BAAR, Switzerland - Global economic uncertainty and Middle East political turmoil are doing little to dim the attraction of emerging markets, which show signs of reducing their dependency on developed markets as they compete to be the trade hubs of the future, a new study shows.
A second-half slowdown in 2011 cooled growth in virtually
every region of the world at a time when regimes in Egypt,
Libya, Tunisia and other Middle East countries were
collapsing in the face of popular unrest.
In spite of the economic slowdown and political upheaval,
output in powerhouse economies such as Brazil, China and
India remains high, and the so-called "Arab Spring"
countries are now viewed as more attractive places to do
business, according to the 2012 Agility Emerging Markets
Logistics Index released today.
The annual Index spotlights 41 emerging markets and ranks
them by their investment potential and progress each year.
Attractiveness is measured by: market size and growth,
market compatibility (foreign direct investment, security,
urbanization and wealth distribution) and market
connectedness (international and domestic transport
infrastructure). The report, sponsored by global logistics
provider Agility, is compiled by Transport
Intelligence, a leading provider of expert research
and analysis to the global logistics industry. As part of
the Index, 550 senior logistics executives were surveyed,
making this the biggest survey to date in the emerging
markets logistics sector. For the first time, the Index
offers trade lane analysis from 2005 to 2011.
Dependence on developed economies lessening
While emerging markets cannot avoid the impact of economic
downturns in the U.S. and Europe, the Index points to
developments that are providing a cushion. First, domestic
demand in emerging markets such as China is growing.
Second, trade volumes between key emerging markets are
growing - and offsetting declines in trade with traditional
developed markets. At the same time, worries of overheating
in Asia have lessened.
The developing world will be the engine of global growth in
2012, offering business opportunity few global companies
can afford to ignore.
Top 10 performers - investment attractiveness powers
ahead
The countries that dominated the rankings continued to be
those that combine size and robust growth. China ranked
first; India second; Brazil third. Saudi Arabia and United
Arab Emirates (UAE) came in Nos. 4 and 5, and Indonesia and
Russia at Nos. 6 and 7, respectively. Malaysia moved up
three places from last year's rankings to land at No. 8.
Chile was No. 9, and Mexico was No. 10, falling two places.
"Emerging markets are more resilient and independent than
they've ever been," said Essa Al-Saleh, Agility's President
and Chief Executive Officer, Global Integrated Logistics.
"There's growing evidence that their dependence on the
established markets is diminishing as new trade lanes grow
and consumer demand in huge markets like China and India
gathers strength. In the Middle East, where we saw old
regimes fall, the Index indicates that logistics
professionals see the region as 'open for business' in a
way that it wasn't before."
"Emerging markets have never been so important to the
global economy," said John Manners-Bell, Chief Executive of
Transport Intelligence. "However operating in these markets
requires a great deal of attention and preparation as the
business environment is often highly challenging. The
Agility Emerging Markets Logistics Index highlights many of
these challenges and points towards the markets that will
deliver the greatest opportunities."
The Index top 10 - China pulls further ahead, while Middle
East forges on
China and India increased their Index scores, an indication
that they took steps to enhance their attractiveness as
markets. China distanced itself from other emerging
markets, including India (2), which remained hampered by
below-average scores in market compatibility and
connectedness. Though Brazil's infrastructure score remains
weak, investment is set to intensify in the run up to both
the 2014 World Cup and 2016 Olympic Games.
Underlining the resilience of the Middle East, Saudi Arabia
saw a strong increase in its score and topped the
compatibility index, meaning its market is easily
accessible for foreign companies and poses few barriers to
entry. Neighboring UAE moved up to fifth place, overtaking
Indonesia. The UAE continues to top the "connectedness"
table, the result of its massive investment in
infrastructure in recent years, along with its strong
shipping connections and liberal market access.
In spite of having more raw materials than China, India and
Brazil, Russia finished the lowest of the BRIC (Brazil,
Russia, India and China) economies. Reliance on energy
exports makes Russia vulnerable to price fluctuation. At
the same time, security threats, market barriers,
corruption and political unrest continue to handicap
Russia. In spite of its market size and growth prospects,
Indonesia fell one place to No. 6 in the 2012 rankings,
dragged down by poor "compatibility" and "connectedness."
In Mexico, crime, violence and drug trafficking lowered the
country's score for market compatibility and dropped it to
No. 10 in the Index.
While the BRIC economies have attracted large amounts of
foreign investment since the 1990s, other rising stars -
including Indonesia (6), Vietnam (27) and Turkey (11) -
present increased opportunities for logistics companies as
the "near-sourcing" trend of optimizing the distance
between supplies, production and markets intensifies. These
economies offer stable environment and fast growth.
Markets to watch - Africa showing more promise for
investors
Africa continues to make steady progress thanks to
performers such as South Africa, Morrocco and Ethiopia.
Huge natural resources continue to benefit the region, and
demand for these resources from Asia and the Middle East is
growing. Despite a number of long-standing obstacles,
African markets show increasing promise for investors.
Africa's exposure to fluctuations in commodity prices will
be limited if global demand remains reasonably strong.
Trade lanes - the figures tell the story
With changes in world trade flows driving the emergence of
new sea and air trade lanes, the Index has spotlighted the
major shifts and trends in trade lanes between 2005 and
2011.
Overall ocean freight volumes - Argentina and Turkey stake
their claims
• Argentina's exports to Europe rank a surprising
fourth among emerging market trade lanes, outstripping
those of Russia, Turkey, Ukraine, South Africa, India and
Egypt.
• Among emerging markets, China is the leading
importer of goods from the U.S. and EU, but Turkey comes in
a close second.
• Europe overtook the U.S. as China's top trading
partner. China's imports from the EU showed a huge increase
-- 96% between 2005 and 2011 -- with domestic demand an
increasingly significant driver.
• The biggest emerging market trade lane of all
involved sea freight shipments from China to the EU,
estimated at 50.48 million tons in 2011.
Fastest growing ocean freight volumes - rising stars
include Middle East, Africa and Americas
• Top of the table is Oman: non-oil trade from Oman to
the EU increased almost tenfold between 2005 and 2011.
Qatar, Saudi Arabia, UAE and Kuwait also feature reflecting
successful diversification outside the energy sector.
• Rising export stars also include Morocco, Bolivia,
Paraguay, Vietnam, Peru, Uruguay, South Africa, Tunisia,
Argentina and Mexico.
• In the reverse direction, the fastest-growing sea
freight trade lanes are those that carried goods from the
U.S. and EU to Paraguay, Vietnam, Morocco, Nigeria,
Tunisia, Uruguay, Oman and India.
Overall air freight volumes - perishable goods place Kenya
and Americas up with the leaders
• Top 10 surprise rankings by volume to U.S. / EU
include Kenya, Columbia, Chile and Peru, driven by exports
of perishable goods. Kenyan exports by air to the EU
increased an amazing 134% between 2005 and 2011.
• Largest air freight trade lane by volume is from
China to EU 1.13 million tons in 2011
• Top 10 importers from U.S. / EU include the BRIC
countries, but with the UAE amongst them. The UAE ranks an
impressive fourth; and with South Africa (8), Turkey (9)
and Mexico (10).
Africa and Americas dominate fastest-growing air freight
trade lanes
• Ethiopia exports to EU and to U.S. top the table on
the back of coffee and non-coffee products.
• African countries Nigeria, Kenya, Morocco and
Tunisia all feature in the top 10 fastest-growing
exporters.
• America's countries in the top 10 include Chile,
Ecuador, Peru and Mexico.
• In the reverse direction - Paraguay tops the table
(from a very small base figure), and with Qatar and Oman
showing strongly increasing import volumes by air.
How the industry sees it: Confidence in Middle East;
Americas, Turkey, Vietnam on the rise
As part of the 2012 Agility Emerging Markets Logistics
Index, 550 senior logistics executives were surveyed,
making this the biggest survey to date in the emerging
markets logistics sector.
Middle East - "open for business" in spite of Arab
Spring
43% of respondents view the Arab Spring phenomenon as
making the region either more attractive or much more
attractive as an investment target, with a further 24%
seeing "no impact" from the tumult of the past year.
Turkey, Vietnam and UAE slated for a big future
After the BRIC countries, professionals pointed to Turkey
and Vietnam with massive near-sourcing potential as major
markets of the future, and the UAE for its massive port,
airport, road and rail spending. South Africa, Mexico and
Indonesia also make it into the top 10 "markets of the
future."
Barriers to business: corruption takes second place behind
transport
Poor transport infrastructure is seen as the top barrier to
business, while corruption and government policies have
moved up the table as issues causing concern. Difficult
customs procedures and hurdles to setting up and doing
business also figure in the top five causes of concern.
Security has dropped as an impediment in the 2012 Index.
Asia dominates nominations for "trade lanes of the
future"
Top nominee as having the greatest potential for future
growth was the Intra-Asia trade lane, followed by
Asia-Europe. Other big future routes highlighted by the
survey were Asia-South America, Asia-Africa and Asia-Middle
East, driven partly by the expansion of Chinese investment
in these markets.
Future investment stars include Americas; confidence strong
in Middle East
Professionals tapped Brazil as the top destination for new
investment over the coming five years, in part because of
global demand for Brazil's natural resources. Brazil's
selection was something of a shift away from China and
India as top investment targets. Russia, the fourth BRIC
market, makes up the last of the top four. Next come
Vietnam, Mexico and Turkey, all high-profile emerging
markets. South Africa and Argentina are both surprise
markets to make the top 10. Morocco and Algeria shrugged
off Arab Spring impact, and did well. Venezuela and Chile
both fared well also.
###
If you wish to be sent the full report, or would like an
interview to discuss the Agility Emerging Markets Logistics
Index in more detail, please contact Christel Stadelmann,
Weber Shandwick at cstadelmann@webershandwick.com
or T +41 22 879 85 24; M +41 79 521 67 94.
About the Agility Emerging Markets Logistics Index
The Agility Emerging Markets Logistics Index 2012 compares
41 major emerging markets using a number of different
metrics, identifying the key attributes which will make the
market attractive from the point of view of logistics, air
cargo, shipping lines and freight forwarders.
The Index is complemented by a global electronic survey
which provides insight on which emerging markets hold the
greatest levels of potential and why.
To supplement the quantitative results of the Agility
Emerging Markets Logistics Index 2012, Transport
Intelligence undertook an electronic survey of more
than 550 senior logistics executives. The opinion-based
portion of the report provides insight into perceptions of
which countries are more attractive propositions as
logistics markets and have the potential to become future
logistics hotspots.
About Transport Intelligence
Headquartered in the UK, Transport Intelligence is
one of the world's leading providers of expert research and
analysis dedicated to the global logistics industry.
Utilizing the expertise of professionals with many years
experience in the mail, express and logistics industry,
Transport Intelligence has developed a range of
market leading web-based products, reports, profiles and
services used by all the world's leading logistics
suppliers, consultancies and banks as well as many users of
logistics services.
About Agility
From its roots in emerging markets, Agility brings efficiency
to supply chains in some of the globe's most challenging
environments, offering unmatched personal service, a global
footprint and customized capabilities in developed countries
and emerging economies alike. A publicly traded company,
Agility is one of the world's leading providers of integrated
logistics with close to $6 billion in annual revenue and more
than 22,000 employees in 550 offices across 100
countries.
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