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Agility Emerging Markets Logistics Index2016
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Agility Emerging Markets Logistics Index 2016
www.transportintelligence.com
Contents
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Section 1: The Agility Emerging Markets Logistics Index 4
Section 2: Sources 6
Section 3: Methodology 7
Section 4: Key Findings 9
EmergingMarkets:HowLogisticsExecutivesSeeThem 9
MarketsontheMove 11
TradeLanes 13
Section 5: Overview & Outlook 14
Section 6: The 2016 Agility Emerging Markets Logistics Index 18
TheTop10 18
ChangesoutsidetheTop10 20
The2016Index 23
EmergingMarketsQuadrant 34
Section 7: Emerging Market Trade Lanes 35
TradebyAir 38
TradebySea 46
Section 8: The 2016 Agility Emerging Markets Logistics Survey 54
PerceivedMajorLogisticsMarketsoftheFuture 55
FactorsbehindthePotentialEmergenceofMarkets 57
ProblemsAssociatedwithDoingBusinessinEmergingMarkets 58
SupplyChainRisk 60
LeastAttractiveEmergingLogisticsMarkets 63
ProspectsforEmergingTradeLanes 65
Contents
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Contents
VerticalSectors 66
MarketsforPotentialInvestmentovertheNextFiveYears 69
ProspectsfortheChineseEconomy 71
TheEffectsofChineseEconomicTurbulence 72
StrategiesforSub-SaharanAfrica 73
Sub-SaharanAfrica’sMostPromisingMarkets 74
DriversbehindtheEmergenceofSub-SaharanAfrica’sEmergingMarkets 75
ProspectsfortheBRICS 77
BarrierstoGrowthinBrazil 78
TheFutureofGrowthinIndia 79
Expectationsfor2016 80
MostSignificantDriversintheGlobalEconomy 81
ProspectsforEmergingMarketGrowth 82
Section 9: About Agility and Transport Intelligence 83
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The Agility Emerging Markets Logistics Index
Essa Al-Saleh, CEO & President Agility Global Integrated Logistics (GIL)
NationalReviewmagazinerecentlynotedthatforthefirst
timeinhistorylessthan10%oftheworld’spopulation
livesinextremepoverty,currentlydefinedassubsistence
on$1.90adayorless.Forcontext,in1990,37.1%of
theworld’speoplelivedinextremepoverty.Emerging
marketswere–andstillare–hometothemostofthe
world’spoor,butthepaceofchangeandprogressin
thosecountrieshasbeennothingshortofbreathtaking
overthepast25years.That’simportanttoremember
afterayearlike2015,whichwascharacterizedby
fallingtradevolumes,depressedcommoditypricesand
geopoliticalinstabilitythatcombinedtoslowgrowth
inemerginganddevelopedmarketsalike.Emerging
marketsgrowth,4.6%in2014,slowedto4.2%in2015,
accordingtotheInternationalMonetaryFund.TheIMF
forecastsapickup–to4.7%–in2016.
In2015,thelonebrightspotamongthelargestemerging
markets,theso-calledBRICS,wasIndia.India,which
tookinitialstepstoenactlong-promisedreformssuchas
taxsimplificationandregulatorystreamlining,overtook
John Manners-Bell, CEO Transport Intelligence
Theworld’seconomyisstillrivenbyinstability,as
marketscometotermswiththehangoverleftbythe
globalfinancialcrisisof2008-9andthesubsequent
downturnwhichencompassedEurozoneeconomies.
Emergingmarketshavenotbeenimmunetotheworld’s
economicmalaise,withChinainparticulardowngrading
itseconomicgrowthprospectsascommodityprices
slumpandexportsstagnate.WithChinasuffering,its
tradingpartnersacrosstheregionarealsoaffected.On
topofthisastrongerUSeconomyhasmeantaflightof
capitalfromEasttoWest,whichhasledmanyemerging
countriestoincreasetheirinterestrates,dampening
domesticgrowthfurther.
Theunderlyingeconomicproblemshavehad
consequencesfortheinternationalfreightsector.Air
andseavolumeshavebeenweakduetotheslowdown
ininternationaltrade.ShippinglineMaersknowexpects
globaldemandforseabornecontainertransportation
toincreaseby1-3%in2015,downfromitsprevious
expectationof3-5%announcedinitsQ12015report.
One
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Chinaastheworld’sfastest-growingeconomy.Russia
andBrazilexperiencedsharpcontractions.Asagroup,
countriesinSub-SaharanAfricalostmomentumafter
severalyearsofstronggrowth,despitevitalityinEthiopia,
IvoryCoastandTanzania.Theyear-longpersistence
ofcheapenergypricesamountedtoa$450billion-
plustransferofwealthfromproducingcountriesto
consumingeconomies,anenormousboontoconsumers.
Butlowpricesalsostalledambitiousenergyprojects,
particularlyinAfrica,whereoilandgasfindshavethe
potentialtoacceleratedevelopmentandbringdramatic
improvementsinlivingstandards.
Theglobaleconomyrodethecoattailsofemerging
marketsgrowthforadecadeormoreaheadofthe
2008crisis.Withtheslowdowningrowthin2015,some
economistsexpressedconcernthatemergingmarkets,
52%ofglobalGDPinpurchasingpowerterms,could
becomeadragontheworldeconomy.Thatdoesnot
havetobethecase.Billionsofpeoplelivinginemerging
marketscountriescontinuetoworktheirwayinto
theglobalmiddleclass.Theirdesireforbetterjobs,
healthcare,high-qualityeducationandelevatedliving
standardsshouldcontinuetopropelgrowthinemerging
markets,especiallythosecountrieswithyounger
populations.Wherepolicymakerstakestepstoenhance
tradeandimprovethebusinessclimate–streamlining
regulations,protectinginvestors,attackingcorruption,
strengtheningcontractlawandpropertyrights,easing
capitalrestrictions,andnurturingentrepreneursand
smallbusiness–prosperitywilltakerootandemerging
marketscountrieswillbevital,durablelinksinregional
andglobalvaluechains.
Perhapsmostworryinglyofall,theOECD’slatest
economicoutlookwarnsthatglobaltradegrowthwillbe
just2%in2015,downfrom3.4%in2014.
However,itisnotallbadnews.Chinaismuchmore
resilientthanmanywouldbelieve.Ithastheeconomic
resourcestobeabletorideoutthetransientproblems
whichitcurrentlyfaces.Althoughtherewillbea
slowdowningrowth,thechancesofafull-scalerecession
seemoverblown.
Otheremergingmarketsmaynotbesolucky.Brazil,for
example,isnotnearlyasrobustasChinaandissuffering
substantiallyfromaneconomywhichhasnevermaterially
diversifiedfromitsrelianceonnaturalresources.
Transportinfrastructureisweak,againincontrastwith
China,andbusinessishamstrungbycorruptionand
bureaucracy.
Smalleremergingmarketsalsohavesystemicfiscal
problems.Malaysia,forexample,issufferingfromsevere
indebtedness.Russiaisstrugglingduetolowcommodity
pricesandtheeffectsoftradesanctionsimposedby
theEUandUS,andTurkeyhashighinflationandlarge
foreigndebts.
However,lookingtothelongerterm,thingsarenotasbad
astheymayatfirstseem.Althoughlowoilpriceshavea
detrimentalimpactonmanyproducersinthedeveloping
world,theyalsospurgrowthintheWest.According
totheIMF,worldGDPwillactuallygrowby3.6%in
2016.Thisissignificant,albeitlowerthanbeforethe
2008financialcrisis.Indiaisexpectedtogrowby7.3%,
takingoverthemantlefromChinaastheworld’sfastest
growinglargeeconomy,helpedbythefactthatitisa
consumerratherthanproducerofoil.Mexicoisalsoina
muchbetterpositionthanmanyotheremergingmarkets,
notleastbecauseofitsstrongtieswiththeUSandthe
benefitsitisgainingfromthenear-sourcingstrategiesof
USmanufacturers.
Morethanever,itseems,investorsinemergingmarkets
havetobediscerning.WhenTiestablishedtheAgility
EmergingMarketsLogisticsIndexin2010,itspurpose
wastodifferentiatebetweencountrieswhichofferedthe
bestopportunitiesduetotheirfarsightednessintermsof
infrastructureinvestment,security,growthprospectsand
businessenvironment,andthosewhichlaggedbehind.
ThebasisfortheIndexremainsasrelevantnowasitwas
then,providingclarityinaconfusingandcomplexworld.
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Sources
TheAgilityEmergingMarketsLogisticsIndexhasthree
maincomponents–theIndexcountryrankings,major
tradelanesbyvolumeandmodeoftransport,anda
surveyoftradeandlogisticsprofessionals.
DatafortheIndexcountryrankingscomesfromthe
InternationalMonetaryFund,OrganizationofEconomic
CooperationandDevelopment,WorldBank,government
statisticalagencies,UnitedNationsandUNagencies,
WorldEconomicForum,InternationalTradeCentreand
InternationalAirTransportAssociation.
TradelanedatacomesfromtheUnitedStatesCensus
BureauandEurostat.
Two
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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,asdefinedby
theWorldBank
2.Itsinvestablemarketcapitalisation(IMC)islowrelative
toitsmostrecentGrossDomesticProduct(GDP).
The Agility Emerging Markets Logistics Index
TheAgilityEmergingMarketsLogisticsIndexusesthree
metricstoassessandrank45emergingmarkets.The
metricsmeasurethecountries’:
•Marketsizeandgrowthattractiveness(50%ofoverall
Indexscore)
•Marketcompatibility(25%ofscore)
•Marketconnectedness(25%ofscore).
Market size and growth attractiveness(MSGA)rates
acountry’seconomicoutput,itsprojectedgrowthrate,
financialstabilityandpopulationsize.
Market compatibilityratesemergingmarketsaccording
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.
Market connectednessassessesacountry’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.
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,thefastest25
growingtradelanesforeachcasehavebeenranked
bytheirgrowthin2015.Inaddition,anindexhasbeen
calculatedwithabaseyearof2005toofferalong-term
perspectiveoneachtradelane’sperformance.
2005-2014dataare‘actual’figures,whereas2015data
areforecastfiguresbasedonactualmonthlydatafrom
January-August2015.Aforecastmodelwhichaccounts
forseasonalityhasbeenappliedtoestimatefull-year2015
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.CAGRstandsforCompoundAnnualGrowth
Rate.Itmeasurestheconstantannualpercentagegrowth
rateofatimeseriesbetweenaparticularstartandend
point.WhileCAGRscanbeaquickandusefulwayto
analysemediumandlong-runperformance,cautionshould
betakenastheycanoftendisguisevolatility.Inspectionof
eachyear’sindexvalueovertimerevealsvolatility.
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Key Findings
Emerging Markets: How Logistics Executives See Them
Nearly 1,200 supply chain and logistics executives
worldwide shared their views on the 2016 global
economic outlook, prospects for emerging markets, key
growth drivers and trends affecting emerging markets
countries.
•Thesupplychainindustryisbracingformorevolatility
intheglobaleconomy.Alargemajorityofindustry
executives(61%)areunclearonthedirectionofthe
worldeconomyorindicatetheyexpectmoreturbulence.
TheirtoptwoconcernsareoilpricesandChina’s
economichealth.Atthesametime,most(59.4%)feel
theIMFwas“aboutright”inforecasting4.7%growthfor
emergingmarketsin2016
•Globaleconomicprospectsin2016areheavily
dependentontheUnited States,intheviewofindustry
executives.AfteroilpricesandChineseeconomic
vitality,respondentssaidthemostsignificantdriversof
theglobaleconomywillbethestrengthofthedollarand
thehealthoftheUSeconomy
•Forthefirsttime,supplychainindustryprofessionals
seeIndiaastheemergingmarketscountrywith“the
mostpotentialtogrow”asalogisticsmarketoverthe
nextfiveyears.IndiaedgedoutChina,whichwasseen
asthemarketwiththemostpotentialinpastsurveys.
Indiaalsoclimbedtwospotsto3rd,behindChina
andUAE,inthedata-drivenAgilityEmergingMarkets
LogisticsIndex.Itsrisewaspropelledbyaninitial
roundofeconomicreformsandasurgingeconomy.
Whileoptimistic,logisticsprofessionalsalsoremain
cautiousaboutIndia.Nearly42%saidIndianeedsmore
structuralreformtosustainitscurrentgrowthandmore
than21%saidthecountryneedsmorethaneconomic
reformifitistounlockitspotential
•LogisticsexecutivesareintriguedbyIran’semergence
frominternationalisolationandanticipateopportunity
andgrowthwiththephasedliftingofmosteconomic
sanctions.Inthe2016survey,Iranmovesup12spots
(from27thto15th),asapotentialmajorlogisticsmarket
overthenextfiveyears.Iranalsoleaptfrom35thto
16th,amongmarketsforpotentialinvestmentoverthe
nextfiveyears
Four
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• Brazilremainsanappealinglogisticsmarkettoalarge
percentageofindustryexecutives,againrankingas
thethirdmostattractiveemergingmarketamongthose
surveyed.Butsentimenthassouredamongsome,
whoputBrazil17thamongemergingmarketswith
theleastpotentialasamajorlogisticsmarket.Nearly
35%ofsurveyrespondentscitedpoorgovernance
asthekeybarriertoBrazil’sreturntohighergrowth
rates.Takentogether,thetopthreebarriers–poor
governance,corruptionandexcessivegovernmentdebt
–drew73.1%ofresponses,anindicationthatindustry
executivespinblameforBrazil’scurrentrecession
mainlyonthecentralgovernment
•Economicgrowthratesareagain,byfar,theleading
choiceasthe“keydriver”thatmakesacountryan
importantemergingmarket(30%).Foreigndirect
investmentwaspickedasthe2ndmostsignificantdriver
andgrowingtradevolumeswere3rd.Atthebottomofa
12-itemlistweretheabilitytobeanear-sourcingmarket,
lackofcorruptionandstrongsecurity
•Industryprofessionalsseecorruptionasthebiggest
problemassociatedwithdoingbusinessinemerging
markets,eventhoughtheydon’tconsider“lackof
corruption”tobeakeydriverthatmakesacountryan
importantemergingmarket.Thissuggeststhatindustry
professionalsunderstandthattheywillencounter
corruptioninemergingmarketsandhavestrategiesto
dealwithit
•Forthefirsttime,logisticsprofessionalsseeeconomic
shockastheleadingsupplychainriskinAsiaPacific,
reflectingconcernabouttheeffectofaslowingChinese
economyandthepotentialforarippleeffectinthe
region.Inthepast,industryprofessionalsviewed
naturaldisastersandcorruptionandthetopthreatsto
Asia’ssupplychains.Morethanhalf(54.8%)oflogistics
professionalsnowbelievetheChineseeconomyfaces
majorchallengesoverthenexttwotothreeyears.
Asignificantpercentage(38%)isreassessingits
Chinastrategy,asaresult.SluggishnessinChinahas
prompted22%tore-examinetheirbroaderemerging
marketsstrategy
•Logisticsprofessionalsbelievethatsupplychainrisks
varybyregion,althoughgovernmentinstabilityisnear
thetopofthelistinmostregions.InLatinAmerica,
corruptionremainsthetoprisk.IntheMiddleEastand
NorthAfrica,terrorismisthebiggestconcern.InSub-
SaharanAfrica,poorinfrastructuretopsthelist
•Notsurprisingly,countriesgrippedbywar,sectarian
conflict,politicalinstabilityorinternationaleconomic
sanctionswereidentifiedbysurveyrespondentsas
havingtheleastpotentialasemerginglogisticsmarkets:
Syria(1st),Iraq(2nd),Libya(4th)andIran(5th).There
werethreenotableexceptionsamongthe20countries
identifiedastheleastattractivemarkets:Ethiopia(3rd)
isridinganexportboombutisalsosufferingitsworst
droughtindecadesandfacingpowercuts.Bolivia(up
sixspotsto16th)wasjarredbytheannouncementthat
PresidentEvoMoraleswantstochangetheconstitution
inordertoseekre-electionandstayinpoweruntil2025.
Brazil(up11spotsto17th)isinthemidstofarecession
andexperiencinghighunemploymentandinflation.
PresidentDilmaRousseff,whowantstoraisetaxes
andcutspending,isentangledinamassivecorruption
scandal
•TradeflowsbetweenAsianmarketsremainthemost
promisingintheeyesoflogisticsprofessionals.Atthe
sametime,theyshowedincreasedoptimismabout
prospectsforgrowthalongotherkeyAsiantrade
routes:Asia-NorthAmerica,Asia-AfricaandAsia-
MiddleEast.SentimentaboutAsia-SouthAmericatrade
andSouthAmerica-NorthAmericatradeslippedfroma
yearago
•Industryprofessionalscontinuetoviewthebiggest
emergingmarkets(China,IndiaandBrazil)asripestfor
investmentoverthenextfiveyears.Butmanyareclearly
intriguedbyIran.Iranleapt19spotsto16th,among
marketswiththebiggestinvestmentpotential.Turkey,hit
byslowinggrowth,fallingexportsandinstabilityalongits
southernborder,droppedthreespots,to14th.Kuwait,
whichcontinuestoinchtowardsprivatisationofkey
state-ownedenterprises,climbedsevenspotsto20th
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•Inspiteofrecentgrowthandsurgingforeigninvestment,
Sub-SaharanAfricaremainstheemergingmarkets
frontier,aplacewhereonlytheboldarepreparedtodo
business.Just21.2%ofrespondentsindicatedthey
haveestablishedoperationsinSub-SaharanAfrica.
Another12.7%saidtheyareintheplanningstagesto
entermarketsthere.Morethan43%saidtheyhaveno
planstoestablishoperationsinSub-SaharanAfrica
•South AfricaandNigeria,Sub-SaharanAfrica’stwo
largesteconomies,areviewedbylogisticsprofessionals
asthemostpromisingmarkets,followedbyKenyaand
Ghana.Forthefirsttime,industryprofessionalssee
consumerspendingbyAfrica’sgrowingmiddleclass
asamoreimportantdriverofgrowththanmineraland
resourcedemand.Poorinfrastructureandcorruption
remaintheleadinginhibitorstogrowth,survey
respondentssaid.
Markets on the Move
•Volatilityintheglobaleconomywasmirroredinthe2016
AgilityEmergingMarketsLogisticsIndex.Eightofthe
top10emergingmarketseconomiesshiftedplaces.
Chinaremainstheleadingmarketbyalargemargin,in
spiteofthefactthatitseconomyisslowing
•Amongthetop10emergingmarkets,thecountries
takingstepstodiversifyandenacteconomicand
businessreform–UAE(2nd),India(3rd)andMalaysia
(4th)–leapfroggedthecommodity-dependent
economiesofSaudi Arabia(5th),Brazil(6th)and
Indonesia(7th),allofwhichslidthreespots
• Nigeria(17th)andEgypt(22nd)bothjumped10
spots,thelargestimprovementbyanycountrysince
theIndexwasfirstpublishedin2010.Inthecaseof
Nigeria,businessesandinvestorshavebeguntogeta
truerpictureofitsperformanceandpotentialwiththe
recalibrationofitsnationaleconomicstatistics.Ayear
ago,logisticsprofessionalsindicatedtheyweregrowing
moreoptimisticaboutEgypt,eventhoughthecountry
slippedfourspotsinthe2015Index.Inthe2016Index,
Egypt’sperformancehascaughtupwithsentiment,the
resultoffaster-than-expectedgrowthandanimproving
businessclimate.Algeria–upfourplacesto30th–
wastheotherbrightspotinNorthAfrica
•Byfar,theemergingmarketsbestbusinessclimate–or
marketcompatibility–isfoundinUAE.Atthesame
time,theUAEboaststhebest“connectedness”–a
gaugeofinfrastructureandtransportconnections.As
aresult,UAEranksastheworld’s2ndmostpromising
emergingmarket,eventhoughitseconomyisdwarfed
bythatofChina(25timeslarger),India(fivetimeslarger)
andBrazil(sixtimeslarger)
•Amongthesmalleremergingmarketseconomies
(lessthan$300bnGDP),Chilecontinuestobethe
topperformer,basedonitsstrongbusinessclimate,
infrastructureandtransportconnections.Qatarand
Omanscorehighestamongsmallereconomiesfortheir
businessenvironment
•ThepicturewasgloomierinLatinAmerica.SeveralLatin
countriesdroppedsharplyintheIndex.Inadditionto
Brazil(whichfellthreespotsto6th),Uruguaydropped
fourspotsto24th,Colombiaslippedthreespotsto25th,
Peruplungedfiveplacesto28thandArgentinadropped
fivespotsto31st.Venezuelacontinuesitseconomic
freefall.Itdroppedthreespotsto39th.Twenty-three
ofthe29countrieswithsmallereconomiesoutrank
VenezuelaintheIndex.ElsewhereinLatinAmerica,only
Paraguay(upthreeto35th)andBolivia(upthreeto
38th)improvedtheirIndexrankingssignificantly
• Russia,increasinglyisolatedeconomicallysinceit
beganbackingrebelsineasternUkraine,fellfrom7thto
9thintheIndex.Ukrainefellfourspotsto34th.
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BIGGEST MOVERS1 Egypt2 Nigeria3 Algeria4 Malaysia5 UAE6 Bolivia7 Paraguay8 India9 Pakistan10 Sri Lanka
UPBIGGEST MOVERS1 Argentina2 Peru3 Jordan4 Ukraine5 Uruguay6 Brazil7 Indonesia8 Morocco9 Saudi Arabia10 Venezuela
DOWN
1
2
3
4
5
67
8
9
10
8
7
2
6
51
10
9
4
3
Source: Transport Intelligence
Markets on the Move
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Trade Lanes
Air Freight to Emerging Markets
Thebusiestemergingmarketsairfreighttradelanes
originatingintheEUorUStendtoconnecttolarger
marketsintheIndex:China,UAE,India,SaudiArabia,
Turkey,Mexico,BrazilandSouthAfrica.Volumealong
theselanesgrewbydouble-digitmarginsinmanycases.
TheexceptionswereEU-Brazil(down1.5%)andUS-
Brazil(down14.4%).
Theninefastest-growingairlanesinvolveEUorigins.
ThetopfivewereEU-Indonesia(up72.8%),EU-Peru(up
61.6%),EU-Ethiopia(up58.6%),EU-Thailand(up52.9%)
andEU-Malaysia(up42.1%).
EUairshipmentstoemergingmarketsareonpaceto
growby16.5%forfull-year2015,butUSairshipmentsto
thosesamemarketslooksettoshrinkby1.6%.
Air Freight from Emerging Markets
Flowingintheotherdirection–fromemergingmarketsto
theEUandUS–thepicturewasmixed.Alongthebusiest
airlane,China-USairfreightgrew12.6%.Volumeon
the2ndlane–China-EU–fell17.3%.Thelargestgains
amongtop10laneswereVietnam-US(up39.2%)and
Ethiopia-EU(up55.2%).
Ocean Freight to Emerging Markets
Inoceanfreight,thelargestlaneconnectsUSoriginswith
destinationsinChina.Tradealongthatlanefell6%.The
EU-Chinaoceanlaneexperienceda9.4%increasein
volume.Elsewhere,EUoceanshipmentstoSaudiArabia
(up20%)andUSshipmentstoColombia(up11.7%)
showedthemostgrowthamongthetop10lanesinvolving
EU/USoriginsandemergingmarketsdestinations.Along
laneswithlessvolume,thebiggestincreasescamein
EU-Bangladesh(up107.4%),US-Pakistan(up76.6%),
EU-Oman(up59.4%)andEU-Kenya(up57.4%).
Ocean Freight from Emerging Markets
Alongthetopoceanlanescarryingemergingmarkets
freighttotheEUandUS,growthwasmoremodest.The
biggestgaincameinthebusiestlane:China-USvolume
wasup7.4%.
Anumberoflaneslinkingemergingmarketswiththe
EUandUSgrewspectacularly,butmostgainscameoff
relativelysmallbasevolumes:Uruguay-EU(up56.8%),
Oman-US(up56.7%)andTurkey-US(up30.2%).
EUoceanfreightfromemergingmarketsoriginswasflat
(upamere0.8%).USoceanvolumefromIndexcountries
grew4.3%.
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Overview & Outlook
Emergingmarketshavebecomeincreasinglyimportant
totheworld’seconomy,takingonrolesasmanufacturing
hubs,outsourcingdestinations,transhipmentpoints
betweenproductionandconsumption,andforsome,
aspotentialconsumermarketshometomillionsof
consumersenteringthemiddleclasseachyear.These
rolesbecamevastlymoresignificantfollowingthefinancial
crisisin2008,whichhighlightedthealreadycompelling
commercialopportunitiesandcostadvantagesoffered
tomanufacturers,retailersandlogisticsserviceproviders
inavastarrayofindustriesandsub-sectors.Asweenter
2016,however,apotentmixofeconomicheadwinds,
marketturbulence,andsocialandpoliticalpressureshave
threatenedthecapacityofmanyoftheworld’shighgrowth,
highpotentialemergingmarketstofulfiltheirpromise.
Theyearaheadwillbringwithitnewfounduncertainty
andcomplexityinemergingmarkets,andthoseoperating
inmanyofthesehighlypromisingmarketswillhaveto
navigateathirdphaseofthewiderglobaleconomic
traumathatfirstappearedin2008.AsAndyHaldane,
ChiefEconomistattheBankofEngland,explained,
phaseonecamein2007-2008,whenbankslenttoo
muchwithouttheprotectionofsufficientcollateral.Phase
twooccurredduring2011-2012,withtherealisation
thatlendingintheEurozonewasofferedonthefalse
assumptionthatallcountrieshadequalcapacitytorepay,
culminatingwithmassiveroundsofquantitativeeasing.
Now,weareinwhatcanbecharacterisedasthethird
phase:theneedtoadjusttoaneraoflowertradegrowth,
loweroilandcommodityprices,andaloomingendto
cheapcreditproppinguptheglobaleconomy.
Whileactsoneandtwooftheglobaleconomicturmoil
ledtomanypainfulmoderationsandadjustmentsin
developednations,theybroughtaboutaboomperiodfor
emergingmarkets.China’seconomicoutput,forexample,
totalled$4.56trillionin2008,accordingtoWorldBank
figures.By2014,thatfigurehadskyrocketed127%to
$10.36trillion.Itisgrowthonthisscalethathasproven
soattractivetoinvestors,butaswemoveinto2016,
thetwodecadesofspectaculargrowththatpropelled
Chinatobecometheworld’ssecondlargesteconomy
alreadyseemlikeadistantmemory.Whilethecountry
lookstoreorientitseconomytoplacedomesticdemand
andconsumermarketsatthecentreofitsnextstageof
development,emergingmarketsthatgearedtheirown
developmenttowardsservingChinesedemandforparts,
componentsandcommoditiesmustalsoadjust.
Five
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LowerChinesedemandissignificantforanumberof
reasons,notleastbecauseitlowersthepriceofgoods
andmaterialsthatexport-orientedemergingmarketssell.
Forthesemarkets,lowercommoditypriceshaveresulted
inlowerexportrevenues,lostjobsandcurrencyvolatility.
Onemeasureoftheextentofthecollapseinrawmaterials
pricesinthisdecadecomesfromTheEconomist’s
compositecommodity-priceindex,whichhasplunged
fromafigureofaround240nearthestartof2011,to
just140inthemiddleof2015,implyingadecreaseof
approximately40%overtheperiod.Netoilexporting
countriesareenduringparticularlydifficulttimestoo.At
theendofJune2014,theOPECBasketPriceforcrudeoil
wasaround$110.BytheNovember2015,thepricehad
sunkbelow$40,acrashofaround60%.
Emergingmarketcurrencieshaveenduredatorrid2015,
too,withsubstantialdepreciationsrecordedinalarge
numberofmarkets.AnalysisbytheFinancialTimes
showedthatthecurrenciesofRussia,Colombia,Brazil,
Turkey,MexicoandChilehavelostbetween20%and50%
oftheirvalueagainsttheUSdollar,sinceJune2014.This
hasoccurredforvariousreasons,withtheexpectation
ofaUSinterestratehikeandChina’sdecisiontodevalue
theyuancompoundingtheeffectsofreductionsinthe
quantitydemandedandpricesofcommodities,prime
amongstthem.Thefallingvalueofemergingmarket
currencieshasbeenespeciallydamagingbecause
ratherthanreapportioningafixedleveloftradebetween
winnersandlosers,theFT’sresearchsuggestscurrency
weaknesshasunderminedimports,asonewouldexpect,
buthasnothadanybeneficialimpactonexportvolumes.
Additionally,thefallinthevalueofcurrencyhasmeantthat
foreign-denominateddebtthatemergingmarketsholdhas
suddenlybecomemoreexpensivetoservice.
Debtheldinemergingmarketsisalsopresentinghigh
levelsofrisk.Indeed,theseverityoftheemergingmarket
debtproblemisdifficulttocomprehend.TheIMF’s
October2015GlobalFinancialStabilityReportwarnedthat
corporatedebtofnon-financialfirmsinmajoremerging
marketshasmorethanquadrupled(from$4trilliontoover
$18trillion)from2004to2014,aperiodwhichalsosaw
averageemergingmarketcorporatedebt-to-GDPratios
increaseby26percentagepoints.Suchanexpansion
ofdebtisnotsurprisinggivengrowthinemerging
marketsandthelarge-scaleroundsofquantitative
easingamongstadvancedeconomiesthatcreatedvast
amountsofcheapcreditalliedwithlowinterestrates,
overtheperiod.Buttheobviousriskthispresentsis
whenglobalfinancialconditionsinevitablytighten,as
interestratesrise.Debtservicingcostswillalsorise:a
problemalreadyexacerbatedbydepreciationofemerging
marketcurrencies.Onthisbasis,theIMFhaswarnedthat
emergingmarketsshouldbraceforariseincorporate
failures.Ontheothersideofthecoin,accordingto
researchbyMoody’s,theshareofdebtheldintheworld’s
largestemergingmarketsindomesticcurrencytermshas
jumpedfromjustover50%,tojustunder75%,inthepast
15years.Thiswillhelptoprovideinsulationforexposed
emergingeconomiesandmeans,whiledebtisdefinitelya
problem,itcouldbefarworse.
Thefinalstormthatemergingmarketsareweatheringis
tumblingtradevolumegrowth.For2012to2014,import
andexportvolumegrowthinemergingmarketsaveraged
4.7%and4.2%respectivelyonasix-monthmoving
averagebasis,withrelativelylittlevariationaboveor
belowthosemarks.In2015,year-on-yeargrowthrates
havefallenwellshortofthesefigures,evendippinginto
negativeterritoryattimesinthesecondandthirdquarters
oftheyear.
But,while2015hasundoubtedlybeenachallengingyear,
forecastsfor2016aremorepositive.Themessagetotake
fromtheturmoilisthatthevolatilityandheadwindsof
thelast12monthsareproofoftheresilienceofemerging
markets.Manywillalreadyknowthatthetrendsseenin
2015arebettercharacterisedastornadosratherthan
tsunamis(theeffectsarenotbalanced,thevolatilitynot
universal)andthatrecoveryandsubsequentgrowthis
likelytobejustasuneven.Creatingvalueinthiscontext
requiresnotonlybusinessmodelsthatmanagethe
complexity,butalsomind-setsanddecision-making
modelsthatmanagethestormandempowerthosethat
understandtheuncertainty.
Asia Pacific
AsiaPacificcontinuestodominatethetopendofthe
AgilityEmergingMarketsLogisticsIndexin2016:seven
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oftheregion’s11emergingmarketscoveredbythis
Indexplacewithinthetop20rankingspots.Despitethe
economicturbulenceoriginatingfromChina,onlyoneof
the11–Indonesia–seesitsrankingscorefall.
Theregionremainstheengineroomofglobaleconomic
development,withitsoutputexpectedtogrow6.5%in
2015.AccordingtotheWorldBank,EastAsiawillaccount
foraround40%ofalleconomicgrowthin2015,withthe
sub-region’semergingmarketsgrowing4.6%.Theseare
positivenumbersthatindicatestrongopportunitiesin
servingbothglobalmarketsaswellasdomesticdemand
ineconomieslikeChina,SouthKoreaandSingapore.
Indeed,itmaywellbethoseseekingtofacilitateintra-Asia
tradethatfindthebestopportunities,althoughthiswon’t
bewithoutitschallenges.Thegrowthincontainerisedsea
freightvolumesonintra-Asialaneshasseenanexplosion
ofcompetitionandforcedratesdown.Despitethis,the
outlookremainspositive.MOLLinerexpectsintra-Asia
reefervolumestogrow6%,addingaround1.3mextra
TEUalonetothelanein2015.Whilemoregenerally
costsremainlow,skillsamongsttheregion’slabourforce
areincreasingandsupplychainsarebecomingmore
sophisticated,thereforecreatingopportunitiestooffer
highervalueandhighmarginservices.Growingmiddle
classesamongstAsiaPacific’semergingmarketswill
furtheraddtodemand,aswilltheincreasedfreedomand
efficiencywithwhichASEANmemberstateswillbeable
totrade.
However,whiletheemergingmarketsofAsiaPacific
seemwellplacedtotakeadvantageofsuchtrends,
therearechallengesthatmustbeovercome.Economies
acrosstheregionarehavingtorapidlyadjusttoaslowing
Chineseeconomyandsubsequentfallindemandfor,and
pricesof,commodities.Moreover,theprospectofhigher
interestratesandastrongerUSdollar,especiallyagainst
weakeneddomesticcurrencies,areathreattothosewith
highlevelsofpublicorprivatedebt.Howeffectivelythese
issues,inadditiontoloweroilpricesintheregion’snet
oilexporterssuchasMalaysia,aremanaged,willplay
alargeroleinthefortunesofmarkets,manyofwhich
willbefacingtheirsternesttestsincethe1997-98Asian
FinancialCrisis.Reformsthatemphasisesustainable,
long-termeconomicgrowthmustbebalancedwith
robusteconomicmanagementthataddressesshort-term
challenges,structuralinefficiencyandinequality.
Latin America
ForthefirsttimeeverintheAgilityEmergingMarkets
LogisticsIndex,LatinAmericahasnopresenceinthetop
fiveIndexranking,asBrazilslippedto6thandMexico’s
improvedperformancewasonlystrongenoughtosee
itreach8th.Ofthe11LatinAmericanmarketsinthe
Index,sixfellintheoverallrankings,whiletheaverage
scoreacrossthemarketsdeclined.Allthreeothermajor
regionalgroupingssawanincreaseinaveragescore.
Itshouldperhapsbenosurprisethenthatanexamination
ofLatinAmericarevealsanumberofchallenges,with
lowercommoditypricesprimaryamongstthem.Lessening
Chinesedemandfortheregion’sexportsisamajordriver
ofthelowerprices,whichisfurthercompoundedbylow
oilprices,hittingproducerslikeVenezuelahard.Inthe
early2000s,growthratesofaround5%ormorewere
commonacrosstheregion.However,lowerprices,aswell
ascorruption(estimatedtocostMexicobetween5%-9%
ofGDP),poorinfrastructure(theIMFidentifiedBrazil’s
infrastructureashinderingdomesticintegration,export
performance,productivityandmarketefficiency)and
pooreconomicmanagementinvariousmarketsacross
theregion,havedriventheregion’sgrowthratedownto
around2%-2.5%,inmorerecentyears.Indeed,theIMF
hasevengonesofarastoforecastaslightcontraction
acrosstheregionin2015,withtheregion’slargest
economies–Brazil,VenezuelaandArgentinainparticular–
weighingdownthemorebuoyanteconomies.
Duringthe2000scommodityboom,LatinAmerica’s
middleclassexpandedbynearly50%.Thiscreatedvast
consumermarkets,butthestagnationoftheregion’s
economymeansitisatriskoffallingintoamiddle-
incometrapasrisingwagessapthecompetivenessof
highervalue-addedsectors.Achroniclackofadequate
infrastructureisalsoalimitingfactorintheregion’s
capacitytopropelitselfbacktohighergrowthrates,
asisalackofcompetitivenessandproductivityinkey
industrialsectors.Therearepositives,though.Coldchain
needsaregrowinginColombia,amajorglobalexporter
offlowers,whilethewideningofthePanamaCanalwill
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createopportunitiesfortranshipmentoperationswithin
bothPanamaandsurroundingcountries.Mexico’s
proximitytotheUSanditsmembershipofNAFTAalso
boostitsprospectsastheUSgrows.
Middle East & North Africa
Forthesecondconsecutiveyear,theMENAregionis
representedin2ndsecondplaceintheoverallIndex,
althoughthistimebytheUAE.SaudiArabia,2ndinlast
year’sIndex,slipsthreeplacesto5th.The13MENA
countriesincludedintheIndexarespreadfairlyevenly
throughoutthe45rankingplaces.Thoseintheupper
half,broadlyspeaking,haveresourcewealthandpolitical
stabilityaspillarsofeconomicdevelopment.Progressing
downthelist,however,revealstheeffectsofinstabilityon
performanceasanemerginglogisticsmarket.Jordan(33rd),
Tunisia(36th),Libya(41st)andLebanon(42nd)haveall
seensignificantupheavalinrecentyears,eitherasaresult
oftheArabSpringin2011ortheongoingconflictsinSyria
andIraq.Theregion’smostimprovedperformerisalso
perhapsthemostillustrativeexampleofstability’simpact
onthefortunesofMENA’semerginglogisticsmarkets.
Egypt,havingreached18thpositionbeforetheonsetofthe
ArabSpring,slipped14positionsby2015,asstabilityand
securityacrossthecountryweakened,andconfidencein
thebusinessenvironmenteroded.In2016,though,Egypt
ranks22nd,havingrisen10placesoverthelast12months,
astheruleofGeneralAbdel-Fattahal-Sisihasrestoreda
measureofconfidenceinthemarketanditsgovernance,
evenifprogressinotherareasofsocietyisslow.
ThecontrastingperformanceofMENAcountriescreates
aclearpictureofjusthowsignificantstabilityistothe
emergenceofhighgrowth,highpotentiallogistics
markets.Whileitmaywellbefoundedonabasisof
stabilityassecurity(bothintermsofthephysicalsecurity
andeconomicstabilitythatresultfromstronginstitutions
implementingandenforcingruleoflaw),stabilityhere
alsomeanscontinuityagainstawidersetofthreatsthat
includefallingoilprices,short-termisminpolicymaking
andundiversifiedeconomies.Thosemarketsthathave
takenmeasurestoeitherreducedependenceonresource
wealthbyincentivisingactivityinotherindustrialareas,
astheUAEhas,orhaveimplementedsoundeconomic
managementduringbettertimes,suchasinSaudi
Arabia,arebestpositionedtohandlemorechallenging
conditions.Acrosstheregion,economicgrowthis
expectedtoreach2.9%in2015,solidlybelowthe4%-
5%experiencedbetween2000and2010.
Sub-Saharan Africa
JusttwomarketsfromSub-SaharanAfricareached
thetop20in2016:SouthAfricaandNigeria.Whilethis
performancehighlightsNigeria’sprogress(itmatched
Egyptbyrising10rankingpositions),aswellasthe
potentialoftheregionasalogisticsmarket,sub-Saharan
Africaisstillahighlychallengingenvironmentinwhichto
dobusinessandperformlogisticsservices.Thisismost
clearlydemonstratedbyfouroftheregion’ssixmarkets
occupyingpositionswithinthebottomninerankingspots.
Lowcommodityprices,andespeciallythelowprice
ofoil,arethreatstosub-SaharanAfrica’semerging
markets.Nigeria,amajorexporter,hasindicated
thatcapitalexpenditureswillfallaspartofarevised
budget,threateningthedevelopmentofmuchneeded
infrastructure.AndwhileSouthAfricashouldbea
benefactoroflowoilprices,energyshortagesandweak
investorconfidencehavesappeddynamismfromthe
country’seconomy.Moreover,SouthAfricaisalsofeeling
theeffectsofthefallincommodityprices,withthe
country’sminingsectorlosing23,000jobsbetweenApril
andAugust2015alone.
Toputtheregion’sacuteinfrastructurecrisisinto
perspective,theweightdraggingonproductivityinthe
worstaffectedareasinsomecountriesisestimatedto
reduceoutputbyasmuchas40%,atleastequaltothe
burdenimposedbycorruption,crimeandexcessive
bureaucracy.Providingaconsistentsupplyofpoweris
alsoasignificantchallenge.Indeed,the48countriesthat
makeuptheregionhaveapowergenerationcapacityin
linewiththatofSpain,whichhasapopulationtotalling
roughly5%ofsub-SaharanAfrica’s.Whilethese
challengesandtheireffectsareunevenacrosstheregion,
theydemonstratethescaleandsalienceoftheproblems
sub-SaharanAfrica’semergingmarketshavetosolve.
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The 2016 Agility Emerging Markets Logistics Index
The Top 10
Theupheavalcausedbytheglobalforcesthathave
shapedmuchoftheemergingmarketlandscapeover
thelast12monthsarestarklyillustratedwithinthehigh
degreeoffluctuationseeninthisyear’stop10ranking.
Forseveralyears,thosecountriesrankedattheupper
endoftheIndexlookedtobeslowlyedgingawayfrom
therestofthepack.Theywere,withintheIndexat
least,stableintheirpositionasagroupofemerging
marketsthatappearedtooffertheverybestmixof
economicrobustness,commercialopportunityand
accesstobothdomesticandglobalmarkets.Results
in2016,however,appeartoshowasplitbetweenthese
markets,highlightingthosebestpositionedtomanage
macroeconomicturbulence,andthosemorevulnerableto
globalmarketforcesandeconomicheadwinds.
Fiveofthetop10rankedmarketsmovedbyatleast
threepositions,whilejusttwo–ChinaandTurkey–are
inunchangedpositions.Comparingthefourmarketsthat
rosewiththefourthatsank,thedifferencecanlargely
beattributedtotheeffortsmadetocreatediversified
andmodernisedeconomiesoverthecourseofthe
2000s.TheUAE,whichrosefourpositionstorank2nd
overall,isaprimeexampleofthis.TheEmirates’ability
tobothunderstandandplaytoitsstrengths(primarily
itsgeographicpositionasastrategictransithublinking
eastandwest,itsvasthydrocarbonendowmentand
therevenuesgeneratedtherein,anditsabilitytocreate
abusinessenvironmenthighlyattractivetoforeign
investment)hasbeencentraltoitsabilitytoachieve
thisranking.FormanyorganisationsoperatinginUAE–
includinglogisticsandtransportationserviceprovidersas
wellasmanufacturers–anetworkof34freetradezones
offersfullforeignownership,nodirectbusinesstaxation,
noexchangecontrolsandnolimitsontherepatriation
ofcapital.Whatisthereforeanalreadyhighlyattractive
businessenvironmentisfurthercomplementedwitha
largepoolofmigrantlabour,includingbothskilledand
low-costworkers.Inshort,theUAEhastakensignificant
stepstocreatetheconditionsforlogisticsservice
providers,andtheirclients,tosucceed.
Asimilarpatternofeconomicdiversificationcanbe
seeninMalaysia,anothermarketrisingfourplaces
intheIndextoachieveitshighesteverranking.Once
amarketdominatedbytheexportofrawmaterials,
Six
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Malaysiahastransformedintoanopeneconomyand
becomealeadingglobalexporterofelectricalappliances,
partsandcomponents,aswellaspalmoil.Alsorising,
althoughfollowingastutteringattemptateconomic
diversification,isMexico,whichgainedonepositionto
rank8th.Nationalised75yearsago,Mexico’soilindustry
wasopenedtoprivateinvestmentinmid-2014,justas
oilpricesplunged.TheexpectedfloodofFDIintothe
sectorwasstymiedandthecountry,whichreliesonoil
revenueforaroundonethirdofitsoutlays,islikelytocut
publicspending,includingoninfrastructureprojects,
asaresult.Thecountry,though,isabletoperformwell
becauseithasstrengthsinotherareas.Itsmanufacturing
sectorishighlydevelopedandoffersbothproximityto
theUSandthecapacitytoproducehighvaluegoods
withlabouravailableatbroadlysimilarcoststoChina.
SuchcompetitiveadvantageshaveseenFDIinMexico’s
automotivesectortotal$20bnsince2010,withfDi
MarketsdatashowingthatMexicohasovertakenChina
intermsofmarketshareofinvestmentintheglobal
automotiveindustry.
Thefinaltop10markettoriseisIndia.Itsreturntothe
top3forthefirsttimesince2013demonstratesjusthow
uneventhecountry’sgrowthhasbeen.Attheheartof
theundulationinitsfortunessitsstiflinginefficiency,the
bestexampleofwhichcanbefoundinthedireneedfor
thestill-pendingGoodsandServicesTax(GST).India’s
currenttaxregimeeffectivelycreates29sub-national
marketswithinthecontinent-sizednationandrequires
checkpointsonmajortransportationlanesthatcreate
queuesoftrucksanddelaysintransit,whileeroding
valueandefficiency,andaddingsignificantcomplexity.
EstimatessuggestimplementationoftheGSTalone
wouldinstantlyaddupto2%toIndia’sGDPandfreeup
valuewithinsupplychainsacrossthemarket.Theneed
forsuchreformsismadeallthemorepressingbyIndia’s
potentialasalogisticsmarketprimarilybringdrivenbyits
sizeandstrengthasaconsumption-driveneconomy.
Justasexamplesofweatheringtheglobaleconomic
stormexistamongsttherisingcountries,sotoodo
examplesofvulnerabilitiesamongstthosemarketswhich
slipped.PerhapsthemostnotableoftheseisBrazil,
whichplacedoutsideofthetop3rankingpositionsforthe
firsttimeever.Ridingthecommodityboomofthe2000s
sawmillionsofBraziliansenterthemiddleclassforthe
firsttime,allowingretailersandmanufacturerstofindnew
consumers,asdisposableincomesgrew.SlidingChinese
demand,however,hasseencommoditypricesfall,which
hasresultedinjoblosses.Meanwhilebureaucracy,high
wagesandpoorqualityinfrastructurehaveleftBrazil’s
manufacturersuncompetitive.Addtothemixa$2bn
briberyscandalatstate-ownedoilcompany,Petrobras,
andBrazil’sproblemsarecompoundedbyagovernment
ingridlock,unabletoimplementmuchneededreforms
thatwouldenhanceproductivityandcompetiveness,or
moveaheadwithspendingonprojectstoremedythe
country’schronicinfrastructuredeficit.Withtheeconomy
inrecession,logisticsserviceprovidersfaceyetmore
challengesinBrazil.Russia’sfalloftwopositionsto8th
inthe2016Indexrankingscomesasitdealswithcapital
flight,adevaluationofitscurrencyandrampantinflation,
whichhaverevealedthetrueextentoftheneedforthe
countrytodecreaseitsrelianceontheenergysector.
UndersanctionsfromWesterngovernmentsfollowingits
activitiesinUkraine,economicgrowthisalmostcertainto
remainfragilesolongasacertaindegreeofuncertainty
overRussia’sgeopoliticalambitionsexists.
Alsofallingasaresultoffallingcommodityandoilprices
areSaudiArabiaandIndonesia,rankingthisyearin
5thand7thplaces,respectively.SaudiArabia’sslide
from2ndplacelastyearfollowsafallinoilprices:the
Kingdom’soil&gassectoraccountsforaround50%of
GDPand85%ofexports.Soundeconomicmanagement
duringthe2000slimiteditsfalldowntherankings,but
thereisclearevidenceofSaudiArabia’sneedtodiversify
itseconomy.Stepsarealreadybeingtakentoprivatise
infrastructureassets,shiftingtheinvestmentburden,and
therisk,bothofwhicharenowunsustainableagainsta
backdropofloweroilrevenues.Theprivatisationprocess
islikelytotouchonportsandairports,andwithnew
impetustocompeteagainstregionalrivalssuchasJebel
Ali,couldbringrenewedimpetustoinnovateanddrive
costsdownforshippersandlogisticsserviceproviders.
Indonesia,meanwhile,findsitselfhavingtodealwith
lowercommoditypricesandlowerdemandforits
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exports.Thecountry’sgovernmenthasrespondedwith
legislationdesignedtoimproveitsbusinessenvironment,
butmanyofitsshortcomingsasalogisticsmarketare
linkedtoalackofinfrastructure,poorproceduresand
systems,andcorruption.Domestically,mostkeytrunk
routesandgatewayssufferfromcongestionas,formuch
ofthelastdecade,ports,railways,airportsandroads
havebeenallbutneglected.Thisaddscosttosupply
chains,andunlessreformsandinvestmentsaremade
quicklyandeffectively,Indonesiacouldseeitselfloseout
toneighboursasOEMsseekalternativestoChina.
Thetwomarketswithunchangedrankingsbookendthe
top10thisyear.Forthefourthconsecutiveyear,Turkeyis
positionedin10th,primarilyduetoitspositionasamajor
manufacturinghubforEuropeanandUSbusinesses,
offeringcloseproximitytothegroupof28European
states.SuchFDIhascreatedjobsthatemploymillions
ofthecountry’slabourforceandempoweritsdomestic
consumers.Thecountryhasalsopositioneditselfasa
stableactorinavolatileregion,apillarofitseconomic
attractivenessitwouldbewelladvisedtopreserve.There
arechallenges,however.Lowerglobaltradeisthreatening
thejobscreatedbyforeignmanufacturersandTurkey’s
privatesectorhasborrowedheavilyindollar-denominated
debt,withrepaymentsbecomingmoreexpensiveasthe
USdollargainsstrengthandtheTurkishliralosesvalue.
Thesecondemerginglogisticsmarketwithanunchanged
rankingin2016isChinawhich,havingenteredtheIndex
in2011,hassuccessfullytakenthetopspotineachyear
since.Chinais,though,slowlyregressingtowardsthe
pack.Itsmarginofvictoryhasdecreasedineachyear
since2012anditsscoreintheoverallIndexthisyear
(7.91)representsthefirsttimeithasrecordedafigure
belowthe8.00mark.Thisisbecausegrowthinthe
Chineseeconomyisfaltering,leavingitwithsignificant
questionstoanswer.Havingbeengearedtowardsgrowth
asanexport-ledmanufacturer,China’sproductive
capacityisnowfacingreorientationinordertosmoothly
andrapidlytransitiontheeconomytoaconsumption-
leddomesticmarket.Aspartofthistransition,China
mustactquicklytodiversifyitseconomy,purgeitself
ofcorruptionandintegratethevastpopulationinrural
areasintomoreproductiveeconomicactivity.Thisis
because,putsimply,China’sinternalmarketisnotyet
abletooffsetthefallinexportvolumesquicklyenoughto
makeupfortheshortfallingrowth.Whilethelossof$5
trillionfromitsstockmarketsinJuly2015isanindication
thatconfidenceinthemarketisweakening,thereare
signsofprogress.China’sleadershiprecognisesthat
modernconsumption-driveneconomiesrunonreliable
androbustroads,railways,electricity,telecommunication
networksandinternationalgateways.Investmentsin
suchinfrastructurehavebenefittedvastswathesofthe
population,aswellasChineseindustry.Furthertargeted
infrastructureinvestmentwillbeneededtosupportthe
transitiontoadomesticconsumption-driveneconomy.
ReportsemergedinJanuary2015suggestingan
acceleratedinvestmentprocessacross300infrastructure
projectswithintheenergy,health,transportationand
miningsectors.Thissuggeststheinvestmentistaking
place,butthequestionremainsastowhetherthescale
andspeedrequiredcanbeachieved.
Changes outside the Top 10
Nigeria
Nigeriaranks17thinthe2016Index,movingup10spots
thisyear.Itsscorehasincreasedfrom4.56to5.28.
IntheMarketSizeandGrowthAttractivenesssub-index,
Nigeria’sscorehasrisenfrom6.31to7.79.Thisreflectsthe
country’s‘rebasing’ofitsGDPin2014,whichpromoted
NigeriatothelargesteconomyinAfrica,supplanting
SouthAfrica.Morespecifically,therevisedGDPfigurewas
89%higherthanpreviouslythought.Althoughsceptics
maydoubtthevalidityofthenewnumber,itwasreally
theoldfigurethatwasdubious.AssummarisedbyThe
Economist,“GDPistypicallymeasuredbyreferenceto
theshapeoftheeconomyina‘base’year.Statisticians
samplebusinessesindifferentindustriestoseehowfast
theyaregrowing.Theweighttheygivetoeachsector
dependsonitsimportancetotheeconomyinthebase
year.Astimepassesthefiguresbecomelessandless
accurate.Nigeria’soldGDPdatareliedonahopelessly
datedsnapshotofitseconomyin1990.Thenewfigures
(whichhave2010asthebaseyear)givedueweightto
fast-growingindustriessuchasmobiletelecomsandfilm-
makingthathavesprungupsincethen.”
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TherebasingalsohadasignificantimpactonNigeria’s
Compatibilityscore(3.40comparedto2.46inthe2015
Index),becausethecompositionoftheeconomyisnow
moreorientedtowardslogistics-intensivesectorsthan
previouslythought.ThisbumpedNigeriaupthreespots,
thoughitstillrankspoorlyatjust40thinthissub-index.
Egypt
Egypthasjumped10spotsintheoverallIndexranking,to
22nd.Itsscorehasrisenfrom4.38to4.99.Thisismostly
downtoitsMarketSizeandGrowthAttractivenessscore
increasingfrom4.92to6.12.Theimprovementhasbeen
drivenbysignificantupwardrevisionstoitseconomic
growthforecastsandtheoverallsizeofitseconomy
beingmoreimpressivecomparedtotherestofthepack,
thanlastyear.Post-ArabSpring,Egypthasquietlymade
animpressiverecovery.
Unsurprisingly,therehasalsobeenageneral
improvementinEgypt’sbusinessenvironmentwhich
hasseenitsCompatibilityscorerisefrom2.35to2.85,
thoughthisstillonlyranks43rd.Foreigninvestorsin
particularappeartoberegainingameasureofconfidence
inEgypt.AccordingtofDi,realforeigninvestmentin
Egypt(asmeasuredbytheextentofgreenfieldcapital
investmentprojects)pickedupstronglyin2014,witha
significantnumberoflarge-scaleinvestmentprojects
announced,whichthemselvesfollowtheredevelopment
andwideningoftheSuezCanal.Infact,Egypt’sinward
capitalinvestmentof$18bnin2014wasgreaterthanany
othercountryintheMiddleEastandAfrica.However,this
fundingwasconcentratedinjust51projects,compared
to302($13bn)intheUAEand116($4bn)inSouthAfrica.
Pakistan
Pakistanhasmoveduptwospotsinthisyear’sIndexto
23rd.Itsscorehasimprovedfrom4.77to4.99.
Thisislargelydowntoitseconomicoutlookimproving.For
example,theIMF’slatestiterationofrealGDPforecasts
to2020iscertainlymoreoptimisticthanayearago.
Credit-ratingagenciessuchasMoody’sandStandard&
Poor’shavealsobeensimilarlyupbeat.Bothimproved
theircreditratingoutlookforthecountrytopositive
fromstableinMarch2015andMay2015,respectively.
Standard&Poor’sstated:“Thepositiveoutlookreflects
ourexpectationsofPakistan’simprovedeconomicgrowth
prospects,fiscalandexternalperformance,andthe
supportiverelationshipofexternaldonorsoverthenext
12months.”Theagencyalsoraisedits2015-2017average
growthprojectionto4.6%from3.8%.
However,Pakistanstilllagsbehindseverelyinthe
CompatibilityandConnectednesssub-indices,ranking
42ndand35threspectively,withPakistan’sscorein
bothmeasuresfallingyear-on-year.Onepossibleroad
toimprovementmaycomeintheformofChinese
investment.WhenPresidentXiJinpingvisitedPakistan
inApril2015,Chinapledged$46bnforroad,portsand
powerplants:aplannedinvestmentequaltoalmostthree
timesthetotalFDIthatPakistanhasreceivedoverthe
lastsevenyears.Pakistaniofficialssaymostprojects
willreachcompletioninonetothreeyears,withsome
$15.5bnofcoal,wind,solarandhydroenergyprojectsto
comeonlineby2017.
Peru
Perustruggledinthisyear’sIndex,losingfivespotsto
rank28thoverall.Itsscorehasfallenfrom4.84to4.70.
Thedeclinewaslargelyattributabletoaweakening
ofthecountry’seconomicprospects.WhiletheIMF
hasdowngradeditslongertermoutlookforPeru,its
mostconcerningpieceofdataisthatPeru’srealGDP
growthin2015isnowexpectedtocomeinat2.4%,
downfromitspredictionayearagoof5.1%.Although
expansionaryfiscalpolicyandhigheryear-on-year
miningindustryoutputaresustainingsomemeasureof
growth,lowercommoditypricesarehavingasignificant
adverseimpact.Thepriceofcopper,forinstance,has
fallenbymorethan15%in2015alone.Inaddition,
Peru’smanufacturingandconstructionsectorshave
struggledthisyear,whileinvestmentgrowthisslow,
duetodepressedbusinessconfidence.Asidefromthe
economicdata,Peru’sConnectednessscoreisdown
from4.96to4.84,mainlyasaresultofthecountrybeing
judgedtohavepoorerqualityinfrastructureandmore
inefficientcustomsproceduresyear-on-year.
Amorepositivespinmightbethatoverthelongerterm,
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Peruislikelytobeoneofthebetter-faringcountriesin
LatinAmerica.OutofallSouthAmericancountries,ithas
oneofthebestgrowthoutlooksoverthenextfiveyears,
evenwiththedownwardrevisionsin2015.
Algeria
AlgeriamovedupfourspotsintheoverallIndexrankingto
30thin2016.Itsscorehasincreasedfrom4.10to4.46.
Ithasmademeaningfulgainsacrossallfacetsofthe
Index.ItsMarketSizeandGrowthAttractivenessscoreis
up0.40points,Compatibilityhasincreasedby0.62points
andConnectednessisupby0.21points.MarketSizeand
GrowthAttractivenesshasimprovedlargelybecauseits
economy,asmeasuredbyPPPGDP,madeimpressive
gainsyear-on-year.Compatibilityhasrisenbecause
Algeria’seconomyisnowthoughttobemoreoriented
towardslogisticsintensivesectorsthanbefore,inaddition
tometricsofsecurityimprovingyear-on-year.Finally,
Connectednessisbetterthankstoimprovedcustoms
procedures.
Themajorquestionmarksurroundingthecountryisthe
collapseintheoilpriceandthesubsequentimpactonthe
economy.WithoilresponsibleforalmostallofAlgeria’s
exportrevenues,howthecountryrespondstosuchan
adverseshockwillbecrucial.
ArgentinahasplummetedfivespotstoNo.31inthisyear’s
Index.Itsoverallscorehasdeclinedby0.25pointsto4.42.
Unsurprisingly,giventhecountry’songoingeconomic
difficulties,thedropintheMarketSizeandGrowth
Attractivenesssub-indexwasparticularlysevere(down
from4.78to4.14).Itseconomicoutlookisworsenow
comparedtoayearago,withtheIMFpredictingvirtually
noeconomicgrowthfrom2016-2020.Inflationisaround
25%andcurrencycontrolsandtraderestrictionsinplace
since2011continuetochoketheeconomy.Thisisthe
legacythatPresidentCristinaFernandezdeKirchner
leavesbehind.OnereasonforoptimismisthatArgentina
willbeundernewleadershipwiththeelectionofpro-
businessMauricioMacrifromDecember2015anditis
difficulttoimaginethateconomicpolicygoingforward
couldbeanyworsethanunderthepreviousregime.
Jordan
JordanhasfallenfourspotsintheoverallIndexrankingto
33rd.Itsscoreisdown0.26pointsto4.28.
TheMarketSizeandGrowthAttractivenesssub-index
declinedmoderately,mainlyonaccountofthecountry’s
worseningfinancialstability,butthemainculpritwas
theCompatibilitysub-index,whichscoredjust5.52this
year,downfrom6.51inlastyear’sIndex.Theweightof
instabilitycausedbycrime,violenceandterrorismspilling
overtheborderfromSyriaanditsknock-onimpactwere
primarydriversbehindthis.Apartfromthecatastrophic
humanitarianimpactoftheconflict,theUNhasestimated
thatthetotaleconomiclossfromthewarwillreach
$237bnbytheendof2015.
Ukraine
Ukraineranks34thinthisyear’sIndex,adeclineoffour
placescomparedtothepreviousyear.Itsoverallscore
hascontractedby0.37pointsto4.09.
Thecountryhasbeenenvelopedincrisissince
November2013,withmassunrestplaguingthecountry.
TheprimarilyRussian-speakingeasternandsouthern
regionsofthecountryhavebeenhittheworst.Interms
ofIndexscores,theconflicthastakenitstollonvarious
fronts.ItsMarketSizeandGrowthAttractiveness
sub-indexhascrashedby0.42pointsto3.48.TheIMF
estimatedthatrealGDPgrowthwas-6.8%in2014
andworsestillin2015,at-9.0%.Inaddition,Ukrainian
financialstabilityhastakenabighit.Moreover,the
Compatibilitysub-indexscoreof3.99,downby1.30
points,indicatesthatthebusinessenvironmentin
Ukrainehassufferedseverely.Measuresoftheinstability
areunderstandablyfarworsethanbeforethecrisis
erupted.Furthermore,FDIflowstoUkrainefellby91%to
$410min2014(thelowestlevelin15years),mainlydue
toRussiancapitalabandoningthecountry.
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Ranking Country 2016 Index 2015 Index Change in Ranking
1 China 7.91 8.09 -
2 UAE 7.00 6.63 up 4
3 India 6.76 6.66 up 2
4 Malaysia 6.66 6.36 up 4
5 Saudi Arabia 6.62 6.76 down 3
6 Brazil 6.40 6.71 down 3
7 Indonesia 6.36 6.70 down 3
8 Mexico 6.17 6.30 up 1
9 Russia 6.16 6.57 down 2
10 Turkey 5.95 6.06 -
11 Chile 5.94 5.93 -
12 Qatar 5.83 5.87 -
13 Thailand 5.63 5.58 up 1
14 Oman 5.48 5.70 down 1
15 Philippines 5.34 5.15 up 1
16 South Africa 5.30 5.46 down 1
17 Nigeria 5.28 4.56 up 10
18 Kazakhstan 5.28 5.08 -
19 Vietnam 5.10 4.95 -
20 Morocco 5.05 5.11 down 3
21 Kuwait 5.02 4.91 -
22 Egypt 4.99 4.38 up 10
23 Pakistan 4.99 4.77 up 2
24 Uruguay 4.93 4.92 down 4
25 Colombia 4.91 4.86 down 3
26 Bahrain 4.90 4.78 down 2
27 Bangladesh 4.73 4.56 up 1
28 Peru 4.70 4.84 down 5
29 Sri Lanka 4.55 4.43 up 2
30 Algeria 4.46 4.10 up 4
31 Argentina 4.42 4.67 down 5
32 Ecuador 4.29 4.14 up 1
33 Jordan 4.28 4.54 down 4
34 Ukraine 4.09 4.46 down 4
35 Paraguay 3.71 3.74 up 3
36 Tunisia 3.69 3.87 down 1
37 Ethiopia 3.62 3.76 -
38 Bolivia 3.61 3.58 up 3
39 Venezuela 3.60 3.81 down 3
40 Tanzania 3.57 3.60 down 1
41 Libya 3.52 3.58 down 1
42 Lebanon 3.43 3.56 -
43 Kenya 3.38 3.47 -
44 Cambodia 3.36 3.46 -
45 Uganda 3.33 3.31 -
Source: Transport Intelligence
The 2016 Index
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ChinaUAEIndia
MalaysiaSaudi Arabia
BrazilIndonesia
MexicoRussiaTurkey
ChileQatar
ThailandOman
PhilippinesSouth Africa
NigeriaKazakhstan
VietnamMorocco
KuwaitEgypt
PakistanUruguay
ColombiaBahrain
BangladeshPeru
Sri LankaAlgeria
ArgentinaEcuadorJordan
UkraineParaguay
TunisiaEthiopia
BoliviaVenezuela
TanzaniaLibya
LebanonKenya
CambodiaUganda
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 10.00Source: Transport Intelligence
The 2016 Index
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Agility Emerging Markets Logistics Index for Countries with GDP more than US$300bn
The16economieswithGDPabove$300bnremainthe
sameasin2015.Whilethereismovementamongstthe
markets,itistruetosaythatlargeGDPequatestohigh
potentialasanemerginglogisticsmarket.Indeed,thetop
10marketsoverallhaveGDPabovethethreshold.
Todependsolelyonmarketsize,however,wouldpainta
misleadingpictureofwhattruelogisticsmarketpotential
lookslike.UAE,ranked2ndoverallbytheIndex,hasan
economyjust3.9%thesizeof1strankedChina,whilethe
EmiratesoutscoresIndiaandBrazil,despiteitseconomy
equalling19.4%ofIndia’seconomyand17.1%ofBrazil’s.
Ranking Country Market size and growth sub-index
Market compatibility sub-index
Market connected-ness sub-index
Total Index
1 China 9.48 6.79 6.75 7.91
2 UAE 5.58 8.61 7.73 7.00
3 India 9.32 4.80 4.95 6.76
4 Malaysia 6.41 6.56 7.00 6.66
5 Saudi Arabia 6.84 6.89 6.23 6.62
6 Brazil 7.87 6.09 4.91 6.40
7 Indonesia 8.66 4.44 4.81 6.36
8 Mexico 7.73 4.56 5.29 6.17
9 Russia 6.83 5.58 5.72 6.16
10 Turkey 6.74 5.63 5.23 5.95
11 Thailand 6.72 4.33 5.13 5.63
12 South Africa 5.54 4.81 5.31 5.30
13 Nigeria 7.79 3.40 3.50 5.28
14 Colombia 5.88 2.86 4.95 4.91
15 Argentina 4.14 4.99 4.42 4.42
16 Venezuela 3.38 3.69 3.79 3.60
Source: Transport Intelligence
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Agility Emerging Markets Logistics Index for Countries with GDP less than US$300bn
JustasintheoverallIndex,thereturnofameasure
ofstabilitytoEgyptseesitrisethroughtheranking,
movingfrom17thto9th.ThereverseistrueofUkraine,
wheretheongoingconflicthasdetrimentallyaffectedits
prospects:thecountrytookhitstobothitsSize&Growth
AttractivenessscoreanditsCompatibilityscore.
Perhapsthemostsignificantoutcomehere,though,is
thatastaggering23ofthe29countrieswithGDPsbelow
the$300bnthresholdoutrankVenezuelaasanemerging
logisticsmarket.Infact,Chile’soverallscorewould
seeitfinish11thintherankingofcountrieswithGDP
above$300bn.Againstabackdropoflowereconomic
prospectsacrossallemergingmarkets,thisserves
asapotentreminderthatinvestmentdecisionsmust
bebothstrategicandnuanced,reflectingtheunique
characteristicsofthemarketsunderinvestigation.While
forecastssuggest2016willseesomethingofarebound
infortunesforemergingmarkets,thedaysofinvestment
guidedbyheadlinefigures–andindeed,thedaysof
‘investmentbyacronym’–shouldbefullyconsignedto
history.
Ranking Country Market size and growth sub-index
Market compatibility sub-index
Market connected-ness sub-index
Total Index
1 Chile 5.26 6.62 6.32 5.94
2 Qatar 4.83 7.62 5.97 5.83
3 Oman 3.93 7.54 6.11 5.48
4 Philippines 6.56 4.79 4.27 5.34
5 Kazakhstan 4.60 6.94 5.14 5.28
6 Vietnam 5.42 5.15 4.72 5.10
7 Morocco 4.15 6.05 5.52 5.05
8 Kuwait 4.63 6.59 4.59 5.02
9 Egypt 6.12 2.85 4.90 4.99
10 Pakistan 6.85 2.86 4.06 4.99
11 Uruguay 3.38 6.71 5.69 4.93
12 Bahrain 3.27 6.21 6.01 4.90
13 Bangladesh 5.91 4.45 3.56 4.73
14 Peru 4.91 4.03 4.84 4.70
15 Sri Lanka 3.25 5.96 5.26 4.55
16 Algeria 4.87 4.49 3.98 4.46
17 Ecuador 2.80 4.65 5.77 4.29
18 Jordan 2.81 5.52 5.25 4.28
19 Ukraine 3.48 3.99 4.84 4.09
20 Paraguay 2.82 4.76 4.15 3.71
21 Tunisia 3.06 4.18 4.14 3.69
22 Ethiopia 3.37 4.39 3.48 3.62
23 Bolivia 2.76 4.52 4.06 3.61
24 Tanzania 3.15 4.52 3.53 3.57
25 Libya 2.68 2.08 5.25 3.52
26 Lebanon 2.46 4.33 4.04 3.43
27 Kenya 3.34 2.23 4.06 3.38
28 Cambodia 2.53 4.34 3.77 3.36
29 Uganda 2.90 3.48 3.74 3.33
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 9.48 6.79 6.75 7.91
2 UAE 5.58 8.61 7.73 7.00
3 India 9.32 4.80 4.95 6.76
4 Malaysia 6.41 6.56 7.00 6.66
5 Saudi Arabia 6.84 6.89 6.23 6.62
6 Brazil 7.87 6.09 4.91 6.40
7 Indonesia 8.66 4.44 4.81 6.36
8 Mexico 7.73 4.56 5.29 6.17
9 Russia 6.83 5.58 5.72 6.16
10 Turkey 6.74 5.63 5.23 5.95
11 Chile 5.26 6.62 6.32 5.94
12 Qatar 4.83 7.62 5.97 5.83
13 Thailand 6.72 4.33 5.13 5.63
14 Oman 3.93 7.54 6.11 5.48
15 Philippines 6.56 4.79 4.27 5.34
16 South Africa 5.54 4.81 5.31 5.30
17 Nigeria 7.79 3.40 3.50 5.28
18 Kazakhstan 4.60 6.94 5.14 5.28
19 Vietnam 5.42 5.15 4.72 5.10
20 Morocco 4.15 6.05 5.52 5.05
21 Kuwait 4.63 6.59 4.59 5.02
22 Egypt 6.12 2.85 4.90 4.99
23 Pakistan 6.85 2.86 4.06 4.99
24 Uruguay 3.38 6.71 5.69 4.93
25 Colombia 5.88 2.86 4.95 4.91
26 Bahrain 3.27 6.21 6.01 4.90
27 Bangladesh 5.91 4.45 3.56 4.73
28 Peru 4.91 4.03 4.84 4.70
29 Sri Lanka 3.25 5.96 5.26 4.55
30 Algeria 4.87 4.49 3.98 4.46
31 Argentina 4.14 4.99 4.42 4.42
32 Ecuador 2.80 4.65 5.77 4.29
33 Jordan 2.81 5.52 5.25 4.28
34 Ukraine 3.48 3.99 4.84 4.09
35 Paraguay 2.82 4.76 4.15 3.71
36 Tunisia 3.06 4.18 4.14 3.69
37 Ethiopia 3.37 4.39 3.48 3.62
38 Bolivia 2.76 4.52 4.06 3.61
39 Venezuela 3.38 3.69 3.79 3.60
40 Tanzania 3.15 4.52 3.53 3.57
41 Libya 2.68 2.08 5.25 3.52
42 Lebanon 2.46 4.33 4.04 3.43
43 Kenya 3.34 2.23 4.06 3.38
44 Cambodia 2.53 4.34 3.77 3.36
45 Uganda 2.90 3.48 3.74 3.33
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Market Size & Growth Attractiveness
WithintherankingforMarketSize&Growth
Attractiveness,thetopfourrankingmarketsare
unchangedforathirdconsecutiveyear.Nigeriahas
risentotake5thintheranking,whilePakistanjumpedto
7thasaresultofmarkedlybettergrowthprospectsfor
itseconomythanayearago.Russia,however,hasfelt
theimpactofpoorergrowthexpectationsfollowingthe
impositionofEUandUSsanctions,whichhaveseenit
slipto9thinthismeasure.
Atthebottomendofthescale,Cambodia,forthefirst
timesinceitwasaddedtotheIndexin2013,isnotthe
lowestrankedMarketforSize&GrowthAttractiveness.
Paraguay’simprovedoutlookhasseenitrisefromthe
lowestreachesofthismeasuretoo.
Source: Transport Intelligence
Ranking Country Market size and growth sub-index
1 China 9.48
2 India 9.32
3 Indonesia 8.66
4 Brazil 7.87
5 Nigeria 7.79
6 Mexico 7.73
7 Pakistan 6.85
8 Saudi Arabia 6.84
9 Russia 6.83
10 Turkey 6.74
11 Thailand 6.72
12 Philippines 6.56
13 Malaysia 6.41
14 Egypt 6.12
15 Bangladesh 5.91
16 Colombia 5.88
17 UAE 5.58
18 South Africa 5.54
19 Vietnam 5.42
20 Chile 5.26
21 Peru 4.91
22 Algeria 4.87
23 Qatar 4.83
24 Kuwait 4.63
25 Kazakhstan 4.60
26 Morocco 4.15
27 Argentina 4.14
28 Oman 3.93
29 Ukraine 3.48
30 Uruguay 3.38
31 Venezuela 3.38
32 Ethiopia 3.37
33 Kenya 3.34
34 Bahrain 3.27
35 Sri Lanka 3.25
36 Tanzania 3.15
37 Tunisia 3.06
38 Uganda 2.90
39 Paraguay 2.82
40 Jordan 2.81
41 Ecuador 2.80
42 Bolivia 2.76
43 Libya 2.68
44 Cambodia 2.53
45 Lebanon 2.46
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ChinaIndia
IndonesiaBrazil
NigeriaMexico
PakistanSaudi Arabia
RussiaTurkey
ThailandPhilippines
MalaysiaEgypt
BangladeshColombia
UAESouth Africa
VietnamChilePeru
AlgeriaQatar
KuwaitKazakhstan
MoroccoArgentina
OmanUkraineUruguay
VenezuelaEthiopia
KenyaBahrain
Sri LankaTanzania
TunisiaUganda
ParaguayJordan
EcuadorBoliviaLibya
CambodiaLebanon
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
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Market Compatibility
Fiveofthetop10rankedmarketsforCompatibilitycome
fromtheMiddleEast&NorthAfricaregion.TheUAE
retainsitspositionatthetopforasecondconsecutive
year,althoughitsscorehasfallen.ThattheUAEistop,
though,isunlikelytobeasurprisetothosewithexposure
tothemarket.Its34freetradezones,non-existent
corporationtaxandtheofferoffullownership,aswellas
unlimitedrepatriationofprofits,makeitahighlyappealing
businessenvironmentforproducersandmanufacturers
alike,aswellastologisticsserviceproviders.
Kazakhstan’sfavourabletaxregimeseesitriseto
becomethe4thhighestrankedmarketforCompatibility
thisyearwhich,combinedwithSaudiArabia’sclimb
to5th,seesChinafalloutofthetop5inthismeasure.
Anothermajoremergingmarkettofalldowntheranking
isRussia,whichslipsthreeplacesto16th,butitis
Ukrainewhichsuffersmostheavilyfollowingtheconflict
betweenthetwo,dropping19spotsfrom18thto37th.
ConflictalsocausedJordan’sslide–havingreached4th
in2014,thecountry’sslidehasacceleratedasitfollowed
afourplacedropin2015withafurthernineposition
lossin2016,toendin17thoverall–asthetroublesin
neighbouringSyriaweighdownitsprospects.
LibyapropsuptheCompatibilityrankingforasecond
year,andwhileEgyptandNigeriawereabletorise,
neithercouldmatchtheirrateofprogressintheSize&
GrowthAttractivenessranking.Despiteitshighoverall
ranking,Indiastilllanguishesasthe21strankedmarket
forCompatibility.Thismayrepresentariseofeight
positions,butitservestohighlightthatthecountry’s
businessenvironmentisstillinneedofsignificantand
rapidimprovement.
Source: Transport Intelligence
Ranking Country Market compatibility sub-index
1 UAE 8.61
2 Qatar 7.62
3 Oman 7.54
4 Kazakhstan 6.94
5 Saudi Arabia 6.89
6 China 6.79
7 Uruguay 6.71
8 Chile 6.62
9 Kuwait 6.59
10 Malaysia 6.56
11 Bahrain 6.21
12 Brazil 6.09
13 Morocco 6.05
14 Sri Lanka 5.96
15 Turkey 5.63
16 Russia 5.58
17 Jordan 5.52
18 Vietnam 5.15
19 Argentina 4.99
20 South Africa 4.81
21 India 4.80
22 Philippines 4.79
23 Paraguay 4.76
24 Ecuador 4.65
25 Mexico 4.56
26 Bolivia 4.52
27 Tanzania 4.52
28 Algeria 4.49
29 Bangladesh 4.45
30 Indonesia 4.44
31 Ethiopia 4.39
32 Cambodia 4.34
33 Lebanon 4.33
34 Thailand 4.33
35 Tunisia 4.18
36 Peru 4.03
37 Ukraine 3.99
38 Venezuela 3.69
39 Uganda 3.48
40 Nigeria 3.40
41 Colombia 2.86
42 Pakistan 2.86
43 Egypt 2.85
44 Kenya 2.23
45 Libya 2.08
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UAEQatarOman
KazakhstanSaudi Arabia
ChinaUruguay
ChileKuwait
MalaysiaBahrain
BrazilMorocco
Sri LankaTurkeyRussiaJordan
VietnamArgentina
South AfricaIndia
PhilippinesParaguayEcuadorMexicoBolivia
TanzaniaAlgeria
BangladeshIndonesia
EthiopiaCambodia
LebanonThailand
TunisiaPeru
UkraineVenezuela
UgandaNigeria
ColombiaPakistan
EgyptKenyaLibya
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
Thetop10rankingpositionsforMarketConnectedness
displayedalargeamountofcontinuityyear-on-yearas
themarketstooccupythetopthreepositions–UAE,
MalaysiaandChina–wereunchanged,whilenineofthe
10remainedunchanged.ThecasualtywasSouthAfrica,
whichslidto13thandwasreplacedbyRussia.The
infrastructuredeficitsoftwomajoremergingmarkets–
BrazilandIndia–aresharplyillustratedinthismeasure
ofdomesticandinternationalconnectivity,withboth
languishingindistinctmediocrity.
Overall,theIndexin2016paintsabroadlypositivepicture
ofNigeria’spotentialasanemergingmarket.Havingrisen
10placesinthecombinedranking,itmaywellserveasa
warningtothoseexcitedbythecountry’spotential,that
itsinfrastructureislikelytoseverelylimitgrowthunless
significantprogressismade.Inthismeasure,Nigeria
ranks44thofthe45marketsunderexamination,having
regressedoverthelastyear.
Source: Transport Intelligence
Ranking Country Market connectedness sub-index
1 UAE 7.73
2 Malaysia 7.00
3 China 6.75
4 Chile 6.32
5 Saudi Arabia 6.23
6 Oman 6.11
7 Bahrain 6.01
8 Qatar 5.97
9 Ecuador 5.77
10 Russia 5.72
11 Uruguay 5.69
12 Morocco 5.52
13 South Africa 5.31
14 Mexico 5.29
15 Sri Lanka 5.26
16 Jordan 5.25
17 Libya 5.25
18 Turkey 5.23
19 Kazakhstan 5.14
20 Thailand 5.13
21 Colombia 4.95
22 India 4.95
23 Brazil 4.91
24 Egypt 4.90
25 Peru 4.84
26 Ukraine 4.84
27 Indonesia 4.81
28 Vietnam 4.72
29 Kuwait 4.59
30 Argentina 4.42
31 Philippines 4.27
32 Paraguay 4.15
33 Tunisia 4.14
34 Bolivia 4.06
35 Pakistan 4.06
36 Kenya 4.06
37 Lebanon 4.04
38 Algeria 3.98
39 Venezuela 3.79
40 Cambodia 3.77
41 Uganda 3.74
42 Bangladesh 3.56
43 Tanzania 3.53
44 Nigeria 3.50
45 Ethiopia 3.48
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UAEMalaysia
ChinaChile
Saudi ArabiaOman
BahrainQatar
EcuadorRussia
UruguayMorocco
South AfricaMexico
Sri LankaJordan
LibyaTurkey
KazakhstanThailand
ColombiaIndia
BrazilEgyptPeru
UkraineIndonesia
VietnamKuwait
ArgentinaPhilippines
ParaguayTunisiaBolivia
PakistanKenya
LebanonAlgeria
VenezuelaCambodia
UgandaBangladesh
TanzaniaNigeria
Ethiopia
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
http://www.transportintelligence.com
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Agility Emerging Markets Logistics Index 2016
www.transportintelligence.com
Contents
34
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 10.00
Smaller markets but good prospects and easy market entry
Low potential except niche markets,challenging market environment
High market potential with few barriers to market entry
Large markets but potential constrained by barriers to entry
Market Size and Growth
Mar
ket C
ompa
tibili
ty a
nd C
onne
cted
ness
Oman Qatar
UAE
Malaysia
Saudi Arabia
Russia Brazil
Mexico
PakistanNigeria
Indonesia India
China
TurkeySouth Africa
Bangladesh
ColombiaEgypt
ThailandPhilippinesPeru Vietnam
Algeria
UruguayBahrain
Sri LankaJordan
Ecuador
ParaguayTunisia
EthiopiaTanzania
UkraineArgentina
Morocco Kazakhstan
Kuwait
Chile
VenezuelaKenya
BoliviaLebanonCambodia
LibyaUganda
Emerging Markets Quadrant
Theemergingmarketsquadrantdisplaystherelative
positionsofthecountriesintheIndex.Thechartis
dividedintofourareasbasedonsizeandpotential
barrierstoentry(anaverageof“MarketCompatibility”
and“MarketConnectedness”).
Countriesinthetoprightquartile,suchasChina,
representthebiggesttargetsforlogisticsinvestments
aswellastheeasiestmarketstooperatein.Inthetop
leftquartilearethosecountriesthatrepresentsmaller
opportunities,butareeasilypenetrated.OmanandQatar
representthesetypesofopportunities.
Thebottomhalfofthechartincludescountriesinwhich
therearesignificantbarrierstoentryanddifficultiesin
operating.Astheseeconomiesmatureandconnectmore
withglobalmarketstheyarelikelytomovetowardsthe
upperquartiles.NigeriaandKenyaareexamplesofthese
typesofopportunities.
Source: Transport Intelligence
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Agility Emerging Markets Logistics Index 2016
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Contents
35
Emerging Market Trade Lanes
Thestateofemergingmarkettradein2015canbe
summarisedinonesimplegraphthattrackstotalyear-
on-yearexportandimportgrowthforemergingmarkets.
Thegraphmeasuresthetotalvalueoftradeovertime,but
holdsthepricesofallgoodsconstant,sothatchanges
areonlydrivenbyvariationinthequantityofgoods
exportedorimported.
Quitesimply,2015hasbeenapooryearforemerging
markettradeonthewhole.For2012to2014,import
andexportvolumegrowthaveraged4.7%and4.2%
respectively,withrelativelylittlevariationaboveorbelow
thosemarks.In2015,year-on-yeargrowthrateshave
clearlyfallenshortofthesefigures,evendippinginto
negativeterritoryinthesecondandthirdquartersof
theyear.
Althoughthevolumefiguresinthechartareperhapsof
mostconcerntoforwardersandlogisticsproviders,when
allowingpricestofluctuateovertimethefigureslook
significantlyworse.Commoditypriceshavedeteriorated
in2015,notonlyreducingthevalueofrawmaterials,
butalsoinallmannerofproductswhichrequirethemas
inputs.Inaddition,whenmeasuringtradeinUSdollars
(asismostoftenthecase),thepictureisevenbleaker
giventhecurrency’sincreasingvalueoverthecourse
of2015,effectivelyerodingthevalueofgoodspricedin
emergingmarketcurrencies.
Sev
en
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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 2015
Imports Exports
Emerging market merchandise trade volumes, six-month average, % change on a year earlier
Source: CPB World Trade Monitor
Sogiventheanaemictradenumbersin2015,isthere
reasontoworryaboutthelong-termfutureofemerging
markettrade?Yesandno.ThelatestsetofIMFforecasts
predictsthatemergingmarketimportandexportvolume
growthin2016willbe4.3%and4.6%respectively,and
thatbothwillriseandhoveraround5%from2017-2020.
Essentially,areturntosomethinglikethemoderate
growthfiguresof2012-2014.From1990-2008,though,
emergingmarketswereregularlyrecordingtradevolume
growthratesintherangeof5-10%,sometimeshigher.
Forthenextfiveyearsatleast,growthrateslikethat
seemtobealongwayoff.
Inthesectionthatfollows,airandseavolumedatafor
tradelanesinvolvingemergingmarketsandtheEU/
USwillbeanalysed.Asisusualwithemergingmarkets,
forecastsoftonnagefor2015onthesetradelanes
suggestavastamountofdifferenceinperformance
betweencountriesandhighvolatilitywhencomparing
volumesovertime.Althoughthereareobviouslymany
factorsatwork,oneimportantoveralltrendtopickupon
in2015istheinfluenceofexchangeratemovements.
AccordingtoBankofInternationalSettlementsdata,on
atrade-weightedbasisandinrealterms,theaverage
monthlyvalueoftheeurobetweenJanuary-September
2015,comparedtothesameperiodin2014,is9.6%
lower.Conversely,thedollaris11.2%higher.The
implicationisthatimportsaremoreexpensiveforthe
EuroareabutcheaperfortheUS,stimulatinglower
importdemandintheEUandgreaterdemandintheUS.
Theoppositeistrueforexports.Itisworthaddingthat
overthepastfewyears,suchmovementincurrencieshas
notreallybeenafactor,withthevalueofthedollarand
eurorelativelyconstantfrom2010untilthestartof2014.
Sowhatdotheoverallairandseavolumefiguresreveal?
EUairandseaimportgrowthratesfromemerging
marketsin2015arepredictedtofallshortofUSgrowth
figures.Ontheotherhand,EUexportgrowthratesto
emergingmarketsbeattheUSfigures.Exchangerate
movementscouldwellbeasignificantfactorbehindthis
patternofresults.
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37
Euro and US Trade-Weighted Exchange Rate Indices (2010=100)
2015 EU/US Ai