Consistency at the top
The Agility Emerging Markets Logistics Index remains a good indicator for the level of logistics development in individual emerging markets. China is holding its own, despite policy and health turbulence. It’s possible that a recession could throw everything overboard, however. Some logistics experts expect this to happen, but Agility CEO Essa Al-Saleh demonstrates composure in an interview with the ITJ.
At first glance, the Agility Emerging Markets Logistics Index 2020 contains little that’s new. The countries in the top six ranks occupy the same positions as in the previous year, and even behind them there were only minor changes.
In view of the current events affecting the logistics world today, the Kuwaiti logistics company’s index nevertheless contains some interesting facts. As in the last six editions, China has again taken the top slot on the list of emerging markets.
This is an extremely delicate phase, however. No sooner have the effects of the trade conflict with the USA been more or less contained than the ‘Wuhan coronavirus’ put a damper on the Chinese economy. What these developments mean for logistics companies is still unclear at the moment.
Impact of the ‘Wuhan coronavirus’
What is clear is that today, practically every international logistics company is connected with China in some way – and so is Agility, of course. Essa Al-Saleh, president and chief executive officer of Agility’s Global Integrated Logistics division (GIL), says that “of course the ‘Wuhan coronavirus’ has heavily influenced logistics flows. At the moment we still can’t fully estimate the exact extent of its impact, however.”
The fact that the outbreak of the virus coincided with the Chinese New Year was a mitigating factor, as there is usually less transport activity during this period anyway, as Al-Saleh explained in an interview with the ITJ.
Agility is closely monitoring the further development of the situation and is analysing scenarios for if the situation were suddenly to deteriorate significantly. “We’re in constant communication with the WHO,” Al-Saleh emphasised.
Excluding the effects of the ‘Wuhan coronavirus’, the report shows that many emerging markets no longer experience such extreme swings. This is due to the fact that investors no longer select emerging markets solely on the basis of the cost factor, says the CEO. “The young and growing populations in these countries also want prosperity, which promotes consumption and drives development.”
Barriers to trade in India
In the Emerging Markets Logistics Index, India came second for the fourth time in a row. The world’s largest democracy has been predicted to achieve an economic breakthrough for years, but this has only occurred sporadically.
Al-Saleh, too, wavered between optimism and disillusionment in his assessment of India’s performance. “India is on the right track, but the business environment is characterised by too many regulations and barriers. Politics could do more in these fields”.
The view of Africa is also ambivalent. Nigeria gained eight places, more than any other country, whilst Ghana lost seven ranks. Egypt overtook South Africa to become the ‘continental champion’, in 20th place worldwide.
The dynamics in Africa also play an important role for Agility, as the company has a strong presence in various regions there. “I was very pleased with Egypt’s rise, just as I regret developments in South Africa,” Al-Saleh said. “Despite different dynamics, African countries remain important markets for Agility.”
64% anticipate a recession
Agility’s Emerging Markets Logistics Index not only examines countries, but also asks opinion leaders from our industry about their business forecasts. These paint a negative picture for 2020.
Of 780 respondents, 64% expect a recession in the next twelve months. Al-Saleh didn’t join this lament. “This concern about a recession could prove to be a self-fulfilling prophecy. No one can say how the ‘Wuhan coronavirus’ or other factors will develop. In my 20 years in the logistics industry I’ve learnt that positive and negative changes can come about quickly.”