yeartoover9,000tonnes.
TurningawayfromChina,theonlytradelanesinthe
top10projectedtorecorddecentgrowthratesare
EU-India(+10.5%)andEU-Mexico(+7.6%).EU-India’s
forecastisaresultofbroad-basedgains:its13largest
productgroupsin2015haverecordedhigheryear-on-
yeartonnageforJanuary-August2016.Machinery&
machineryparts(+8.0%to27,000tonnes),optic,photo,
medicandsurgicalinstruments(+7.8%to6,000tonnes),
plastics&plasticarticles(+13.3%to6,000tonnes)
andvehicles&vehicleparts(+29.9%to4,000tonnes)
aresomeofthestandoutperformers.ForEU-Mexico,
althoughmachinery&machinerypartsandvehicles&
vehiclepartstonnagehasdeclinedforJanuary-August
2016year-on-year,electronics(+10.7%),plastics&plastic
articles(+15.8%)andespeciallyappareltonnage(+25.5%
to7,000tonnes)boostedgrowth.Onelogisticsprovider
bettingstronglyonMexicoisDHLExpress.InOctober
2016,itannouncedthatitwouldinvest$100minits
Mexicoinfrastructure.ItsMexicoCEOsaidthatDHLsaw
double-digitgrowthin2015andattributedalargepart
ofthistogrowthfromtheelectronicssector,aswellas
strongMexico-USvolumes.
Elsewhere,EU-UAEtonnageisforecastsubduedgrowth
ofjust2.1%,thoughmachinery&machineryparts
(+14.3%to22,000tonnes)volumehasdevelopedwell
forJanuary-August2016year-over-year.Thestoryis
remarkablysimilarforEU-Turkey:overallvolumegrowth
for2016isweakat2.1%,thoughmachinery&machinery
partstonnagehasincreasedstronglyfortheyear-to-date
(+43.3%to19,000tonnes).
Theremainingfourlanesinthetop10areexpectedto
endurevolumecontractionsfor2016.EU-SaudiArabia
sufferedwidespreaddeclines,thoughonceagain
machinery&machinerypartstonnageheldupwell,
whileforEU-SouthAfricathestorywassimilarexcept
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theonlymajorproductgrouptorecorddecentyear-on-
yeargrowthwasplastics&plasticarticles(+14.6%for
January-August2016).
Aswasthecaselastyear,Brazilianairimportsfrom
boththeEU(-6.7%)andtheUS(-11.6%)areexpected
tofallin2016.Itishardlysurprisingthatimportdemand
issuppressedgivenitsongoingeconomicdifficulties.
Comparedtothesameperiodlastyear,EU-Brazil
tonnageforJanuary-August2016isdownbymore
than20%acrossseveralmajorsectors(machinery&
machineryparts,electronicsandpharmaceuticalsetc.).
Thelonebrightspotwasthatvehicles&vehicleparts
tonnagewasupby38.1%toover8,000tonnes,aswas
thecaseforUS-Brazil,withvehicles&vehicleparts
tonnageupby24.0%toover2,000tonnes.Thatsaid,it
alsostruggledwithdeclinesinexcessof20%acrossa
rangeofproductgroups(machinery&machineryparts,
optic,photo,medic&surgicalinstruments,plastics&
plasticarticlesetc.).
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Rank Origin Destination 2015 Tons 2016* Tons
15-16 Growth
2013 Index
2014 Index
2015 Index
2016 Index*
2013-2016 CAGR
2005-2016 CAGR
1 EU Vietnam 35,775 49,088 37.2% 245 316 344 472 24.5% 15.2%
2 EU Pakistan 16,711 21,893 31.0% 122 72 67 88 -10.1% -1.1%
3 EU Colombia 24,934 29,591 18.7% 118 127 162 192 17.7% 6.1%
4 EU Oman 14,037 16,059 14.4% 154 172 179 205 10.0% 6.7%
5 EU India 156,631 173,090 10.5% 155 163 166 183 5.6% 5.7%
6 EU Bahrain 12,683 13,737 8.3% 84 107 117 126 14.5% 2.1%
7 EU Thailand 72,329 78,076 7.9% 162 107 149 161 -0.3% 4.4%
8 EU Mexico 109,240 117,500 7.6% 120 126 155 167 11.5% 4.7%
9 US Russia 14,751 15,850 7.5% 205 200 125 134 -13.1% 2.7%
10 EU Tunisia 13,072 14,039 7.4% 67 75 73 78 5.0% -2.2%
11 EU Chile 27,068 28,878 6.7% 139 122 141 150 2.6% 3.8%
12 EU Ukraine 14,559 15,415 5.9% 102 61 87 92 -3.4% -0.7%
13 EU Iran 21,365 22,441 5.0% 46 65 94 99 28.9% -0.1%
14 EU Lebanon 19,749 20,699 4.8% 130 136 161 169 8.9% 4.9%
15 EU Qatar 60,833 63,470 4.3% 275 306 373 389 12.2% 13.2%
16 EU Philippines 21,651 22,370 3.3% 107 120 141 146 11.0% 3.5%
17 EU UAE 237,317 242,409 2.1% 157 172 202 206 9.6% 6.8%
18 EU Turkey 113,909 116,258 2.1% 155 152 186 189 7.0% 6.0%
19 EU Argentina 21,267 21,698 2.0% 141 123 133 135 -1.5% 2.8%
20 EU China 708,817 722,237 1.9% 338 297 354 361 2.2% 12.4%
21 US Vietnam 25,326 25,790 1.8% 341 491 603 615 21.7% 17.9%
22 US China 308,168 308,936 0.2% 215 230 251 251 5.3% 8.7%
23 EU Russia 86,512 85,563 -1.1% 61 56 62 61 -0.1% -4.4%
24 EU Kuwait 24,316 24,022 -1.2% 89 94 104 103 4.9% 0.3%
25 EU Peru 12,543 12,252 -2.3% 189 193 223 218 4.9% 7.3%
n/a EU All 50 EM 2,546,513 2,500,547 -1.8% 159 151 176 173 2.8% 5.1%
n/a US All 50 EM 1,091,857 1,023,509 -6.3% 163 168 160 150 -2.7% 3.7%
n/a EU and US All 50 EM 3,638,370 3,524,056 -3.1% 160 156 171 165 1.1% 4.7%
Air Freight Fastest Growing Trade Lanes – EU/US to Emerging Market (Index of Tons, 2005=100)
Note: 2016* figures are forecasts Source: Transport Intelligence
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Outofthe54airfreighttradelanesfromtheEU/UStothe
Index’semergingmarketswhichrecordedvolumeofat
least10,000tonnes,only22reportedpositivegrowth.
Vietnamappearstwiceinthelist,asadestinationfrom
theEU(1st)andUS(21st).EU-Vietnamairfreightis
expectedtobethefastestgrowingemergingmarketair
importtradelane,growingat37.2%in2016,notallthat
surprisinggivenitsstrongmedium-term(13-16CAGR
of24.5%)andlongertermperformance(05-16CAGR
of15.2%).2016growthisbeingprimarilydrivenby
electronicsvolumegrowth,whichforJanuary-August
2016isuptoover5,000tonnesfromunder2,000tonnes
inthesameperiodin2015.FromtheUS,growthhasalso
beenstrongoverthemediumandlongrun,althoughitis
anticipatedtobesubduedin2016(+1.8%).Electronics
tonnagehassoaredfromunder1,000tonnestoaround
3,000tonnesfortheyear-to-date,butdeclineinother
groupssuchasfishandmachinery&machineryparts
haveheldgrowthback.
Threeothertradelanesareprojecteddoubledigitgrowth
for2016,oneofwhich(EU-India)hasalreadybeen
discussedintheprevioussection.EU-Pakistanhas
thesecondhighestgrowthforecastfor2016at31.0%,
thoughitsvolumeisbelow2005and2013levels,hardly
adynamicmarketoveralongertimeframe.Ontheother
hand,EU-ColombiaandEU-Omanlookmoreattractive
prospects,withfarbettermediumandlong-term
performance.EU-Colombiaisforecasttonnagegrowthof
18.7%in2016,largelyduetofertilisersvolumeincreasing
fromaround3,000tonnestoover7,000tonnesfor
January-August2016year-on-year.Onthesamebasis,
EU-Omanvolumegrowthhasbeenmorebroad-based:
iron&steelarticles,fertilisersandchemicalproducts
havedriventheimprovement.
Withvolumeofover78,000tonnesexpectedin2016,
EU-Thailandisarelativelysubstantialtradelanewhichis
predictedtogrowwellin2016(+7.9%).Infactithasnow
fullyrecoveredfromaslumpin2014,possiblyassociated
withitspoliticalcrisis,ayearwhichsawrealGDPgrowth
reachonly0.8%.Overthelongrunthough,itsairvolume
growthhasbeenrobustenough,increasingataCAGRof
4.4%from2005to2016.Thetradelane’smostimportant
commoditiesaremachinery&machineryparts(21.7%
oftonnagein2015),fertilisers(18.9%)andelectronics
(9.3%).ForJanuary-August2016,volumeinthese
productsgroupshasrisenby14.2%,6.3%and17.9%
respectively.
Acountrygarneringconsiderableinterestfromlogistics
providerslatelyisIran.WhileEU-Iranisarelativelysmall
airfreightlaneatpresentwithvolumeonlysettoexceed
22,000tonnesin2016,whatisinterestingisitsgrowth
resurgencein2015,although2016isexpectedtoseejust
5.0%growth.Volumeattheendoftheyearisanticipated
tobejustshyofthelevelin2005.Fortheyear-to-date,
commoditygroupstoperformwellarepharmaceuticals
(+17.6%toaround2,000tonnes),optic,photo,medicand
surgicalinstruments(+36.1%toaround1,000tonnes)and
machinery(+146.0%toover2,000tonnes).
EU-Qatarispredictedgrowthofjust4.3%in2016,mainly
thankstooil&gassectorandvegetablesvolumesrising
by7.7%and8.4%respectivelyinJanuary-August2016
comparedtothesameperiodin2015.While2016growth
looksrelativelysubdued,thelong-termperformanceof
thistradelaneisamongthebest,exemplifiedbya2005-
2016CAGRof13.2%.Inaddition,itsgrowthtrajectoryis
remarkablyconsistent,displayingrelativelylittlevolatility.
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Rank Origin Destination 2015 Tons 2016* Tons 15-16 Growth
1 China EU 1,111,507 1,164,740 4.8%
2 China US 1,259,570 1,127,256 -10.5%
3 Kenya EU 201,390 208,768 3.7%
4 India EU 180,069 184,184 2.3%
5 Colombia US 156,059 165,640 6.1%
6 Chile US 143,089 138,180 -3.4%
7 India US 124,457 129,693 4.2%
8 Mexico EU 82,986 101,467 22.3%
9 Peru US 108,161 99,887 -7.7%
10 Bangladesh EU 73,035 88,165 20.7%
n/a All 50 EM EU 2,501,236 2,583,475 3.3%
n/a All 50 EM US 2,369,754 2,223,115 -6.2%
n/a All 50 EM EU and US 4,870,990 4,806,590 -1.3%
Air Freight Top 10 Trade Lanes – Emerging Market to EU/US
Note: 2016* figures are forecasts Source: Transport Intelligence
Air Freight Emerging Market to EU/US Top 5 Trade Lanes 2005-2016 Growth
2005 2006 2007 2008 2009 2010 2011 2012 20142013 2015 2016
400
350
300
250
200
150
100
50
0
China-EU
2005
= 1
00
China-US Kenya-EU India-EU Colombia-US Source: Transport Intelligence
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Intotal,itisestimatedthattheIndex’s50emerging
marketswillexport3.3%moreairfreighttotheEUin
2016comparedto2015,but6.2%lesstotheUS.
Outofthe100tradelanesgoingfromthe50emerging
marketstotheEU/US,thetop10lanesarepredictedto
accountfor70.9%oftotalairtonnagein2016.Chinais
byfarthelargestexporter,havingcomprised44.4%of
allemergingmarketairfreighttotheEUand53.2%ofair
freighttotheUSin2015.Inanutshell,Chinarepresents
aroundhalfofemergingmarketairexporttonnagetothe
USandEU.
China-USairfreightlookssettoendureatough2016
asvolumeisprojectedtodecreaseby10.5%.Having
displacedChina-EUasthelargesttradelanein2015,
ithasnowfallenbacktosecondplaceasChina-EU
tonnageisanticipatedtoincreaseby4.8%.Forairfreight
totheUS,thetwolargestproductgroups(machinery&
machinerypartsandelectronics)haverecordedvolumes
declinesof36.9%and12.2%forJanuary-August2016
year-on-year.Thesetwogroupsaccountedfor29.4%and
28.2%respectivelyoftotalfreightonthislanein2015.
Declineshereweresomewhatoffsetbyimprovement
insectorssuchasplastics&plasticarticles(+13.9%),
vehicles&vehicleparts(+11.4%)andfurniture(+21.2%).
ForChina-EUairfreight,thetwolargestgroupsof
electronicsandmachinery-whichrepresented25.4%
and23.2%oftotaltonnagein2015-haveseenvolume
growthof5.2%and12.6%respectivelyfortheyear-
to-date.Plastics&plasticarticles(+21.6%),furniture
(+13.8%)andvehicles&vehicleparts(+49.1%)aresome
othersignificantproductgroupswhichhavereported
substantialgrowthfortheyearsofar.
Kenya-EUisnowtheonlyAfricantradelaneinthetop
10,asEthiopia-EUtonnagefor2016isanticipatedto
fallby8.7%to86,000tonnes.Kenya-EUremainsthe
thirdlargestemergingmarketairexporttradelaneby
tonnage,exceedingevenIndia’stradewiththeEU,an
economywhichis30timeslarger.Tonnageispredicted
toincreaseby3.7%in2016toalmost209,000tonnes.
Twoproductgroupsareresponsibleforalmostall
ofKenya’sairexports–flowers(73.0%in2015)and
vegetables(24.0%in2015).ForJanuary-August2016,
exportsofflowerstotheEUhaveincreasedby0.9%
whereasforvegetablesgrowthhasbeenmoredynamic
at7.1%.Kenyacontinuestointerestmajorlogistics
providers.InNovember2015,Panalpinaannouncedthat
itwouldacquireamajoritystakeinAirflo–aKenyanand
Netherlandsbasedforwarderspecialisedinhandling
flowersandvegetables.Panalpinaclaimsthecompanyis
thesecondlargestforwarderinKenya.InFebruary2016,
UPSexpandeditsalliancewithitsKenyancontractor
FreightinTime(FIT)byconsolidatingbothitsexpress
andfreightforwardingservicesthroughFIT.Accordingto
UPS,thelocalplayerhasinvested$9minitsoperations
andhasa5,000sqmwarehousewithsixofficesacross
thecountry.Ithasalsoinvestedinanewairsidefacility
atthecountry’smainairportinNairobitohandleand
processexpressoperations.Finally,thesamemonthsaw
BDPInternationalstatethatitwasstudyingthepossibility
ofexpandinginKenya.
India’sairfreightexportstotheEU(+2.3%)andUS
(+4.2%)areperhapsnotgrowingasdynamicallyin
2016asonewouldexpectgiventheheadlinesofrobust
economicgrowth.ExportstotheEUarebeingheldback
bynegativegrowthinitssecondmostimportantproduct
group,machinery&machineryparts.ForJanuary-
August2016,volumeisdownby6.8%year-on-year.The
storyisdifferentforitslargestexportgroup,apparel,
wheretonnagehasincreasedby7.4%toalmost34,000
tonnesoverthesameperiod.Leatherarticles(+5.2%to
10,000tonnes),vegetables(+13.9%to9,000tonnes)and
vehicles&vehicleparts(+24.1%to3,000tonnes)have
alsorecordeddecentgrowth.TotheUS,thebiggest
exportgroupispharmaceuticals(29,000tonnesin2015).
Fortheyear-to-date,volumeshavecontractedby2.1%,
whilemachinery&machinerypartsvolumehasfallen
by3.8%.Onapositivenote,appareltonnageisupby
4.4%to24,000tonnes,whileforelectronics,volumehas
expandedby12.1%to5,000tonnes.
Twotradelaneswhichareforecastrapidgrowthare
Mexico-EU(+22.3%)andBangladesh-EU(+20.7%).
Mexico’sprojectionislargelyasaresultoffruitstonnage
morethandoublingfromaround8,000tonnesinJanuary-
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August2015tonearly18,000tonnesinJanuary-August
2016,thoughelectronics(+6.9%toover15,000tonnes)
andvegetables(+21.1%toalmost9,000tonnes)have
alsorecordedgoodincreases.Bangladesh-EUtonnage
growthisduealmostexclusivelytoappareltonnage
increasingby42.6%tonearly56,000tonnesforJanuary-
August2016year-on-year.
TurningtoSouthAmerica,therearemixedperformances.
Colombia-USairfreightisanticipatedtogrowby6.1%,
whereasChile-USandPeru-USarepredicteddropsof
3.4%and7.7%respectively.ForColombia,around90%
ofitsexporttonnagetotheUSiscomprisedofflowers.
ForJanuary-August2016,volumehasimprovedby5.1%
year-on-year.ForChile,thedominantcommodityisfish
(over80%oftotaltonnagein2015).Fortheyear-to-date,
tonnagehasslidby1.7%.ForPeru,vegetablesaccount
foralmost90%oftotaltonnage,andforJanuary-August
2016,volumeshavecontractedby16.5%year-on-year.
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Air Freight Fastest Growing Trade Lanes – Emerging Market to EU/US (Index of Tons, 2005=100)
Rank Origin Destination 2015 Tons 2016* Tons
15-16 Growth
2013 Index
2014 Index
2015 Index
2016 Index*
2013-2016 CAGR
2005-2016 CAGR
1 Mexico EU 82,986 101,467 22.3% 169 194 208 255 14.6% 8.9%
2 Bangladesh EU 73,035 88,165 20.7% 222 162 198 239 2.5% 8.2%
3 Cambodia EU 10,971 12,925 17.8% 300 344 316 372 7.4% 12.7%
4 Pakistan EU 48,506 56,189 15.8% 121 112 101 117 -1.1% 1.4%
5 Brazil US 42,666 47,376 11.0% 41 42 46 51 7.8% -5.9%
6 Tanzania EU 12,129 13,436 10.8% 128 120 105 117 -3.1% 1.4%
7 Ecuador EU 26,554 29,244 10.1% 294 332 332 365 7.5% 12.5%
8 Peru EU 38,227 41,630 8.9% 182 222 211 230 8.2% 7.9%
9 Brazil EU 68,423 74,410 8.7% 99 142 108 118 5.9% 1.5%
10 Colombia US 156,059 165,640 6.1% 125 123 117 124 -0.2% 2.0%
11 UAE EU 16,569 17,557 6.0% 104 114 109 116 3.6% 1.3%
12 Turkey EU 70,069 74,084 5.7% 111 117 147 156 12.1% 4.1%
13 Thailand EU 53,631 56,568 5.5% 78 89 76 81 1.0% -1.9%
14 Mexico US 50,406 52,894 4.9% 86 82 78 82 -1.6% -1.8%
15 China EU 1,111,507 1,164,740 4.8% 147 173 146 153 1.5% 4.0%
16 Sri Lanka US 22,826 23,833 4.4% 104 102 140 147 12.0% 3.5%
17 India US 124,457 129,693 4.2% 111 120 128 134 6.3% 2.7%
18 Kenya EU 201,390 208,768 3.7% 280 294 302 313 3.7% 10.9%
19 Vietnam EU 52,894 54,730 3.5% 220 236 241 250 4.4% 8.7%
20 Malaysia EU 38,658 39,599 2.4% 124 106 99 101 -6.4% 0.1%
21 India EU 180,069 184,184 2.3% 130 137 129 132 0.7% 2.6%
22 Ecuador US 54,389 55,492 2.0% 96 91 104 106 3.3% 0.5%
23 Uganda EU 29,929 30,462 1.8% 150 140 141 144 -1.4% 3.4%
24 Pakistan US 13,993 14,135 1.0% 62 61 57 58 -2.5% -4.9%
25 Turkey US 26,505 26,524 0.1% 101 126 150 150 14.0% 3.8%
n/a All 50 EM EU 2,501,236 2,583,475 3.3% 123 136 125 129 1.6% 2.4%
n/a All 50 EM US 2,369,754 2,223,115 -6.2% 110 121 127 119 2.6% 1.6%
n/a All 50 EM EU and US 4,870,990 4,806,590 -1.3% 117 128 126 124 2.0% 2.0%
Note: 2016* figures are forecasts Source: Transport Intelligence
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Outofthe44emergingmarketairfreighttradelanesto
theEU/USforwhichvolumesexceeded10,000tonnes,
only25areexpectedtoincreasetheirtonnagein2016.
Asstatedintheexaminationofthe10largestemerging
marketairexporttradelanes,MexicoandBangladesh
arebothexpectedtorecordtonnagegrowthratesin
excessof20%for2016,mainlydowntohigherfruitsand
appareltonnagerespectively.ForMexico,thegrowth
appearsmoreimpressiveasitmarksacontinuationof
robustgrowthoverthemedium-term:volumeshave
recordeddecentgainseveryyearsince2013.Thisis
trueofthelongruntoo,from2005to2016,volumehas
grownatacompoundannualgrowthrate(CAGR)of
8.9%.ForBangladesh,thislongrunstoryholdstoo,
itsCAGRonthesamebasisis8.2%.Butitisworth
highlightingthatitsvolumespeakedin2013atjustover
80,000,thencollapsedtoaround60,000in2014,before
thenrecoveringin2015and2016.Thisstuntedtrajectory
isperhapsinpartaresultoftheRanaPlazaandMirpur
textilefactorytragediesof2013.
Fiveothertradelanesreporteddoubledigitgrowthin
2016–Cambodia-EU,Pakistan-EU,Brazil-US,Tanzania-
EUandEcuador-EU.Ofthose,thelargestlanesare
Pakistan-EUandBrazil-US,andwhiletheyachieved
stronggrowthin2016,overthelong-term,theirgrowth
isfarlessimpressive(2005to2016CAGRsof1.4%and
-5.9%respectively).Tanzania-EUisasmallerlanewitha
similarstory(CAGRof1.4%).Cambodia-EUhasbeena
dynamicmarketinrecentyears,itsgrowthhastakenoff
since2011,albeitwiththeoddbumpintheroad.Volumes
havegrownfromaround3,000tonnesin2011toan
estimated13,000tonnesin2016.Almost90%ofvolume
isapparel.Ecuador-EUhasrecordedgoodgrowth
overboththemediumandlong-term,withitsvolumes
expectedtoreachover29,000tonnesin2016.Over90%
ofitsvolumeisflowers.
Outsidethedouble-digitgrowthclub,Peru-EUwasthe
nextbestperformerwithtonnageforecasttoexpandby
8.9%in2016.Ithasalsorecordedrobustgrowthoverthe
medium-term(13-16CAGRof8.2%)aswellasthelonger
term(05-16CAGRof7.9%).Thecoredriverofgrowthis
theagriculturalsector:vegetablesandfruitsaccounted
foraround65%and25%oftotaltonnagerespectivelyin
2015.
Turkeyisaninterestingairexportmarketforboththe
EUandUS.Thedestinationshaveincommonthatthey
haveexperiencedmoderategrowthoverthelongrun,but
muchmorerobustgrowthoverthelastthreeyears(13-16
CAGRsof12.1%and14.0%respectively).TotheUS,
themostimportantexportisapparel,whichhasgrown
by32.0%year-on-yearforJanuary-August2016,though
declinesinfish(-18.4%)andfurniture(-86.4%)areholding
overallgrowthback.TotheEU,apparelisalsothemost
importantcommoditybytonnage,andhasincreased
by7.0%year-on-year,withchemicals(+24.1%toover
9,000tonnes)alsoperformingwell.Lowermachinery&
machineryparts(-45.5%to3,000tonnes)shipmentsare
stuntinggrowth.
SriLanka-USisatradelanewhichstruggledforgrowth
untilrecently.In2005,volumeswerearound16,000
tonnes.Itrecordedfigureslowerthanthatinmostofthe
interveningperioduntilaround2013whengrowthpicked
up,andthenvolumesreallybouncedin2015tonearly
23,000tonnes.Almost80%ofitstonnagein2015was
apparel,withfishaccountingfor15%.Althoughapparel
exportsfellby1.6%year-on-yearforJanuary-August
2016,fishexportsincreasedby43.9%.SriLankahas
interestedanumberofmajor3PLsinrecentyears.The
likesofAPLLogisticsandDBSchenkerdevelopedtheir
presenceinthecountryin2015byestablishinganew
100,000sqftregionalconsolidationhubandforminga
newoperationalpartnershipwithconglomerateAitken
Spencerespectively.
Vietnam-EUisexpectedtogrowonlymoderatelyin2016
(+3.5%),thoughitslongrunperformanceishealthier
(05-16CAGRof8.7%).Itsexportsofelectronicsand
machinery&machinerypartslooktobestrugglingthis
year,butitsfashion&textilessectorappearstobemuch
moredynamic.
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Rank Origin Destination 2015 Tons 2016* Tons 15-16 Growth
1 US China 82,255,938 76,389,887 -7.1%
2 EU China 40,169,830 38,234,238 -4.8%
3 EU Turkey 29,988,335 31,360,587 4.6%
4 EU Algeria 23,520,821 21,215,860 -9.8%
5 US Mexico 16,026,639 17,968,782 12.1%
6 EU Saudi Arabia 15,738,231 17,637,021 12.1%
7 EU Morocco 11,243,177 14,157,753 25.9%
8 EU Egypt 14,577,968 13,191,263 -9.5%
9 US Brazil 10,261,710 11,459,874 11.7%
10 EU India 9,716,481 10,639,501 9.5%
n/a EU All 50 EM 239,118,834 240,907,367 0.7%
n/a US All 50 EM 193,778,564 199,628,287 3.0%
n/a EU and US All 50 EM 432,897,398 440,535,653 1.8%
Sea Freight Top 10 Trade Lanes – EU/US to Emerging Market
Note: 2016* figures are forecasts Source: Transport Intelligence
Sea Freight EU/US to Emerging Market Top 5 Trade Lanes 2005-2016 Growth
Source: Transport Intelligence
2005 2006 2007 2008 2009 2010 2011 2012 20142013 2015 2016
400
350
300
250
200
150
100
50
0
US-China
2005
= 1
00
EU-China EU-Turkey EU-Algeria US-Mexico
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Overall,seafreighttonnagetoemergingmarketsfrom
theEUandUSispredictedtoexpandby1.8%in2016.
EUtonnageisforecasttoincreaseby0.7%,whileforthe
USthefigureisbetterat3.0%.Theanaemicgrowthcan
largelybeattributedtoChina’swoesalone.
Startingwiththelargestlane,US-Chinatonnageis
expectedtoshrinkby7.1%in2016.ForJanuary-to-
August2016,exportsofcerealsandfoodindustry
residues,waste&animalfeedhavesuffereddeclines
of30.8%and56.9%respectively,althoughsoybeans
growthof38.4%hasoffsetthistoanextent.Evenin
substantialnon-bulksectorslikevehicles&vehicle
partsandmachinery&machineryparts,volumeswere
downby8.6%and27.1%respectively.ForEU-China,
thestoryisquitesimilar.Overallvolumeisprojectedto
contractby4.8%in2016,drivenbyacollapseincereal
volumes,andonceagainvehicles&vehicleparts(-4.6%)
andmachinery&machineryparts(-16.9%)tonnageis
strugglingfortheyear-to-date.
ExcludingtheimpactofChina,EUandUSexporttonnage
totheremaining49emergingmarketswouldhave
increasedby1.9%and10.5%respectively.Cumulatively,
EUandUStonnagewouldhavegrownby5.0%.
Fivetradelanesinrelativelyclosegeographicalproximity
totheEUfeatureinthetop10.ForEU-Turkey,tonnage
growthof4.6%isforecastfor2016,drivenbyJanuary-
August2016growthof6.9%foriron&steel,which
accountedforoverathirdofvolumealonein2015.For
EU-Algeria,2016growthisexpectedtobe-9.8%.The
year-to-datehasseenitsmajorproductsgroupssuchas
cereals(-2.6%)salt,sulphur,earths&stone(-12.4%)and
iron&steel(-18.9%)suffersignificanttonnagedeclines.
EU-SaudiArabiatonnagegrowthof12.1%for2016is
largelypredicatedoncerealsvolumegrowthof38.8%
fortheyear-to-date.Cerealsaccountforoverathird
ofthelane’stotaltonnage.Majorcontainerisedfreight
commoditygroupingssuchasmachineryandvehicles
&vehiclepartshavenotfaredverywell,withvolume
slumpingbymorethan30%forbothfortheyear-to-date.
EU-Moroccoseafreightisalsobeingboostedbycereals,
thoughinorganicchemicalsalsolooktobeastrong
sourceofgrowthin2016.UnlikeEU-SaudiArabia,the
majorcontainerisedcommoditygroupingsofmachinery
andvehicles&vehiclepartshavejumpedby15.6%
and30.5%respectivelyfortheyear-to-date.Morocco
inparticularlookstobeanupcominglocationforthe
automotivesector.PSAPeugeot-Citroenhasrevealed
planstobuilda€557mproductionplantwithoperations
beginningin2019,withinitialcapacityof90,000engines
andvehicles,possiblyrisingto200,000.Engineparts
manufacturerLinamarhasalsopledgedtobuilda$280m
enginepartsplant(whichwillsupplythePSAplant),while
fellowpartsmanufacturerDelphiwilllaunchanewfactory
tomakeelectricaldistributionsystemsaswellasanR&D
centre.ElsewhereinNorthAfrica,acollapseincereals
tonnageistoblameforEU-Egyptvolumegrowthof-9.5%
in2016,thoughvegetablesandfruitsexportslookto
bedynamicgroupswithtonnagerisingby102.9%and
16.7%fortheyear-to-daterespectively.
ThefinaltradelaneinvolvingtheEUinthetop10is
EU-India.Tonnageispredictedtoincreaseby9.5%in
2016.Iron&steel,whichaccountsforaroundaquarter
oftonnage,hasgrownby18.2%fortheyear-to-date.
Vegetablestonnagehasexplodedfromjustover50,000
tonnesforJanuary-August2015toalmost300,000
tonnagesforJanuary-August2016.
US-MexicoandUS-Brazilaretheremainingtradelanes
inthetop10,andtheybotharepredicteddoubledigit
growth(12.1%and11.7%).US-Mexicogrowthislargely
beingdrivenbyhighervolumesofcerealsandorganic
chemicals(+8.0%and+15.7%fortheyear-to-date).For
Brazil,inorganicchemicals(+19.5%fortheyear-to-date)
arebehindthegrowth.
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Rank Origin Destination 2015 Tons 2016* Tons 15-16 Growth
2013 Index
2014 Index
2015 Index
2016 Index*
2013-2016 CAGR
2005-2016 CAGR
1 US Algeria 606,448 1,377,695 127.2% 31 37 42 96 45.2% -0.4%
2 US South Africa 890,317 1,456,148 63.6% 115 99 102 166 13.0% 4.7%
3 EU Vietnam 2,730,711 4,441,480 62.6% 336 394 419 681 26.6% 19.1%
4 US Morocco 1,287,457 2,012,024 56.3% 93 103 102 160 19.9% 4.4%
5 EU Ethiopia 916,524 1,343,777 46.6% 198 304 721 1058 74.9% 23.9%
6 US Vietnam 4,202,789 6,131,796 45.9% 655 795 748 1091 18.6% 24.3%
7 US Pakistan 1,234,849 1,713,468 38.8% 143 139 216 300 28.0% 10.5%
8 US Indonesia 5,350,845 7,184,218 34.3% 177 187 153 206 5.1% 6.8%
9 EU Pakistan 2,465,845 3,257,268 32.1% 93 108 109 144 15.7% 3.4%
10 EU Kenya 1,184,064 1,558,688 31.6% 172 195 319 419 34.5% 13.9%
11 EU Morocco 11,243,177 14,157,753 25.9% 145 174 166 209 12.9% 6.9%
12 US Peru 4,677,001 5,713,159 22.2% 235 385 343 419 21.3% 13.9%
13 EU Jordan 2,271,138 2,742,489 20.8% 163 188 188 227 11.5% 7.7%
14 US Philippines 5,200,109 6,239,439 20.0% 143 161 158 189 9.9% 6.0%
15 US UAE 2,254,512 2,612,039 15.9% 297 284 253 293 -0.6% 10.3%
16 US Chile 3,275,287 3,746,627 14.4% 269 224 228 261 -0.9% 9.1%
17 EU Malaysia 2,289,930 2,603,779 13.7% 122 113 94 107 -4.3% 0.6%
18 EU Tunisia 4,134,291 4,660,873 12.7% 136 116 119 134 -0.6% 2.7%
19 US Mexico 16,026,639 17,968,782 12.1% 114 121 131 147 8.9% 3.6%
20 EU Saudi Arabia
15,738,231 17,637,021 12.1% 172 149 175 197 4.6% 6.3%
21 US Brazil 10,261,710 11,459,874 11.7% 408 373 290 324 -7.4% 11.3%
22 US India 6,568,693 7,328,074 11.6% 214 228 235 262 6.9% 9.1%
23 EU Ghana 3,044,002 3,353,174 10.2% 221 227 276 304 11.3% 10.6%
24 EU Indonesia 3,135,958 3,440,086 9.7% 122 117 103 113 -2.4% 1.1%
25 EU India 9,716,481 10,639,501 9.5% 116 129 139 152 9.3% 3.9%
n/a EU All 50 EM 239,118,834 240,907,367 0.7% 175 179 177 178 0.6% 5.4%
n/a US All 50 EM 193,778,564 199,628,287 3.0% 186 194 185 191 1.0% 6.1%
n/a EU and US All 50 EM 432,897,398 440,535,653 1.8% 179 185 180 184 0.8% 5.7%
Sea Freight Fastest Growing Trade Lanes – EU/US to Emerging Market (Index of Tons, 2005=100)
Note: 2016* figures are forecasts Source: Transport Intelligence
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Outofthe60tradelaneswithvolumesofatleast1m
tonnes,38areexpectedtorecordhighervolumesin2016
thanin2015.23arepredictedgrowthinexcessof10%,
while14areexpectedtohavegrowthofover20%.
Foralmostallthetop25fastestgrowingtradelanes,
growthisoverwhelminglydrivenbyhighervolumesof
cerealcrops,withafewexceptions.
ForEUorigintradelanes,allexceptforEU-Pakistan(iron
&steel),EU-Malaysia(plastics&plasticarticles,paper
andwood&woodarticles)andEU-Ghana(salt,sulphur,
earths&stone)areseeingtheirgrowthbeingdrivenby
highercerealstonnage.
FortheUS,somequasi-exceptionsareUS-Vietnam,
withhighertonnageofsoybeans,foodindustryresidues,
cottonandwood&woodarticlescontributingtoits2016
growthprojectionof45.9%,thoughcerealstonnage
alsogrewverystrongly.AnotherisPakistan,whereiron
&steelisdrivingsignificantgrowthalongsidecereals,
asisIndonesia(soybeansandfoodindustryresidues,
alongsidecereals).
TheUAEisagenuineexceptionwithcerealsplaying
verylittlerole,assoybeansandinorganicchemicalsare
behindits2016predictionof15.9%growth.ForUS-
India,cerealsplayalmostnoroleinitsexportprofile.
ForJanuary-August2016,woodpulp(+8.8%),iron&
steel(+21.0%),organicchemicals(+6.5%),inorganic
chemicals(+88.5%),plastics&plasticarticles(+26.7%)
andbeverages(+151.2%)aredrivingmuchofitsexpected
growthof11.6%for2016.
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2005 2006 2007 2008 2009 2010 2011 2012 20142013 2015 2016
250
200
150
100
50
0
China-US
2005
= 1
00
China-EU Russia-EUBrazil-EU Ukraine-EU
Rank Origin Destination 2015 Tons 2016* Tons 15-16 Growth
1 China US 65,427,160 63,438,316 -3.0%
2 China EU 53,136,391 54,883,827 3.3%
3 Brazil EU 30,056,097 31,557,772 5.0%
4 Russia EU 30,874,150 28,530,118 -7.6%
5 Ukraine EU 22,426,823 23,650,964 5.5%
6 Turkey EU 17,912,817 19,057,976 6.4%
7 Mexico US 19,097,837 16,597,859 -13.1%
8 Argentina EU 13,971,133 15,795,099 13.1%
9 Brazil US 16,386,899 15,266,341 -6.8%
10 South Africa EU 10,612,381 11,343,973 6.9%
n/a All 50 EM EU 271,484,788 276,242,042 1.8%
n/a All 50 EM US 178,127,702 170,190,728 -4.5%
n/a All 50 EM EU and US 449,612,490 446,432,770 -0.7%
Sea Freight Top 10 Trade Lanes – Emerging Market to EU/US
Sea Freight Emerging Market to EU/US Top 5 Trade Lanes 2005-2016 Growth
Source: Transport Intelligence
Note: 2016* figures are forecasts Source: Transport Intelligence
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Outofthe100tradelanesgoingfromthe50emerging
marketstotheEUandUS,thetop10areforecastto
constitute62.7%oftotaltonnagein2016.Chinaalone
willrepresent26.5%oftonnage.Howeverthisdisguises
China’sgreaterimportancetotheUScomparedto
Europe.China-UStonnagerepresents37.3%ofall
tonnagetotheUS,whereasfortheEUthecorresponding
figureisjust19.9%.
Anothersalientfeatureofemergingmarketseafreight
exportsisthattheyaremuchmorediversifiedcompared
toimports,whichareoverwhelminglycomprisedof
agriculturalgoods.Suchvariationholdsgenerallyacross
theboardforemergingmarketexports,butChinais
perhapsthebestexampleofit.
In2015,thetop10productgroupsbytonnagefor
China-USseafreightwerefurniture(7.0m),machinery&
machineryparts(5.7m),electronics(5.0m),iron&steel
articles(3.9m),plastics&plasticarticles(3.6m),salt,
sulphur,earths&stone(3.2m),vehicles&vehicleparts
(2.8m),toys,games&sportsequipment(2.8m),wood
&woodarticles(2.3m)andceramicproducts(2.2m).
Moreover,21differentproductgroupshadvolumesin
excessof1mtonnes.
For2016,China-USexporttonnageisexpectedtofall
backby3.0%.ForJanuary-August2016,thereare
fewmajorproductgroupswhichhaverecordedstrong
tonnagegrowthyear-on-year.Thebestperformances
havecomefromfurniture(+3.3%)andtoys,games&
sportsequipment(+4.8%).Mostothermajorcommodity
groupshaverecordedlowsingledigitcontractions.
ForChina-EUseafreight,thetop10productgroupsby
tonnagein2015were:iron&steel(7.5m),machinery
&machineryparts(5.1m),electronics(4.5m),furniture
(3.5m),iron&steelarticles(3.2m),stonearticles(2.5m),
plastics&plasticarticles(2.2m),wood&woodarticles
(2.0m),organicchemicals(1.6m)andtoys,games&
sportsequipment(1.4m).Intotal,exportvolumesin17
differentproductgroupswereabove1mtonnes.
Overall,China-EUtonnageisanticipatedtoriseby3.3%
in2016.ForJanuary-August2016,year-on-yearexport
growthhasbeensolidifnotspectacularformanymajor
commoditygroupsthatnecessitatecontainerisedsea
freight:machinery&machineryparts(+3.2%),furniture
(+4.3%),toys,games&sportsequipment(+5.3%)and
vehicles&vehicleparts(+8.9%).Theonemajorgroup
thatisstrugglingiselectronics(-16.1%).
Theonlyotheremergingmarkettoappeartwiceinthe
top10isBrazil.ExportstotheEUareforecasttoexpand
by5.0%in2016,whilethecorrespondingfigureforthe
USis-6.8%.ForJanuary-August2016,Brazil-EUgrowth
isprimarilybeingdrivenbyhighsoybeansandcereals
tonnage,whereasforBrazil-US,weakeriron&steel
volumesaredraggingdowngrowth.
Elsewhere,thetwoCISmarketsinthetop10–Russia-
EUandUkraine-EU–areforecastcontrastinggrowthof
-7.6%and5.5%respectivelyin2016.ForJanuary-August
2016,year-over-yeargrowthofRussianexportsofiron
&steel(-5.4%)andwood&woodarticles(-24.6%)has
beennegative.Ontheotherhand,Ukrainianexportsof
cereals(+4.1%)andsalt,sulphur,earths&stone(+18.7%)
aredrivingitsexpectedannualimprovement.
Turkey-EUandSouthAfrica-EUareprojectedsimilar
growthratesof6.4%and6.9%for2016.Whilebulk
commoditiesarestillmostimportantforTurkey-EUsea
freight,vehicles&vehicleparts(8.3%oftotaltonnage
in2015)andmachinery&machineryparts(3.6%of
tonnage)arerelativelymoreimportantcomparedtomost
otherlanes.Volumesfortheyear-to-dateareupby4.0%
and7.7%respectively.Turkeyhaslongbeenconsidered
anintriguingnearsourcinglocationformanufacturers
lookingtoexporttoEurope,notleastamongautomotive
manufacturers,whocontinuetodeveloptheirpresence
there.Atthebeginningof2016,around$1.2bnof
investmentwasatthereadyforTurkey,withfivevehicle
manufacturers–Fiat,Renault,Toyota,Hyundaiand
Honda–allsettorampupoperations.Themedium-term
outlookforthecountry’smanufacturingsectorappears
toberobust.TheoutlookforSouthAfricaislessclear,
thoughits2016performancewasencouragingtoo.Its
seafreightexportprofileislargelyinterestingtologistics
providersbecauseitexportsvastquantitiesoffruit(1.2m
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tonnesorover10%oftotaltonnagein2015,1.8%year-
to-dategrowthin2016),mainlybananas.Othersectors
ofinterestincludevehicles&vehiclepartsexports,which
amountedtoover200,000tonnesin2015,andtheyhave
increasedby28%fortheyear-to-date.
ThetworemainingLatinAmericantradeslanesinthe
top10arepredictedcontrastingresults.Mexico-USis
expectedtoseetonnageslideby13.1%,whileArgentina-
EUvolumeispredictedtoincreaseby13.1%.The
former’swoesareprimarilyonaccountofsalt,sulphur,
earths&stonetonnagecontractingby14.3%.This
groupcompriseswelloverhalfoftotaltonnage.Even
inrelativelyimportantnon-bulksectorslikevehicles&
vehiclepartsthough,tonnageisstilldownby5.9%for
January-August2016year-on-year.Argentina’sdouble
digitgrowthislargelyasaresultof17.8%year-to-date
growthinfoodindustryresiduesexports.
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Rank Origin Destination 2015 Tons 2016* Tons 15-16 Growth
2013 Index
2014 Index
2015 Index
2016 Index*
2013-2016 CAGR
2005-2016 CAGR
1 Egypt EU 4,201,865 5,568,236 32.5% 95 79 61 81 -5.1% -1.9%
2 Vietnam US 4,260,111 5,417,519 27.2% 291 319 356 453 15.9% 14.7%
3 Saudi Arabia US 1,350,184 1,657,024 22.7% 90 99 102 126 11.6% 2.1%
4 Uruguay EU 2,707,486 3,233,356 19.4% 144 114 179 214 14.0% 7.2%
5 Qatar US 1,558,177 1,843,064 18.3% 148 194 196 232 16.2% 8.0%
6 Turkey US 5,504,479 6,501,930 18.1% 81 117 151 179 30.3% 5.4%
7 UAE US 1,477,293 1,744,130 18.1% 124 176 220 260 28.0% 9.1%
8 Mexico EU 2,535,476 2,966,653 17.0% 125 173 127 148 5.9% 3.6%
9 Argentina US 2,296,173 2,674,311 16.5% 123 82 111 130 1.7% 2.4%
10 Peru EU 2,413,937 2,767,048 14.6% 110 124 122 140 8.4% 3.1%
11 Argentina EU 13,971,133 15,795,099 13.1% 69 69 77 87 8.1% -1.3%
12 Algeria EU 6,301,851 7,058,387 12.0% 47 179 190 213 65.0% 7.1%
13 Thailand EU 2,901,157 3,236,439 11.6% 90 94 86 96 2.2% -0.4%
14 Thailand US 3,740,832 4,105,623 9.8% 48 50 54 60 7.7% -4.6%
15 Ukraine US 1,107,201 1,214,175 9.7% 52 43 47 52 -0.4% -5.8%
16 Nigeria EU 1,381,516 1,502,909 8.8% 144 323 417 454 46.7% 14.7%
17 Bangladesh EU 999,605 1,079,395 8.0% 160 181 198 214 10.2% 7.2%
18 Indonesia US 4,583,754 4,914,349 7.2% 93 96 105 113 6.7% 1.1%
19 South Africa EU 10,612,381 11,343,973 6.9% 92 89 81 87 -2.0% -1.3%
20 Egypt US 1,133,846 1,207,741 6.5% 55 72 72 77 11.5% -2.4%
21 Turkey EU 17,912,817 19,057,976 6.4% 86 90 95 101 5.6% 0.1%
22 Philippines US 1,343,156 1,423,663 6.0% 82 79 77 82 -0.1% -1.8%
23 Vietnam EU 3,479,975 3,671,879 5.5% 160 194 197 208 9.1% 6.9%
24 Ukraine EU 22,426,823 23,650,964 5.5% 164 193 202 213 9.0% 7.1%
25 Malaysia US 3,152,501 3,317,031 5.2% 101 100 101 107 1.7% 0.6%
n/a All 50 EM EU 271,484,788 276,242,042 1.8% 107 110 114 116 2.5% 1.3%
n/a All 50 EM US 178,127,702 170,190,728 -4.5% 93 107 110 105 4.1% 0.4%
n/a All 50 EM EU and US 449,612,490 446,432,770 -0.7% 101 109 112 111 3.1% 1.0%
Sea Freight Fastest Growing Trade Lanes - Emerging Market to EU/US (Index of Tons, 2005=100)
Note: 2016* figures are forecasts Source: Transport Intelligence
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Ofthe100possibletradelanesfromthe50emerging
marketstotheUS/EU,only54havevolumesinexcess
of1mtonnes.Ofthese,36areexpectedtoincreasetheir
volumein2016.
Amongthefastestgrowers,Vietnam-USstandsoutboth
foritsrapidexpectedgrowthin2016(+27.2%),butalso
foritsexcellentmediumandlong-termperformance
(2013-2016CAGRof15.9%,2005-2016CAGRof14.7%).
IncommonwithChina,furnitureisitsmostimportant
exportcommodity(1.2mtonnesin2015),accounting
foroveraquarterofitstotalvolume.ForJanuary-
August2016,growthof6.3%hasbeenrecorded.Since
2015,theUShasimposedimporttariffsonChinese
furniture,leadingmanyChinesemanufacturerstoinvest
inneighbouringVietnamwhichfacesnosuchduties.
Therearegrowingconcernsthatsuchmanoeuvring
couldputVietnamfirmlyontheradarofUSanti-dumping
investigators,thoughTPPnegotiationsobviously
complicatethematter.Futuregrowthwillobviouslybe
significantlyinfluencedbytheoutcomeofTPP.Other
importantsectorswhichhaveachievedmeaningful
growthintheyearsofarincludeapparel(+7.7%),
footwear(+24.2%),coffee(+41.7%),fish(+15.8%)and
electronics(+55.9%).Iron&steeltonnagehasrocketed
from33,000tonnesinJanuary-August2015tonearly
500,000tonnesinJanuary-August2016.Vietnam-EUis
expectedmoremoderategrowthof5.5%in2016,though
coffeetonnage(+10.5%)hasincreasedsignificantlywhile
liketotheUS,electronicstonnagehasgrownsharply
(+68.4%).
Othertradelaneswhichfitthemouldofstronggrowth
in2016andoverthelongrun(morethan5%forboth
measures)areUruguay-EU,Qatar-US,Turkey-US,UAE-
US,Algeria-EU,Nigeria-EUandBangladesh-EU.
TakingtheEUlanesfirst,forUruguay-EU,tonnagegrowth
of19.4%isexpectedfor2016.Likelastyear,exports
ofwoodpulp,soybeansandwood&woodarticles
willdrivetheincrease.ForAlgeria-EU,overallgrowth
of12.0%ismainlyonaccountoffertilisersgrowthof
18.2%forJanuary-August2016year-on-year.Nigeria’s
growthfigureof8.8%appearssomewhatdubious,as
itislargelythankstoyear-to-dategrowthof19.9%of
“otherproducts”.Itisnotclearwhatthisincludes.Lastly,
Bangladesh-EU’sexportsareunsurprisinglydominated
bythefashion&textilessector(alsothecasewithair
freight).Overthreequartersoftonnagein2015canbe
attributedtoapparelalone,withyear-to-datetonnageup
by6.8%year-on-year.
ForhighgrowthUSlanes,Qatar-USisforecastan
increaseinvolumeof18.3%in2016.Volumeonthis
laneisdominatedbyfertilisers,representingover90%
oftonnage,andforJanuary-August2016,tonnage
hasexpandedby12.6%.Thestoryofdependenceon
fertilisersissimilarfortheUAE,althoughnotquiteto
thesameextent(56.9%oftonnagein2015).Aluminium
&aluminiumarticlesarecomparativelymoreimportant
however,accountingforaround20%oftonnage.With
growthof74.1%fortheyear-to-date,thishasoffsetthe
fallinfertiliserstonnage(-8.6%)overthesameperiod.
Finally,Turkey-USfreightissimilarlydependentonbulk
goods,thoughofadifferentkind.Iron&steelandstone
articlesareitslargestexportgroups,butbothhave
experienceddoubledigitdeclinesfortheyear-to-date.
Offsettingthisisgrowthinsalt,sulphur,earths&stone,
whichhasmorethandoubledintheyear-to-date.
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The 2017 Agility Emerging Markets Logistics Index Survey
Toexaminethepotentialoftheworld’smostpromising
emerginglogisticsmarketsandtomeasuretheimpacts
ofthetrendsseenacrosstheglobaleconomyonthe
developmentandemergenceofthesemarkets,Transport
Intelligenceundertookasurveyoflogisticsindustry
professionalsbetweenAugustandNovember2016.
Participantsfromarangeoflogisticsmarketsandvertical
sectorstookpart,offeringinsightandopinionfromtheir
exposuretoemergingmarkets.Responsesfrom801
industryprofessionalsareusedinthis,theeighthannual
editionoftheAgilityEmergingMarketsLogisticsIndex
Survey.
Sev
en
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73
20%
15%
10%
5%
0%
China
India
Brazil
Vietna
m
Indon
esia
UAE
Russia
Mex
ico Iran
Mala
ysia
Saudi A
rabia
Turk
ey
Nigeria
Thail
and
South
Afri
ca
Kenya
Philip
pines
Bangla
desh
Kazak
hsta
nQat
ar
% o
f res
po
nden
ts
Country 2017 2016 Change
India 1 1 -
China 2 2 -
Brazil 3 3 -
Vietnam 4 5 up 1
Indonesia 5 4 down 1
UAE 6 7 up 1
Mexico 7 6 down 1
Russia 8 8 -
Iran 9 15 up 6
Turkey 10 11 up 1
Malaysia 11 10 down 1
South Africa 12 9 down 3
Nigeria 13 12 down 1
Saudi Arabia 14 13 down 1
Thailand 15 14 down 1
Philippines 16 17 up 1
Kenya 17 20 up 3
Bangladesh 18 18 -
Qatar 19 16 down 3
Kazakhstan 20 22 up 2
Perceived Major Logistics Markets of the Future
Which of the following countries do you believe have the most potential to grow as logistics markets in the next five years? Please rank.
Source: Transport Intelligence
Source: Transport Intelligence
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74
Surveyrespondentswereaskedtorankthefiveemerging
marketstheyviewedasthemostlikelytobecomemajor
logisticsmarketsoverthenextfiveyears.Ascorewas
calculatedinordertorankthemarkets–afirstpreference
wasawardedfivepoints,asecondpreferencefourpoints,
andsoondowntoasinglepointforthefifthpreference.
Usingthismethod,surveyrespondentsindicatedtheir
beliefthatIndiaremainstheemerginglogisticsmarket
withthemostpotentialforLSPs.
Therewascontinuityinthetopspotsbetween2016and
2017,withayearofstronggrowthandimprovements
toitsbusinessenvironmentthatunlockedopportunity
forLSPshelpingIndiaretainitsadvantageoverChina.
RespondentsappearedtoshowfaiththattheModi
administrationisdeliveringonitsreformspromise,while
indicatingthecontinuedturbulenceinChinahaseroded
someofthepotentialforlogisticsprovidersinthemarket.
OtherfactorscontributedtoChina’slesseningappeal,
suchasrisinglabourcostswhichmakeitalessattractive
lowcostmanufacturinglocation,buttheoverwhelming
suggestionfromsurveyrespondentsisthat,together,
IndiaandChinapresentbyfarthemostcompelling
opportunitiestoLSPs.
Brazilmanagedtoretainits3rdrankinginthelistof
emerginglogisticsmarketswiththemostpotential
despitealessthanfavourableeconomicsituationin
thecountry.Respondentscontinuetoshowfaithinthe
market’ssizeablemiddleclassanditswell-developed
agriculture,mining,manufacturingandservicesectors.It
mayalsobethecasethat,againstachallengingoverall
backdrop,specificopportunitiespresentthemselves,
includinginhighvaluemarketslikepharmaceuticals
whichhasshownsolidgrowthinSaoPaulo,for
example.Additionally,anoptimisticreadingoftheresult
suggeststhatsurveyrespondentshavefaithinthe
newadministrationofPresidentMichelTemertofixthe
country’sproblems.
Anumberofmovementstookplaceacrosstheranking
thisyear,withVietnamandTurkeyeachrisingone
position,whiletheUAEcontinueditsgradualupward
movementtoclaim6th.SouthAfricaandQatarwere
amongstthemajorlosers,witheachdroppingthree
positions.SouthAfrica’sfallinthedata-drivenIndexis
reflectedhereasfewerrespondentsshowedfaithinthe
marketasasourceoffuturegrowth,likelyasaresult
ofdomesticissuesthathavehitbusinessconfidencein
logistics-relatedsectorssuchasmining.Elsewherein
Africa,Kenyaperformedwelltobecomethe17thhighest
ratedfuturelogisticsmarket,reflectingitspositionasa
keyairfreightmarketfortheexportofcommoditieslike
flowersandvegetables.
Themostsignificantmoveintherankings,though,was
Iranwhichrosesixpositionstoclaim9th.Overthelast
twoeditionsoftheAgilityEmergingMarketsLogistics
IndexSurvey,Iranhasrisen21positionsinthisranking
thankstoitsstrengtheningtieswiththeglobaleconomy.
Iran’ssizeableeconomyandpopulation,whichhasa
relativelyhighamountofspendingpower,arealmost
certainlyapartofthis,asaretheopportunitiescreated
forLSPsinothersectorsofitseconomy,suchasoil&
gas,andthecountry’swideropennesstoFDI.
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75
40%
30%
20%
10%
0%
Econo
mic
Growth
Fore
ign D
irect
Inves
tmen
t
Growing
Trad
e
Volum
es
Geogr
aphic
Loca
tion
Growing
Popula
tion
Good B
usine
ss
Enviro
nmen
t
Poten
tial
Consu
mer
Spen
d
Cheap
Lab
our
Forc
e
Strong
Tran
spor
t
Infra
stru
ctur
e
Near-S
ourc
ing
Mar
ket
Lack
of
Corru
ption
Strong
Secur
ity
% o
f res
po
nden
ts
Factors behind the Potential Emergence of Markets
Please rank, in order of importance, the key drivers that make a country an important emerging market.
Source: Transport Intelligence
Source: Transport Intelligence
Factor 2017 2016 Y-o-Y Change
Economic growth 1 1 -
FDI 2 2 -
Growing Trade Volumes 3 3 -
Cheap Labour Force 4 5 up 1
Geographic Location 5 6 up 1
Good Business Environment 6 4 down 2
Strong Transport Infrastructure 7 7 -
Growing Population 8 9 up 1
Potential Consumer Spend 9 8 down 1
Near Sourcing Market 10 10 -
Lack of Corruption 11 11 -
Strong Security 12 12 -
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76
20%
15%
10%
5%
0%
Poor T
rans
port
Infra
stru
ctur
e
Corru
ption
Gover
nmen
t Poli
cies
Difficu
lt Cus
tom
s
Proce
dures
Secur
ity
Difficu
lty S
ettin
g Up/
Doing
Busine
ss
Human
Righ
ts
Issue
s
Difficu
lty in
Repat
riatin
g Pro
fits
Frau
d
Geogr
aphic
Loca
tion
Poor I
T Inf
rast
ruct
ure
% o
f res
po
nden
ts
Problems Associated with Doing Business in Emerging Markets
Please rank, in order of importance, the main problems associated with doing business in emerging markets.
Source: Transport Intelligence
Source: Transport Intelligence
Factor 2016 2015 Y-o-Y Change
Corruption 1 1 -
Poor Transport Infrastructure 2 2 -
Government Policies 3 3 -
Security 4 5 up 1
Difficult Customs Procedures 5 4 down 1
Difficulty in Setting Up and Doing Business 6 6 -
Fraud 7 8 up 1
Difficulty in Repatriating Profits 8 7 down 1
Geographic Location 9 10 up 1
Human Rights Issues 10 9 down 1
Poor IT Infrastructure 11 11 -
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Thetoptwodriversofgrowthinemerginglogistics
marketsremained‘economicgrowth’and‘FDI’in
2017.Giventhecorrelationbetweenwidereconomic
expansionandgrowingdemandforlogisticsservices,
thecontinuedemphasisplacedonthisasthetopfactor
isnotsurprising.Itisperhapslikelythiswillcontinue,too,
withgeneraleconomicgrowthplayinganimportantrolein
encouragingspendingwithinconsumermarkets,pulling
largeramountsofthepopulationintothemiddleclass
andincreasinglevelsofpublicspendingoninfrastructure
projectsandotherpublicservices.
Theriseof‘cheaplabourforce’and‘growingpopulation’
throughtherankingsseemstoimplytheneedtoachieve
efficiencyandscaleinemergingmarketoperations.
Thismaybeduetoincreasedlevelsofcompetitionin
emergingmarkets,makingcostreductionsavitalpart
ofmaintainingprofitability.Itmayalsobeanindication
thattraditionallylowcostlocationsarebecomingmore
expensiveaslivingstandardsrise,atrendseeninChina
overthecourseofitsrapiddevelopmentoverthelastfew
decades.Theincreasedemphasisplacedon‘growing
population’maybearesultofmanyLSPshavingtoshift
theirattentiontoconsumermarkets,ase-commerce
becomesmoresignificantacrossemergingmarkets,for
example,andasprogrammestodiversifyeconomies
awayfromtraditionalindustrialsectors,ashasbeenseen
intheMiddleEast’soilexporters,gatherpace.
Therewasmorechangebelowthetopspots,however.
‘Goodbusinessenvironment’felltwopositionsto6th,
thusreversingtheriseitrecordedlastyear.Thismay
reflecttwotrends–firstly,thattheprioritisationemerging
marketshavegiventoincreasingtheirattractiveness
toforeigninvestorshascreatedrobustbusiness
conditions,suchasintheUAE,withthosesurveyed
havingahigherdegreeofexpectationthatappropriate
conditionswill,bynow,befullyimplemented.Asecond,
morenegativeinterpretation,isthatLSPsarehaving
tofollowopportunitiesintolessthanoptimallocations
asgrowthissqueezedacrossemergingmarkets.
Suchaninterpretationmayalsoexplaintheseemingly
contradictoryresultswhichplacedecreasingvaluein
‘goodbusinessenvironment’butrankproblemssuchas
‘corruption’and‘governmentpolicies’highlyasinhibitors
ofgrowth.Morewidely,thecontinuityofproblems
year-on-yeargoessomewaytoimplyingthatemerging
marketsarenotdoingenoughtoaddressthem.
Overall,itappears‘economicgrowth’isconsidereda
pre-requisiteforemergenceasalogisticsmarket.With
therestofthedriversrankedclosely,however,they
takeonaddedimportance.Whereeconomicgrowthor
commercialopportunityissimilarbetweenmarkets,itwill
bethecombination,strengthandattractivenessofthe
otherdriversthatwillseesomemarketsfavouredover
othersininvestmentdecisions.Themoreevenspread
andtherelativelyhigherconcentrationsbehindanumber
ofinhibitorssuggeststhepresenceofperhapsjustoneor
tworiskfactorssignificantlydiminishesthepotentialofan
emerginglogisticsmarket.
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For each of the following regions, please outline which supply chain risk poses the most considerable threat to growth:
Latin America
Asia Pacific
Supply Chain Risk
9.2%
5.1%
3.3%
3.3%
3.0% 2.0%
12.1%
16.9%
19.5%
25.4%
Economic shocks
Natural disasters
Corruption
Poor infrastructure
Government instability
Other
Terrorism
Inventory levels
Piracy
Cyber attacks
3.0%3.2%
2.3%
1.8%
1.5%
1.5%
9.6%
17.9%
18.3%
41.0%
Corruption
Government instability
Economic shocks
Poor infrastructure
Natural disasters
Other
Terrorism
Inventory levels
Cyber attacks
Piracy
Source: Transport Intelligence
Source: Transport Intelligence
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79
For each of the following regions, please outline which supply chain risk poses the most considerable threat to growth:
Sub-Saharan Africa
Middle East & North Africa
Supply Chain Risk
6.6%
5.4%
2.5%
2.1%
7.2%
8.4%
20.6%
45.1%
Terrorism
Government instability
Economic shocks
Corruption
Poor infrastructure
Other
Inventory levels
Piracy
Natural disasters
Cyber attacks
0.6%
1.6%
3.0%
4.5%
3.0%
2.6%
1.1%
1.7%
11.2%
19.3%
20.4%
33.2%
Poor infrastructure
Government instability
Corruption
Terrorism
Piracy
Natural disasters
Other
Economic shocks
Inventory levels
Cyber attacks
Source: Transport Intelligence
Source: Transport Intelligence
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Withsupplychainsanevermoreintegralpartof
manufacturingandretailingoperations,theneedto
understand,manageandmitigaterisksinthesupply
chainbecomesvitaliforganisationsaretomaintain
lowinventoryandjust-in-timeproductionschedules.
Surveyrespondentsindicatedthatwhilemacroeconomic
indicatorswereimportant,individualmarketsneededto
beproperlyassessedonamicrolevelifopportunities
andrisksweretobefullyunderstood.Somekeytrends
doemerge,however.Highlightingthevulnerabilityof
emergingmarketstowidereconomicuncertainty,survey
respondentscited‘economicshocks’asoneofthe
threemostsignificantsupplychainriskfactorsineach
ofthreeofthefourregionscoveredbytheIndex–Asia
Pacific,MiddleEast&NorthAfricaandLatinAmerica.
‘Governmentinstability’isalsoawidespreadrisk,and
citedbyrespondentsasaleadingriskfactorinallregions
exceptAsiaPacific.
Asia Pacific
Economicshocks,naturaldisasters,corruptionandpoor
infrastructurehavebeenratedasthemostsignificant
supplychainrisksacrossAsiaPacificforasecondyear.
Overall,thefourrisksaccountfor73.9%ofthetotal
responses.
AsiaPacificeconomieshadanotherchallengingyear
economicallyin2016astheturbulenceemanatingfrom
Chinabecameincreasinglyacuteoverthelatermonths
of2015andearlypartof2016.Morewidelyintheregion,
AsiaPacificeconomieshaveseenavarietyofheadwinds
overthelastyear,whichinsomecaseshasprompted
governmentintervention,suchasinIndonesiaand
Malaysiawherethestatewasrequiredtopropupthe
valueofdomesticcurrenciesfollowingthethreatofaUS
interestraterise.Itmayalsobethecasethatsluggish
growthindevelopedeconomiesbothgloballyandwithin
theregionarecreatingconcernsforrespondentswhosee
lowerdemandtranslatingintolowerexportvolumes.
Naturaldisastersremainthesecondmostsignificant
supplychainriskintheAsiaPacificregion.UNdata
showstheregionexperiencedastaggering1,600natural
disastersoverthedecadeto2015,some40%ofthe
globaltotal.Theeconomicimpactofoverthesame
periodtotals$500bn.
Latin America
Corruptionandgovernmentinstabilityremainedthetop
tworisksinLatinAmerica,followingayearwhichhas
seenintensecoverageofhighprofilecorruptionscandals
inBrazil.Togetherthetworiskfactorsaccounted
from59.3%ofthetotalresponses,suggestingsurvey
respondentsareclearintheirreasonstobecautious
whenitcomestoinvestingandoperatingintheregion.
TherecessionsunderwayinBrazilandVenezuela–with
negativeeconomicgrowthcompoundedbyhyperinflation
andcurrencyvolatilityinthelatter–combinedwith
generallowgrowthacrosstheregion,thedriverswhich
sawrespondentsrankeconomicshocksasthe3rdmost
significantLatinAmericanriskfactorarefairlyclear.
Middle East
Terrorismandgovernmentinstabilitywereonceagain
rankedasthemostsignificantsupplychainrisksforthe
MiddleEast&NorthAfrica,accountingfor65.7%ofthe
totalresponses,althoughbothfactorsaccountedfora
slightlylowerproportionofthetotalresponsethisyear.
Thedominanceofthetworiskfactors,however,does
underlinethewiderthreattostabilitythatconflictsacross
theregionposeasthepotentialforspilloversrises.
Theperceptionofpoorinfrastructureasasupplychain
risktogrowthinMiddleEast&NorthAfricahas,however,
declinedfrom8.1%to6.6%,resultinginthisfactor
droppingto5th.Thisislikelyaresultofvastinvestmentin
infrastructureacrosstheregion,suchasthedevelopment
ofKingAbdullahEconomicCityinSaudiArabiaas
wellastheundertakingofhugelogisticsinfrastructure
developmentthathasseenbothseaandairportsbuilt
andexpandedacrosstheregioninrecentdecades.
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Sub-Saharan Africa
Surveyrespondents’perceptionsofsupplychainrisksin
sub-SaharanAfricaisunchangedinthe2017survey,with
poorinfrastructure,governmentinstabilityandcorruption
againheadingtheranking.Together,theseriskfactors
accountfor72.9%ofthetotalresponses.
Themostsignificantchangeamongstthisgroupisthe
3.9ppriseintheproportionofrespondentsthatindicated
corruptionisthemajorriskfactor.A2015studyby
TransparencyInternationalfoundthatapproximately75m
peoplepaidbribesovertheyearinsub-SaharanAfrica,
while18ofthe28governmentsassessedweresaidtobe
failinginthefightagainstcorruption.Conductinglogistics
operationsinsuchanenvironmentishighlychallenging,
withsupplychainefficiencyandintegritypotentially
underminedintheabsenceofsuchpayments.
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Country 2017 2016 Y-o-Y Change
Syria 1 1 -
Libya 2 4 up 2
Iraq 3 2 down 1
Ethiopia 4 3 down 1
Bangladesh 5 6 up 1
Iran 6 5 down 1
Egypt 7 7 -
Algeria 8 8 -
Papua New Guinea 9 10 up 1
Cambodia 10 9 down 1
Venezuela 11 15 up 4
Bolivia 12 16 up 4
Ukraine 13 11 down 2
Belarus 14 14 -
Uganda 15 13 down 2
Pakistan 16 12 down 4
Brazil 17 17 -
Lebanon 18 19 up 1
Georgia 19 21 up 2
Kazakhstan 20 22 up 2
14%
12%
10%
8%
6%
4%
2%
0%
Syria
Libya Ira
q
Ethiop
ia
Bangla
desh
Iran
Egypt
Alger
ia
Papua
New
Guin
ea
Cambod
ia
Vene
zuela
Bolivia
Ukrain
e
Belaru
s
Ugand
a
Pakist
anBra
zil
Leban
on
Georg
ia
Kazak
hsta
n
% o
f res
po
nden
ts
Least Attractive Emerging Logistics Markets
Which of the following countries do you believe have the LEAST potential as emerging logistics markets? Please rank.
Source: Transport Intelligence
Source: Transport Intelligence
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Therankingofemergingmarketswiththeleastpotential
seesSyria,acountrybesetwithviolenceandinstability,
maintainitspositionattheheadofthelist,having
movedawayfromthepackasrespondentscollectively
addemphasistotheperceptionthisyear.Theongoing
insecurityacrossvastswathesofthecountryhasledto
conflictofsuchintensitythatdamagehasleftmajorareas
ofthecountryuninhabitable,letalonefunctionalenough
todemandcommerciallogisticsoperations.Twoother
countriesthathavesufferedheavilyasaresultofconflict
–LibyaandIraq–joinSyriaatthetopoftheranking
againthisyear,althoughLibyahasleapfroggedIraq
into2ndposition.Libya’srisereflectsalackofprogress
madebythevariousadministrationsempoweredtobring
embattledareasofthecountryundertheruleoflaw.
Overall,theMiddleEast&NorthAfricaregioncontributes
fourfurthercountriestothelist,withIran,Egyptand
Algeriaalsomakingthetop10.
Despitefallingoneposition,Ethiopiastillplacesan
undesirable4thinthisranking.Havingrisenthree
positionsinthedata-drivenIndex,andrecordingan
impressive10.8%GDPexpansiononaverageforeach
yearoverthelastdecade,recenteventsandlong-term
perceptionofthemarketseemtoundermineitspotential.
Uganda,downtwoto15th,istheonlyothersub-Saharan
Africamarkettofeatureinthislist.
LatinAmericaishometothreemarketsinthelist.While
Brazilremainedin17th,BoliviaandVenezuelabothrose
fourpositions–Venezuelahasexperiencedsignificant
levelsofdisruptionsincethecollapseoftheoilprice
underminedthemajorsectorofitseconomy.Brazil,
meanwhile,wasalsooneoffourmarketstoappearin
boththemostandleastattractiveemerginglogistics
marketsrankings,alongwithBangladesh,Iranand
Kazakhstan.
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20%
15%
10%
5%
0%
Intra-Asia Asia-Europe Asia-Africa Asia-SouthAmerica
Asia-NorthAmerica
Asia-Middle East
South America-North America
Africa-Europe
% o
f res
po
nden
ts
19.3%
18.6%
16.3% 16.0%
14.4%
13.0%13.6% 13.8%
12.4% 12.8%
9.0%
10.7%
8.4% 8.1%
6.6% 7.0%
2017 2016
Prospects for Emerging Trade Lanes
Which of the following trade lanes do you believe have the greatest potential for future growth?
Source: Transport Intelligence
Theintra-Asiatradelaneremainsthemostpromising
accordingtosurveyrespondents.ThisisdespiteChina’s
lowerdemandforcommoditiesandweakgrowthin
tradevolumes.Theregionis,though,increasingly
interconnectedwithmanymarketsinvolvedinvarious
stagesofproduction,withcomponentsacrossthevalue
chainmanufacturedinseveraldifferentmarketsbefore
beingshippedtoanassemblylocationforre-export.
Thelaneisalsoexpectedtoseeaboostinvolumesas
consumptionintheregionrises,withagreaterproportion
ofgoodsshippedtodestinationmarketsintheregion,
ratherthanbeingsentelsewhereintheworld.Asa
measureofthegrowthinconsumptionacrossAsia
Pacific,itsshareofworldconsumptionisexpectedto
increasefrom27%in2016to39%by2035,accordingto
IHSGlobalInsight.
Thetwootherlanesthatmakeupthetop3–Asia-Europe
andAsia-Africa–alsosawtheirshareofresponses
increaseyear-on-year.TheAsia-Europelaneimproved
marginally,perhapsreflectingfaiththatdemandfrom
EuropeforAsia’sexportswillimproveasitseconomic
situationimproves.ThatAsia-Africaisthethirdhighest
ratedtradelanecouldbereflectedbytheinvestments
madebyChinesebusinessandtheChinesestatewhich
hasimprovedandenhancedthescaleandefficiencyof
Asia-facinglogisticsinfrastructureinthesub-Saharan
Africaregion,suchasthedevelopmentsinTanzania.
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Which of the following vertical sectors do you believe have the greatest potential for future growth in emerging markets?
Latin America
Asia Pacific
Vertical Sectors
7.4%
4.8%
3.7%
2.9%
8.5%
15.5%
27.5%
28.6%
Retail/Consumer
Hi-Tech
Automotive
Pharmaceuticals/Medical Equipment
Agriculture
Chemical
Mining (metals, minerals, etc)
Oil & Gas
Humanitarian Aid
Other
0.3%
0.8%
8.3%
7.8%
6.1%
3.7%
13.4%
13.9%
15.5%
26.4%Agriculture
Mining (metals, minerals, etc)
Automotive
Retail/Consumer
Pharmaceuticals/Medical Equipment
Oil & Gas
Hi-Tech
Chemical
Other
Humanitarian Aid
1.9%2.9%
Source: Transport Intelligence
Source: Transport Intelligence
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Which of the following vertical sectors do you believe have the greatest potential for future growth in emerging markets?
Sub-Saharan Africa
Middle East & North Africa
Vertical Sectors
6.8%
4.9%
3.6%
3.2%
8.6%
9.3%
10.1%
47.9%
Oil & Gas
Retail/Consumer
Humanitarian Aid
Mining (metals, minerals, etc)
Pharmaceuticals/Medical Equipment
Agriculture
Hi-Tech
Other
Automotive
Chemical
2.8%2.9%
8.3%
8.0%
7.8%
9.5%
14.8%
17.7%
27.9%
Mining (metals, minerals, etc)
Humanitarian Aid
Agriculture
Retail/Consumer
Other
Pharmaceuticals/Medical Equipment
Oil & Gas
Chemical
Automotive
Hi-Tech
0.7%2.0%
3.1%
Source: Transport Intelligence
Source: Transport Intelligence
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Asia Pacific
AsiaPacificsawretailandconsumer,hi-techand
automotiveremainatthetopoftherankingsasthe
verticalsectorsmostlikelytodrivegrowthinthelogistics
sectoracrosstheregion.Togetherthethreeverticals
accountedfor71.6%ofthetotalresponses,pointing
towardstheincreasedspendingpoweroftheregion’s
middleclass,aswellastheincreasinglysophisticated
andvaluableproductsAsiaPacific’smanufacturersare
producing,asdriversofgrowth.
Latin America
Arelativelybalancedpictureemergesfromtherankings
oftheverticalsectorsinLatinAmerica,indicatingthat
variousopportunitiesexistforlogisticsserviceproviders
acrosstheregionwithfourverticalsgainingatleast10%
ofthetotalresponseseach.Leadingthewayisagriculture
with26.4%,whilemining,automotiveandretail/consumer
areseparatedbyjust2.1pp.Thattwoofthesemarkets
areextractiveindustriesandtwoareconsumption-driven
goessomewaytosuggestingthevariationofopportunity
aswellasstagesofdevelopmentacrosstheregion.
Middle East & North Africa
Theoil&gassectoragainranksastheverticalsector
mostlikelytocreateopportunitiesforLSPsacross
theMiddleEast&NorthAfricaregion.Almosthalfof
respondents(47.9%)suggestedthesectorholdsthe
greatestcapacitytodrivefuturegrowthintheregion,a
dropof3.9ppyear-on-year,perhapsreflectingsurvey
respondents’beliefthattheopportunitiesmustbesought
elsewhereasoilpriceslooksettoremainlow.Retail
andconsumeralsosawitsshareoftotalresponsesfall,
down0.9ppyear-on-year,perhapsasaresultoffalling
confidenceinconsumerspendingassubsidiesare
replacedwithtaxesinsomeoilproducingmarkets.
Sub-Saharan Africa
At27.9%,morethanonequarterofsurveyrespondents
believetheminingsectorhasthegreatestpotential
todrivegrowthinsub-SaharanAfrica.Overall,the
unchangedtop3–mining,humanitarianaidand
agriculture–accountfor60.4%oftotalresponses.
Respondentsindicatedthepotentialoftheoil&gas
sectorinsub-SaharanAfricahaddeclined,with7.8%
ofrespondentsselectingthissectorin2017,compared
to11.3%lastyear.Withoilpricessettoremainlow,this
couldreflectalackofcommercialviabilityintheoperation
ofproductionfacilitiesinpartsoftheregion.
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Country 2017 2016 Y-o-Y Change
India 1 2 up 1
China 2 1 down 1
Brazil 3 3 -
UAE 4 4 -
Vietnam 5 5 -
Russia 6 6 -
Indonesia 7 7 -
Iran 8 16 up 8
South Africa 9 8 down 1
Mexico 10 9 down 1
Saudi Arabia 11 11 -
Turkey 12 14 up 2
Malaysia 13 10 down 3
Qatar 14 13 down 1
Thailand 15 12 down 3
Nigeria 16 17 up 1
Chile 17 21 up 4
Philippines 18 15 down 3
Kenya 19 23 up 4
Poland 20 18 down 2
200
150
100
50
0
India
China
Brazil
Vietna
mUAE
Russia
Indon
esia
Mex
ico
Saudi A
rabia
Turk
ey
No.
of
pla
nned
inve
stm
ents
Iran
South
Afri
ca
Mala
ysia
Qatar
Thail
and
Nigeria
Chile
Philip
pines
Kenya
Poland
Markets for Potential Investment over the Next Five Years
Which of the following countries, if any, do you plan to expand into in the next 5 years?
Source: Transport Intelligence
Source: Transport Intelligence
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RespondentsindicatedthatIndiahasmovedaheadof
Chinaasthemarketwiththemostplannedinvestments
overthenextfiveyears.TheslowingofgrowthinChina,
incombinationwiththereformswhichunlockpotential
andincreaseefficienciesintheIndianmarketare
undoubtedlyapartofthisswitchinposition,asisthe
centralityofChinainexpansionplansatmanyLSPsover
muchofthelastdecade–LSPshavealreadyestablished
operationsinChina.Therewasgenerallyahighdegreeof
continuityinthetop10,overall,withBrazilretainingthird
positiondespiteachallengingfewyears,suggestingthe
underlyingpotentialofthemarketremainsattractiveto
logisticsproviders.Intotal,nineofthetop10remained
thesame,withonlyMalaysia,downthreepositionsto
13th,fallingout.
ItwasIranthatreplacedMalaysiainthetop10,gaining
16positionstorankasthemarketwiththe8thhighest
numberofplannedinvestments.Irantiestogetheritsrise
upboththedata-drivenIndexandtherankingofmarkets
withmostpotentialelsewhereinthesurveywithastrong
riseinthislist,toenterthetop10forthefirsttimeever.
AcrossallelementsoftheAgilityEmergingMarkets
LogisticsIndex2017,Iranhasperformedstrongly,
underliningitscurrentperformance,butperhapsmore
importantly,highlightingitsfuturepotentialintheeyesof
logisticsindustryprofessionals.Itsnewfoundopennessto
FDIwillalsohaveplayedasignificantrolehere.
Overall,theAsiaPacificregionstruggled.Ofitsseven
marketsamongstthetop20,fourfell,includingMalaysia,
ThailandandthePhilippines,indicatinglowerdemand
fromChinacontinuestoaffectthesemarkets,aswell
asthewiderregiongenerally.Moreworryingly,itmay
indicatethatthedomesticmarketsonoffertoLSPsare
perhapsnotdevelopedenoughtosustaininvestment
plansalone.
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Perceived Effect of China’s Economic Slowdown on the Transportation & Logistics Market
Strategies for China
How has China’s economic slowdown impacted the country’s transportation and logistics sector?
Which statement best reflects your plans for the Chinese market over the next 12 months?
37.4%
12.3%
4.8%
7.0%
21.4%
17.1%The transport and logistics sector has been significantly hindered by the slowdown
The impact has been moderate, some momentum has been lost
The transport and logistics sector has slowed in line with the overall economy
The transport and logistics sector has continued to grow despite what's happened in the wider economy
The economy and the transport and logistics sector are not closely tied in the Chinese market, there’s been no impact
Not sure
22.2%
5.6%
4.4%2.2%
31.7%
31.7%We’ll be continuing with entry/expansion plans, the situation in China has not affected our strategy
We won’t be making any changes to our current position in China
We’ll moderate our entry/expansion plans as a result of slower growth
We will rationalise our presence to focus on core Chinese markets
We will be reducing our overall presence in the market
We’ll be exiting China
Source: Transport Intelligence
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Itisbroadlyacceptedthattheoveralllogisticsmarket
movesinlinewithwidereconomicgrowthinmature
markets,andalittlemorethanonethirdofsurvey
respondentsindicatedthesameistrueofChinatoo.With
Chinarapidlytransitioningtowardsaneconomyfocussed
onservicesectorexpansion,itcouldbethatslowing
growthanddecliningvolumesinmanufacturingsectors
arebeingreplacedwithopportunitiesinotherpartsofthe
economy,mostnotablye-commerce.Theindicationhere
isthatLSPsonthewholehavemanagedtobuildagood
mixofbusinessintheirportfolios,andavoidedtherisks
ofoverexposingtheiroperationstodecliningsectorsof
themarket.
Indeed,whenlookingtothefuture,surveyrespondents
arerelativelybullishonthemarket’sabilitytocontinue
toprovideopportunities,withjust12.2%ofrespondents
indicatinganytypeofdownsizingintheirpresencein
themarket.At31.7%,nearlyonethirdofthosesurveyed
indicatedthestateoftheChineseeconomypresented
noreasontochangemarketentryorexpansionplans,
whileslightlymore,at33.9%,wouldcontinuewithcurrent
operations.Slightlymorethanonefifth(22.2%)either
havemadeadjustmentstostrategiesasaresultofthe
slowergrowthinChina,however.
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25%
20%
15%
10%
5%
0%
% o
f res
po
nden
ts
24.9%
20.2%21.2%
23.1%22.8%
19.5%
10.6%
12.7%
24.5%
20.4%
We do not operate in, or plan to operate in, sub-Saharan Africa.
We have established operations, and we’re looking at strategic
growth opportunities
We have identified the vertical sectors/
domestic markets we want to enter, and are in the planning stages
We have no immediate plans to establish operations
in the region.
We plan to establish operations in the
region, but need to assess which vertical sectors/geographies are best suited to our
business.2017 2016
Which of the following statements best reflects your strategy in sub-Saharan Africa?
Strategies for Sub-Saharan Africa
Source: Transport Intelligence
Nearlyonequarter(24.9%)ofthosesurveyedindicated
theydonot,anddonotplanto,operateinsub-Saharan
Africa,ariseof4.7ppyear-on-year.This,combinedwith
the24.5%ofthosethatstatedtheyhadnoimmediate
planstoentertheregion,putthetotalofsurvey
respondentsthatsuggestedtheregiondoesnotfitwith
theirfutureplansat49.4%.
Still,thatleavesmorethanhalfofallsurveyrespondents
witheitherestablishedoperationsintheregion,or
withtheintentiontobeginoperationsinthenear-term,
witharoundonefifthofthetotal(19.5%)lookingto
expand,suggesting,incontrasttootherrespondents,
opportunitiesarereadilyavailabletothosewithdirect
experienceofthemarket.
Overall,respondentsindicatedanearevensplitbetween
thosewhodonotseelogisticsmarketswithinsub-
SaharanAfrica’snationsasviableopportunitiesfor
theirparticularbusinessaspirations,andthosewho
haveeitherenteredorintendtoenterthemarket.This
isperhapsexplainedbythediversitywhichtheregion
exhibits–Africa’spopulationisgrowingrapidly,asisthe
spendingpowerofitsmiddleclass,andthescaleofthe
opportunitiesinindustriessuchasmining,consumer
goods&retail,agricultureandothersissignificant.Butso
tooarechallengeswithintheregion.Infrastructuregaps
remain,makingitnearimpossibletorunmodernlogistics
operationsinsomelocations,andalsoprecluding
sophisticatedmanufacturingtechniques,suchasjust-
in-time,markedlyincreasingcostinotherareassuch
asinventory.Moreover,simplylinkingmanufacturing
locationstoexportgatewayscanbeproblematicwith
roadssubjecttochroniccongestion.Sporadicelectricity
productioncancauseotherproblems,particularlyin
moreadvancedlogisticsoperations,suchascoldchain
operations.
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30%
25%
20%
15%
10%
5%
0%
% o
f res
po
nden
ts
South
Afric
a
Nigeria
Keny
aGha
na
Tanz
ania
Ivory
Coast
Ethiop
ia
Mozam
bique
Ango
la
DR Congo
Sub-Saharan Africa’s Most Promising Markets
Which of these African countries do you believe has the most potential as a logistics market over the next 5 years? Please rank.
Source: Transport Intelligence
Country 2017 2016 Y-o-Y Change
South Africa 1 1 -
Nigeria 2 2 -
Kenya 3 3 -
Ghana 4 4 -
Tanzania 5 6 up 1
Ivory Coast 6 - new entry
Ethiopia 7 8 up 1
Mozambique 8 7 down 1
Angola 9 5 down 4
DR Congo 10 9 down 1
Source: Transport Intelligence
Thetopfourpositionsforsub-SaharanAfrica’smost
promisingmarketsremainedunchangedin2017,with
surveyrespondentsagainidentifyingtheregion’stwo
largesteconomiesashavingthemostpotential.
Despiteitslacklustreperformanceinthedata-driven
Index,SouthAfrica’sstatusasthemostpromising
logisticsmarketinsub-SaharanAfricawasundiminished.
Thecountryhasseenlowlevelsofgrowthinrecent
yearsandsocialissueswhichhaveaffectedkeylogistics
markets,suchasmining.ThesizeandwealthofSouth
Africa,however,remainsignificantonacontinentallevel
andsurveyrespondentsclearlyseeitsabilitytocreate
opportunitiesasmoreenduringthanrecentsetbacks.
Nigeria,meanwhile,maintainedsecondpositiondespitea
yearthatsawitenterrecession,anditsoilsectoraffected
bytheglobalfallinprices.Angola,anotherofAfrica’soil
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exportingnations,wasthemostsignificantcasualtyin
theopinionofsurveyrespondents,fallingfourranking
placesto9thinthelist.WorldBankfiguresputoil’sshare
ofAngola’stotalexportsat97%overthedecadeto
2015,andtheeconomyhasnotbeenabletowithstand
fallingpricesasgrowthhasslowedandinflationhit35%,
reducingthespendingpowerofAngola’spopulation.
Kenya,whichroundedoutthetop3alongsideSouth
AfricaandNigeria,matchedperformanceherewith
apositiveshowingelsewhereinthesurvey–itrose
fourplacesto19thintherankingoffutureinvestment
locations–aswellasanupwardmovementoftwo
positionstorank43rdinthedata-drivenIndex.Intotal,
58.0%ofrespondentscitedoneofthetop3assub-
SaharanAfrica’smostpromisinglogisticsmarket.
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30%
25%
20%
15%
10%
5%
0%
% o
f res
po
nden
ts
25.6%23.9%
22.6%
13.6%
11.5%
4.6%
24.4%
17.8%
23.8%
15.2%
9.0%
6.4%
Growing middle class and consumer
spending
New oil and gas discoveries
Mineral and resource demand
Rapid infrastructure development
Stronger agricultural demand
Increased FDI
2017 2016
40%
30%
20%
10%
0%
% o
f res
po
nden
ts
32.7% 32.5%31.0%
11.8%10.3%
2.1%
31.0%
12.2% 12.2%
11.1%10.9%
2.0%
Poor quality infrastructure
Corruption Poor connectivity/ linkages between economic centres
Uneven economic development
Lack of integration between economies
Size/scale of the continent
2017 2016
Drivers behind the Emergence of Sub-Saharan Africa’s Emerging Markets
What do you perceive to be the most significant driver of growth in the emergence of Africa’s logistics market?
What do you perceive to be the biggest challenge prohibiting the emergence of Africa’s logistics market?
Inhibitors of Growth in Sub-Saharan Africa
Source: Transport Intelligence
Source: Transport Intelligence
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Whilethetopdriverofsub-SaharanAfrica’slogistics
marketsremainedgrowthintheregion’smiddleclassand
consumerspending,newoil&gasdiscoveriesreplaced
mineralandresourcedemandasthe2ndmostimportant
driver.Intermsofthosefactorsinhibitingemergence,
however,therewasnochangeandtheconsensus
remainedclear–acombined63.7%ofthosesurveyed
citedpoorqualityinfrastructureandcorruptionasthe
mostsignificantfactorsholdinglogisticsgrowthinthe
regionback.
Combined,asmallerproportionofsurveyrespondents
indicatedthatextractiveindustriesweresignificant
driversofgrowthintheregion’slogisticsmarketin2017.
Across‘newoilandgasdiscoveries’and‘mineraland
resourcedemand,’42.2%ofthosesurveyedindicated
thesewouldbethemaindrivers,downfrom48.2%last
year.Itshouldbenoted,however,thatyear-on-year,only
‘mineralandresourcedemand’sawareducedshare
ofresponses,losingsome6.0pp,perhapsindicating
surveyrespondents’beliefthatpricesfortheregion’s
commoditiesaresettoremainlowoveranextended
period.
Asignificantdegreeofcontinuitywasseenyear-on-year
insurveyrespondents’perceptionofthefactorsinhibiting
growthinsub-SaharanAfrica’slogisticsmarket.This
wouldappeartosuggestthatnotenoughisbeingdone
toreducebarrierstoentry.Poorinfrastructureremains
themostsignificantinhibitorofdevelopmentinthe
region,whileinfrastructuredevelopmentrankedasonly
thefourthmostsignificantdriver.Notonlyislogistics
fundamentallylimitedbypoorinfrastructure,wider
economicdevelopmentishinderedbypoorconnectivity
andlinkagesbetweeneconomiccentresandgeneral
inequality.Thatjust2.0%ofrespondentsbelievedthe
sizeandscaleofthecontinenttobefundamentally
holdingbackgrowthsuggestsalackofcoordinated
actiontoovercomeinfrastructurechallenges.
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40%
30%
20%
10%
0%
% o
f res
po
nden
ts
Yes, we’ve started planning
entry/expansion
Yes, we have now initiated
investment
It’s a positive development, and
India is now a market we’d consider investing in
We’re no more or less likely to invest in India than before
We did not have plans to invest in India previously and this has not
changed
The reform has made it less likely that we’ll invest in
India
Strategies for India
Has the passing of reform, including the Goods & Services Tax, changed your plans to invest in India?
Source: Transport Intelligence
ThepassingoftheGSTandthereformsagenda
morewidelyhavebeencharacterisedasasignificant
opportunityforIndiatoovercomemanyofthebarriers
toenteringthemarketthathavepreviouslystymied
investment,particularlyfromoverseas.Thataroundone
thirdofrespondents(30.9%)saidtheywerenomoreor
lesslikelytoinvest,andthatnearlyonequarter(22.8%)
donotseethedevelopmentasareasontofactorthe
countryintotheirplans,meansacombined53.7%of
thosesurveyedhavebeenunmovedbythereformsmade
toimprovetheattractivenessoftheIndianmarket.An
implicationofthisoutcomeisthatIndia’srecenthigh
levelsofFDImaybeunsustainable,atleastasfaras
investmentinlogisticsisconcerned.Overall,FDIinIndia
hasbeenatrecordhighsover2014and2015,butfell
approximately21%inthefirstsixmonthsof2016against
thepreviousyear,accordingtoOECDfigures.
Surveyrespondentsprovideaninterestingcontrast
intheirsuggestionacrossthesurveythatIndiaisthe
emerginglogisticsmarketwiththemostpotential,
whilealsosuggestingthatflagshipreformprogrammes
designedtounlocksignificantvalueandefficiencyacross
theeconomy,includingwithinthelogisticssector,arenot
thecatalystmanyareseeking.ThatIndiaistheemerging
marketwiththehighestnumberofplannedinvestments,
suggestsincombinationwithresultsherethat,whilenot
allLSPshaveinterestinthemarket,thosethatdoare
movingquicklytoestablishalargescalefootprintacross
thecountry.
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50%
40%
30%
20%
10%
0%
Poor
gove
rnanc
e
Corrup
tion
Exce
ssive
gove
rnmen
t deb
t
High in
flatio
n
Trans
port
and l
ogist
ics
infra
struc
ture
Overde
pend
ence
on
expo
rts to
China
Low co
mmodity
price
s
46.0%
34.7%
21.1% 21.3%
11.8%
5.6%3.9% 4.3%
3.1%5.0%
2017 2016
8.1% 8.4%
17.1%
7.4%
Barriers to Growth in Brazil
What is Brazil’s biggest obstacle to returning to higher growth?
Source: Transport Intelligence
Whiletheorderinwhichsurveyrespondentsranked
themajorbarrierstoareturntogrowthinBrazilwas
unchangedyear-on-year,therewasamarkedincreasein
thenumberofrespondentsthatcited‘poorgovernance’
asthemostsignificantfactor.At46.0%,nearlyhalfof
thosesurveyedpointedtothelackofabilityamongstkey
stateinstitutionsatstateandcentrallevelstoproperly
governinBrazil,anincreaseof11.3ppcomparedwithlast
year.Thereisaclearsuggestiontoo,withtheyear-on-
yearincrease,thatnoshort-termsolutionisexpected,
althoughthereductionofrespondentsciting‘excessive
governmentdebt’asabarrierdoesperhapsshowan
indicationthatthenewadministrationofMichelTemer
mayhaveeasedsomeconcerns.
OtherresponsesinthesurveyhighlightthatBrazilretains
aconsiderableamountofattractivenessasalogistics
market–itrankedasthe3rdhighestmarketinterms
ofpotentialandforthehighestnumberofplanned
investments–likelydrivenbyitslargemiddleclassin
whatisstillavasteconomy,despiterecentrecession.
Brazilalsostilldisplaysanumberofinefficiencieswith
underdevelopedinfrastructureprimeamongstthecauses.
Inaworldofcompetingandhighlycompetitiveemerging
markets,sustainingthelevelofattractivenessBrazil
currentlydisplayswillbeasignificantchallengeasit
seekstosolveproblemswhich,giventheirhighlevelsof
complexity,haveveryfeweasyfixes.
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12%
10%
8%
6%
4%
2%
0%
% o
f res
po
nden
ts
The d
irecti
on of
China’s
econ
omy
Oil pric
es
The s
treng
th of
the US e
cono
my
Weak t
rade g
rowth
Outcom
e of th
e US
presid
entia
l elec
tion
The s
treng
th of
the
Europ
ean e
cono
my Brexit
Resist
ance
to
trade
agree
ments
(e.g.
TTIP an
d TPP
)
A rise
in pr
otecti
onism
in em
erging
mark
ets
(e.g.
Indon
esia)
Low co
mmodity
price
s
Most Significant Drivers in the Global Economy
Which of the following do you think will have the most significant impact on global economic and trade growth over the next 12 months?
Source: Transport Intelligence
ThedirectionofChina’seconomyisthevariablelikelyto
havethemostsignificanteffectonglobaleconomicand
tradegrowthoverthecourseof2017,accordingtosurvey
respondents.However,whileitwasthefactorthatgained
thelargestshareofrespondents’votes,at10.5%,thereal
indicationoftheresultshereisthatanumberoffactors
areweighingonthemindsofsupplychainprofessionals
astheylookattheyearahead.
EventsinChinaperhapsprevailduetoitsconnectedness
withthefortunesoftradingpartners,aswellasthe
increasingintegrationtheworld’ssecondlargest
economyhaswiththeglobaleconomyatasystemiclevel.
Oilpricesarerankedhighly,too,asfluctuationscanhave
largeimpactsonLSPs,particularlythoseinmarginal
businessessuchasseafreight.Oilpricesalsoclearly
impactonproducingnations,butwithpriceslooking
likelytoremainsuppressedfortheforeseeablefuture,
exportingnationshavebeenadaptingwitheconomic
diversificationplans.Thisprocesslookssettocontinue
overtheyearaheadatleast.
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21.1%
1.2%6.0%
47.6%
24.1%Generally unconcerned
Not at all concerned
Opinion unchanged by these events
Slightly concerned
Very concerned
The Future of Free Trade
Source: Transport Intelligence
Despitegainingattentioninthelatterstagesof2016as
BrexitandtheUSpresidentialelectionunfolded,the
movementtowardsalessopentradingenvironment
globallydoesnotfeaturesignificantlyhighlyonmany
participants’listofconcerns.
Intermsoftheperceivedthreatstothefutureofglobal
trade,almostahalfofrespondents(47.6%)reported
thattheyareslightlyconcernedregardingtheimpactof
developmentssuchasBrexitandresistancetoTTIPand
TPPontheglobalfreetrademovement.Combiningthose
respondentswithonlyaslightlevelofconcernwiththose
whoindicatedthedevelopmentswerenotsignificant,
nearly80%ofthosesurveyedindicatedtheirbeliefthat
theglobalfreetrademovementisrobustenoughto
continuedespitethechallenges.
2016 has seen a number of setbacks for the global free trade movement, including Brexit, resistance to TTIP and TPP as well as growing protectionism in some emerging markets, such as Indonesia. On the scale below, please indicate your level of concern that these developments are the start of a move away from free trade and towards the introduction of more barriers to international trade?
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4.8%
9.0% 5.4%
29.3%51.5%
Prices will see a strong recovery
Prices will improve but not significantly
Prices are unlikely to change much over the course of 2017
Prices will trend downwards slightly in the year ahead
Prices will be highly volatile in 2017
Commodity Price Development
How do you predict commodity prices (oil, gas, minerals) will fare in the year ahead?
Source: Transport Intelligence
Slightlymorethanahalfofrespondents(51.5%)predict
priceimprovementsintheyearahead,thoughthe
expectationisthatanyimprovementswillbemoderate,
withareturntopricesseenduringthecommodityboom
yearsofthe2000salongwayoff.Theimplicationhereis
that,muchlikeoilpricesspecifically,theadjustmenttoa
“newnormal”oflowerpriceshasnowtakentheplaceof
anyexpectationsofaquickrebound.Thisisreinforced
bythe29.3%ofthosesurveyedexpectthatpricesare
unlikelytochangemuchoverthecourseof2017.
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4.2%
42.8%
53.0%
About right
Too optimistic
Too pessimistic
Prospects for Emerging Market Growth
The IMF forecasts 2017 emerging market growth of 4.6%. In your opinion, is this:
Source: Transport Intelligence
Thatmorethanhalf(53.0%)agreewithaforecastthat
putsgrowthinemergingmarketsbelowtheaverageseen
formuchofthe2000ssuggeststhat,atbest,respondents
expectmanyofthechallengesfacedinrecentyearsto
remainoverthecourseof2017.
Arangeofthreatsandchallengestogrowthinboth
developedandemergingeconomieshavecaused
disruptionandturbulenceformuchofthelasttwo
yearsormore.China’sslowingeconomy,loweroil
prices,volatilecurrencies,risingprotectionisminmajor
economiesandloominghigherUSinterestratesall
influence,directlyorindirectly,afundamentaldriverof
thelogisticsindustry–globaltradevolumes.Thatsuch
headwindshaveenduredformuchofthelastfewyears
haslikelyledtosurveyrespondentsmoderatingtheir
expectationsforgrowthinemergingmarkets.Theuneven
impactofthesevariables,andtheuniquestrengths
andcircumstancesofvariousmarkets,willperhapssee
stronggrowthincertainsectorsorcertainmarkets,
however.Wherethisoccurs,logisticsserviceproviders
wouldbewelladvisedtoexpecttofindhighlycompetitive
environments.
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About Agility and Transport Intelligence
Agility – A leader in Emerging Markets
Agilitybringsefficiencytosupplychainsinsomeof
theglobe’smostchallengingenvironments,offering
unmatchedpersonalservice,aglobalfootprintand
customisedcapabilitiesindevelopedanddeveloping
economiesalike.Agilityisoneoftheworld’sleading
providersofintegratedlogistics.Itisapubliclytraded
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20,000employeesin500officesacross100countries.
Agility’scorecommercialbusiness,GlobalIntegrated
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traditionalandcomplexcustomerneeds.GILoffers
air,oceanandroadfreightforwarding,warehousing,
distribution,andspecializedservicesinprojectlogistics,
fairsandevents,andchemicals.Agility’sInfrastructure
groupofcompaniesmanagesindustrialrealestateand
offerslogistics-relatedservices,includinge-government
customsoptimizationandconsulting,wastemanagement
andrecycling,aviationandground-handlingservices,
supporttogovernmentsandministriesofdefense,remote
infrastructureandlifesupport.
Web: www.agility.com
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Eigh
t
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Transport Intelligence
Tiisoneoftheworld’sleadingprovidersofexpert
researchandanalysisdedicatedtothegloballogistics
industry.Utilisingtheexpertiseofprofessionalswith
manyyearsofexperienceinthemail,expressand
logisticsindustries,TransportIntelligencehasdeveloped
arangeofmarketleadingweb-basedproducts,reports,
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