While China still ranks top in this year’s Agility Emerging Markets Logistics Index, supply chain industry executives indicated that China's slowdown and falling oil prices are major concerns for logistics companies. Executives reveal they are bracing for more volatility in the global economy.
This is the seventh year Agility Logistics and research firm Transport Intelligence (Ti) have released the survey. The index offers a snapshot of logistics industry sentiment and ranks the world’s 45 leading emerging markets based on their size, business conditions, infrastructure and other factors that make them attractive to logistics providers, freight forwarders, shipping lines, air cargo carriers and distributors.
Whereas disasters and corruptions are typically the top threats identified by logistics professionals when considering Asia, this time the study found that nearly 55% of respondents pointed to China’s economy and the hurdles it faces over the next two or three years as their top concern. More so, 38% said they are reassessing their China strategy as a result. Sluggishness in the Chinese economy has prompted 22% to re-examine their overall emerging markets strategy.
“The region’s worries about China are understandable,” said Chris Price, chief executive of Agility Asia-Pacific. “Other countries fear a slowing China means a weaker currency that will hurt their competitiveness. At the same time, China’s suppliers – from mines in Africa to component makers in Asia – are concerned that demand for their products could fall significantly.”
Even though China was still the leading emerging market, India, which climbed two places to third, was felt to be the country with the highest growth potential. The United Arab Emirates, which ranked second, was seen as having the best business climate and the best infrastructure and transport connections.
Other top rankings were Malaysia, four; Saudi Arabia, five; Brazil, six; Indonesia, seven; Mexico, eight; Russia, nine; and Turkey, 10, with Malaysia overtaking Saudi Arabia, Brazil and Indonesia in the index.
“Malaysia has shown a sustained commitment to economic diversification and to its drive to develop and upgrade its infrastructure,” said Mr Price. “It has world-class ports, airports, road and rail networks, industrial parks and technology parks. It is going to lead the way as the Asean [Association of South-East Asian Nations] countries continue to work toward economic integration.”