Agility Emerging Markets Index - WordPress.com · Agility Emerging Markets Logistics Index 2011 3.0 Analysis and results of the index China, the largest economy in the survey, retained

Agility EmergingMarkets LogisticsIndex 2011A detailed ranking and analysis of the world’s major developing logistics marketsJanuary 2011

�

Agility Emerging Markets Logistics Index 2011

Contents ......................................................................................................................... 2

1.0 Introduction ...................................................................................................... 3

�.0 Agility Emerging Markets Logistics Index �011 ............................................... 4

3.0 Analysis and results of the index ...................................................................... 5

3.1 Sub-Indices ranking ......................................................................................... 12

3.1.1 Market size and growth attractiveness sub-index ............................................ 12

3.1.2 Market compatibility sub-index ....................................................................... 13

3.1.3 Connectedness sub-index ............................................................................... 14

3.2 Emerging Markets Quadrant ........................................................................... 15

4.0 Emerging Market Survey ................................................................................. 16

4.1 Question 1 – With the exception of China, which markets will emerge

as major logistics hubs? ................................................................................... 17

4.2 Question 2 - Why are these countries considered to be important

emerging markets? .......................................................................................... 20

4.3 Question 3 - Which markets will offer the least opportunities for logistics

companies in the next 5 years? ....................................................................... 22

4.4 Question 4 – What factors do you believe prevent these markets from

emerging as major logistics hubs of the future? ............................................... 23

4.5 Question 5 - Which markets have you expanded into in the past 5 years? ...... 24

4.6 Question 6 - Which markets do you expect to expand into in the next

5 years? .......................................................................................................... 25

4.7 Question 7 - Which regions will emerge as the next major low cost

manufacturing locations in the next 15 to 20 years? ....................................... 26

About Agility and Transport Intelligence ....................................................................... 27

Contents

3


Many analysts believe that global economic growth

in 2011 will be driven by the developing world and

for companies thinking of investing in emerging

markets it is more important than ever to understand

which markets offer the best opportunities.

Increasingly, Western investors are starting to look

beyond China due to continued worries about

its economic prospects. Although growth in both

domestic demand and export activity is still very

high, the signs of over-heating continue to emerge.

The money supply is growing fast, driven in part by

the effects of quantitative easing in the US, whilst

the economy still seems hugely over-balanced in

favour of investment rather than consumption.

Wage rates are rising and the viability of the property

market is in question. There is the probability that

an unstable China will result in an acceleration of

the shift of manufacturing export production away

from Southern China. This in turn could also lead

eventually to a realignment of trade patterns with

many other low cost markets benefiting.

In fact 2011 could well be the year when many

emerging markets come of age. Although many

of these, such as Brazil, are influenced by Chinese

investment and demand, they are also experiencing

growth in domestic consumption as GDP per head

rises. Consequently opportunities for domestic-

orientated logistics provision in these markets look

good. Indeed, whilst top-line growth numbers may

be weaker, the attractions of markets in say Turkey or

Brazil may be greater due to stable and transparent

markets. This aspect may counter-balance possible

instabilities in exports from these countries, such as

agricultural products and mineral raw materials.

The likelihood of higher oil prices in 2011 will bring

about many challenges for emerging markets. Some

manufacturers will be encouraged to repatriate

manufacturing operations to markets closer to end-

consumers in the West. This may well bring benefits

to some economies, such as Mexico or Turkey for

instance, but will have a detrimental effect on remote

manufacturing locations in the Asia Pacific region.

For many, Africa has appeared on the horizon (albeit

distant) as a potential alternative to the Asia Pacific

region although many infrastructure, security and

business compliance challenges will need to be

overcome. Certainly the Chinese think Africa offers

opportunities and there has been massive investment

by the Chinese government in infrastructure and

energy projects throughout the continent.

1.01.0 Introduction

4


The Agility Emerging Markets Logistics Index 2011

compares the major emerging markets on 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 overall index has been built up through

three sub-indices: ‘The Market Size and Growth

Attractiveness’; ‘Market compatibility’; and

‘Connectedness’.

The Market Size and Growth Attractiveness sub-

index rates a country’s economic output, its projected

growth rate and population size.

The Market Compatibility sub-index identifies how

compatible a market is with the services which global

logistics companies provide. For instance it measures:

• A country’s development in terms of the

importance of its service sector (indicative of the

level of out-sourcing of logistics requirements);

• Urbanisation of population (a driver of

manufacturers’ centralised distribution strategies

and the likely consolidation of retailing);

• Distribution of wealth throughout the population

(indicative of the widespread need for higher

value goods often produced by international

manufacturers);

• Foreign Direct Investment (FDI) (this is an

indicator for the penetration of an economy by

international companies);

• Market accessibility (the regulatory regime

facilitating – or otherwise – the entrance of

foreign companies to the market. This includes

factors such as bureaucracy, regulations etc).

• Security (measuring the risk to companies’

operations from threats such as piracy and

terrorism)

The ‘Connectedness’ sub-index rates a country’s

international and domestic transport infrastructure

links as well as the level of service it receives. It

involves:

• The frequency and range of destinations of its

liner shipping connections

• The level of airport infrastructure relative to the

market’s size

• A rating of its overall transport infrastructure

• A rating of the efficiency of its customs and

border controls.

From these three sub-indices a weighted, total rating

and ranking has been developed using established

statistical techniques.

The index has been set out firstly in its full version,

showing each of the three sub-indices for the 38

countries surveyed, and the total index score, on

which the countries have been sorted. Following

that table, the countries have been split into two

sections based on size of GDP. This makes it possible

to compare the performance of the large emerging

markets (GDP over $300 billion) and the smaller

emerging markets (GDP under $300 billion) more

meaningfully.

This year Ti has undertaken a global electronic

survey to complement the Index, providing insight

on which emerging markets hold the greatest levels

of potential and why. The results of this survey are

contained in Section 4.

2.0 Agility Emerging Markets Logistics Index 2011

2.0

�


3.0 Analysis and results of the index

China, the largest economy in the survey, retained

its number one position as the most attractive

investment market for logistics companies. The

country remains top for market size and growth

attractiveness and retains second place for market

connectedness. China’s connectivity to global

shipping networks is among the best in the world,

offering access to a global system of high capacity

and frequency ocean freight and thus enabling trade.

Its market compatibility score however fell, moving

China down to ninth position in this respect. This

decline explains the fall seen in the country’s total

index score overall.

India, Brazil and Indonesia also remain in the top five

investment markets for logistics companies with no

changes among their rankings. India’s score showed

a small improvement as a result of an increase in its

size and growth prospects. Its market compatibility

and market connectedness scores, already below

average, declined leading to an increase in India’s

inconsistency between the sub-indices.

Brazil’s overall score remained stable although it

experienced some changes among the sub indices. Its

‘market size and growth attractiveness’ and ‘market

compatibility’ scores saw an improvement whilst its

‘connectedness’ declined. Poor infrastructure remains

a problem for investors in the country. Indonesia

recorded an increase in its overall score as a result

of improvements in its market size and growth

prospects. The country saw a small improvement

in its ‘connectedness’ although it still scores

below average in this respect. However its market

compatibility sub-index fell, this was driven mainly

by a decline in its security.

Russia’s total index score also increased moving it up

one position to join the other ‘BRIC’ nations in the

top five. This increase was driven by improvements

in the country’s GDP forecast growth, foreign direct

investment (FDI) and reductions in security threats.

The biggest mover up in the total index rankings was

Saudi Arabia which climbed four places and saw the

greatest increase in its overall score. The country saw

significant improvements in its market compatibility

index mainly due to increases in the foreign direct

investment index. The majority of countries included

in the index saw declines in FDI during the global

economic crisis although Saudi Arabia was virtually

unaffected. Its energy, industrial, financial and real

estate sectors still offered considerable scope for

investors.

Oman also moved up four places recording increases

in its market compatibility and market connectedness

index. The improvement in the country’s

‘connectedness’ was driven by developments in

its airport infrastructure. The country is currently

undertaking major improvements to its airport

network including the proposed expansion of Muscat

International airport, to include a new air cargo

terminal, as well as developing new airports in Sohar

and Duqm. Market compatibility increased as a result

of improvement in security.

Despite its overall score experiencing a slight decline,

Chile climbed to tenth position overtaking Thailand

and Malaysia in the total rankings. The country

recorded small increases in its already strong market

compatibility and connectedness sub-indices while its

market size and growth attractiveness index declined.

Chile saw improvements in its already strong market

access. The country benefits from a high number of

trade agreements enabling access to foreign markets

for its exporters.

3.0

�


Egypt was the biggest mover down the index falling

four places and out of the top ten most attractive

markets for logistics companies. The country saw a

significant decline in its market compatibility score

to below average due to increases in its business

costs of crime and violence and terrorism. This

significant fall in market compatibility has reduced

the consistency of Egypt’s scores.

Another significant mover down in the index was

Qatar which fell three places as a result of a decline

in its market size and growth prospects score. Qatar

has experienced rapid economic growth over the

past fifteen years led by the energy sector. After

reaching its peak in 2011 the oil and gas sector is

expected to slow as no new investments into gas

export projects are planned, consequently Qatar’s

GDP growth forecast for 2015 has fallen. Qatar is,

however, currently undergoing major infrastructure

and tourism developments in an attempt to replace

energy revenues in coming years and is, therefore,

likely to improve its position in the future.

At the bottom of the index Kenya’s overall score has

improved while Paraguay’s overall score declined.

Paraguay saw declines in both the The Market Size

and Growth Attractiveness and market compatibility

sub indices. The country scores particularly poorly

in The Market Size and Growth Attractiveness sub

indices due to its limited economy based largely

on agriculture. Its economy contracted as a result

of reduced global demand and commodity prices

causing exports to fall and reducing its GDP.

Kenya saw an increase in its ‘market compatibility’

driven by small improvements in the country’s

security. Despite this security threats such as crime

and violence and terrorism still remain exceptionally

high. It is expected that reforms of the new

constitutional order may help improve these areas

further in the future.

3.0 Analysis and results of the index cont.

3.0

7


Table 1: Agility Emerging Markets Logistics Index

Agility Emerging Markets Logistics Index

2011Total Index

2010Total Index

Change in ranking from previous year

China 8.32 8.46 -India 7.00 6.94 -Brazil 6.74 6.74 -

Indonesia 6.73 6.56 -Russia 6.22 6.04 up 1

Saudi Arabia 6.01 5.45 up 4Mexico 5.98 6.05 down 2Turkey 5.80 5.79 down 1

UAE 5.59 5.55 down 1Chile 5.29 5.30 up 3

Malaysia 5.28 5.36 -Thailand 5.25 5.30 -

Egypt 5.16 5.47 down 4Oman 5.12 4.94 up 4

Argentina 5.08 4.98 -South Africa 5.07 5.02 down 2

Pakistan 5.02 4.95 -Ukraine 4.97 4.90 up 1Qatar 4.86 4.96 down 3

Bahrain 4.77 4.80 -Tunisia 4.77 4.65 up 2Jordan 4.70 4.72 down 1

Uruguay 4.59 4.64 up 1Philippines 4.58 4.68 down 2

Vietnam 4.55 4.59 -Bangladesh 4.55 4.56 -

Nigeria 4.49 4.49 -Morocco 4.47 4.39 -

Peru 4.43 4.36 -Kazakhstan 4.33 4.30 up 1

Ecuador 4.29 4.34 down 1Ethiopia 4.19 4.24 -

Colombia 4.17 4.24 -Venezuela 4.10 4.16 -

Algeria 4.07 4.08 -Tanzania 3.84 3.99 -

Kenya 3.64 3.57 up 2Bolivia 3.64 3.78 down 1

Paraguay 3.53 3.66 down 1Source: Transport Intelligence

3.0

8


MOVEMENT KEY:

UP

NONE

DOWN

BRAZIL

RUSSIA

CHINA

INDIA

UKRAINE

TURKEY

SAUDI ARABIA

EGYPT

SOUTH AFRICACHILE

MEXICO

ARGENTINA

Figure 1: Agility Emerging Markets Logistics Index – Top Movers

3.0

Source: Transport Intelligence

9


Table 2: Agility Emerging Markets Logistics Index Sub-IndicesMkt size &

growth attractiveness

sub-index

Market compatibility

sub-index

Connectedness sub-index

Total Index

Change in ranking from previous year

China 10.00 6.06 7.46 8.32 -India 9.56 4.80 4.54 7.00 -Brazil 8.32 5.49 5.12 6.74 -

Indonesia 9.06 4.77 4.44 6.73 -Russia 7.66 5.23 4.60 6.22 up 1

Saudi Arabia 5.29 6.59 6.75 6.01 up 4Mexico 7.33 4.49 5.02 5.98 down 2Turkey 6.62 4.75 5.34 5.80 down 1

UAE 3.61 6.51 8.21 5.59 up 3Chile 3.95 5.99 7.01 5.29 up3

Malaysia 4.62 4.98 6.72 5.28 -Thailand 5.58 4.25 5.59 5.25 -

Egypt 5.68 4.10 5.22 5.16 down 4Oman 3.22 6.94 6.77 5.12 up 4

Argentina 5.00 5.48 4.83 5.08 -South Africa 5.19 4.20 5.66 5.07 down 2

Pakistan 6.53 3.00 4.25 5.02 -Ukraine 4.36 6.19 4.91 4.97 up 1Qatar 3.31 6.45 6.09 4.86 down 3

Bahrain 3.05 5.78 6.84 4.77 -Tunisia 3.38 6.71 5.38 4.77 up 2Jordan 3.13 6.44 5.84 4.70 down 1

Uruguay 3.12 6.57 5.32 4.59 up 1Philippines 5.08 4.25 3.98 4.58 down 2

Vietnam 4.99 4.57 3.76 4.55 -Bangladesh 5.56 4.20 3.08 4.55 -

Nigeria 5.83 3.49 3.07 4.49 -Morocco 3.79 5.17 5.01 4.47 -

Peru 4.21 4.65 4.62 4.43 -Kazakhstan 3.84 5.52 4.09 4.33 up 1

Ecuador 3.38 4.78 5.42 4.29 down 1Ethiopia 4.20 4.97 3.45 4.19 -

Colombia 4.78 2.51 4.66 4.17 -Venezuela 4.12 4.05 4.12 4.10 -

Algeria 4.10 4.10 3.98 4.07 -Tanzania 3.62 5.03 3.13 3.84 -

Kenya 3.61 3.84 3.49 3.64 up 2Bolivia 3.20 4.35 3.73 3.64 down 1

Paraguay 3.10 4.40 3.47 3.53 down 1Source: Transport Intelligence

Table 2: Agility Emerging Markets Logistics Index Sub-Indices

3.0

10


3.0Of the larger economies included in the index (GDP

in excess of $300bn) Saudi Arabia’s score for market

compatibility signifi cantly improved bringing its score

for this sub-index above that of Brazil and China.

Colombia’s market compatibility remained low- in

particular the country faces extremely challenging

concerns over security. While the country saw a small

decline in terms of business costs of terrorism, its

business costs of crime and violence increased posing

increased risks to logistics companies with operations

in Colombia. Nigeria, which also performs poorly

in terms of market compatibility due to security

threats, saw improvements in business costs of both

crime and violence and terrorism. It also saw an

improvement in market access.

Of the larger markets, Nigeria remains the worst for

‘connectedness’ and saw a decline in its scores for

infrastructure and border administration. The country

does, however, have some strengths. Its score for

its market size and compatibility is above average

and the country takes a mid-rank position among

the larger economies in this respect. Saudi Arabia

stands out as having increased its score for transport

connectivity overtaking Malaysia in the sub indices

through improvements in infrastructure, air and

border administration.

Market size and growth

attractiveness sub-index


sub-indexConnectedness

sub-index Total Index

Change in

ranking from

previous year

China 10 6.06 7.46 8.32 -India 9.56 4.8 4.54 7 -Brazil 8.32 5.49 5.12 6.74 -

Indonesia 9.06 4.77 4.44 6.73 -Russia 7.66 5.23 4.6 6.22 up 1

Saudi Arabia 5.29 6.59 6.75 6.01 up 3Mexico 7.33 4.49 5.02 5.98 down 2Turkey 6.62 4.75 5.34 5.8 down 1

Malaysia 4.62 4.98 6.72 5.28 up 1Thailand 5.58 4.25 5.59 5.25 up 1

Egypt 5.68 4.1 5.22 5.16 down 3Argentina 5 5.48 4.83 5.08 up 1

South Africa 5.19 4.2 5.66 5.07 down 1Pakistan 6.53 3 4.25 5.02 -

Philippines 5.08 4.25 3.98 4.58 -Nigeria 5.83 3.49 3.07 4.49 -

Colombia 4.78 2.51 4.66 4.17 -Venezuela 4.12 4.05 4.12 4.1 -


Table 3: Agility Emerging Markets Logistics Index for Countries with GDP of more than US$300bn

11


Of the smaller economies, UAE remains at the top,

offering the greatest exploitable opportunities. Its

transport connectedness sub-index score increased,

further enhancing its attractiveness to logistics

companies as a strong market for logistics operations

of all kinds. UAE’s border administration, which was

already extremely effi cient, saw an improvement

making the entry and exit of goods even easier.

The country’s liner shipping connectivity also saw

signifi cant improvements.

Tunisia climbed two places up to sixth position as a

result of increases in its market compatibility index.

From 2008 the country’s association agreement with

the EU created a free trade area between Europe and

Tunisia. This has led to a signifi cant increase in its

market accessibility. However, Tunisia also simplifi ed

its tariff structure abolishing tariff peaks and specifi c

tariffs which led to a more complex customs

procedure and consequently decreased its score for

border administration.

Market size and growth

attractiveness sub-index


sub-indexConnectedness

sub-index Total Index

Change in ranking

from previous

yearUAE 3.61 6.51 8.21 5.59 -Chile 3.95 5.99 7.01 5.29 -Oman 3.22 6.94 6.77 5.12 up 1

Ukraine 4.36 6.19 4.91 4.97 up 1Qatar 3.31 6.45 6.09 4.86 down 2

Tunisia 3.38 6.71 5.38 4.77 up 2Bahrain 3.05 5.78 6.84 4.77 down 1Jordan 3.13 6.44 5.84 4.7 down 1

Uruguay 3.12 6.57 5.32 4.59 -Vietnam 4.99 4.57 3.76 4.55 -

Bangladesh 5.56 4.2 3.08 4.55 -Morocco 3.79 5.17 5.01 4.47 -

Peru 4.21 4.65 4.62 4.43 -Kazakhstan 3.84 5.52 4.09 4.33 up 1

Ecuador 3.38 4.78 5.42 4.29 down 1Ethiopia 4.2 4.97 3.45 4.19 -Algeria 4.1 4.1 3.98 4.07 -

Tanzania 3.62 5.03 3.13 3.84 -Kenya 3.61 3.84 3.49 3.64 up 2Bolivia 3.2 4.35 3.73 3.64 down 1

Paraguay 3.1 4.4 3.47 3.53 down 1


Table 4: Agility Emerging Markets Logistics Index for Countries with GDP of less than US$300bn

3.0

1�


3.1The following fi gures examine the ranking of all

the emerging markets covered in the index in

each of the three sub-indices: ‘Market size and

growth attractiveness’; ‘Market compatibility’ and

‘Connectedness’. The performance of each country

is measured by the number of standard deviations

from the average score of the entire group which is

denoted by 0 on the scale.

3.1.1 Market size and growth attractiveness sub-index

In terms of scale and growth prospects it

is of little surprise that the most attractive

markets are China and India. Indonesia,

Brazil, Russia and Mexico also stand out as

offering the largest opportunities. At the

other end of the scale Bahrain, Paraguay

and Uruguay are the smallest markets

offering the least potential for investors.

3.1 Sub-Indices ranking

Ch

ina

Ind

ia

Ind

on

esia

Bra

zil

Russ

ia

Mex

ico

Turk

ey

Paki

stan

Nig

eria

Egyp

t

Thai

lan

d

Ban

gla

des

h

Sau

di A

rab

ia

Sou

th A

fric

a

Phili

pp

ines

Arg

enti

na

Vie

tnam

Co

lom

bia

Mal

aysi

a

Ukr

ain

e

Peru

Eth

iop

ia

Ven

ezu

ela

Alg

eria

Ch

ile

Kaz

akh

stan

Mo

rocc

o

Tan

zan

ia

UA

E

Ken

ya

Ecu

ado

r

Tun

isia

Qat

ar

Om

an

Bo

livia

Jord

an

Para

gu

ay

Bah

rain

3.00

2.50

2.00

1.50

1.00

0.50

–

-0.50

-1.00

-1.50

Figure 3: Market Size and Growth Attractiveness Sub-Index Scores


13


3.13.1.2 Market compatibility sub-index From the perspective of market

compatibility, Oman scores well against

a range of criteria including low business

costs from crime and terrorism; high levels

of foreign direct investment; good market

access; high degree of service sector

development and urbanization.

Pakistan, Colombia and Nigeria score the lowest

against this criteria suffering not least from high

degrees of corruption and crime.

Om

anTu

nis

iaSa

ud

i Ara

bia

Uru

gu

ayU

AE

Qat

arJo

rdan

Ukr

ain

eC

hin

eC

hile

Bah

rain

Kaz

akh

stan

Bra

zil

Arg

enti

na

Russ

iaM

oro

cco

Tan

zan

iaM

alay

sia

Eth

iop

iaIn

dia

Ecu

ado

rIn

do

nes

iaTu

rkey

Peru

Vie

tnam

Mex

ico

Para

gu

ayB

oliv

iaTh

aila

nd

Phili

pp

ines

Ban

gla

des

hSo

uth

Afr

ica

Egyp

tA

lger

iaVe

nez

uel

aK

enya

Nig

eria

Paki

stan

Co

lom

bia

1.50

1.00

0.50

–

-0.50

-1.00

-1.50

Figure 4: Market Compatibility Sub-Index Scores


14


3.1.3 Connectedness sub-index In the ‘Connectedness’ sub-index, which

is made up of components including liner

shipping connectivity; airport density;

customs effi ciency and infrastructure

strength, the United Arab Emirates scores

highest, followed by China and more

surprisingly by Chile.

A range of Middle Eastern also countries

score well.

At the other end of the spectrum Nigeria,

Bangladesh and Tanzania suffer from very

poor connectivity.

160

140

120

100

80

60

40

20

0 Ind

ia

Bra

zil

UA

E

Russ

ia

Sau

di A

rab

ia

Turk

ey

Vie

tnam

Qat

ar

Mal

aysi

a

Cze

ch R

epu

blic

Mex

ico

Jord

an

Ukr

ain

e

Ind

on

esia

Ch

ile

Thai

lan

d

Egyp

t

Paki

stan

Sou

th A

fric

a

Om

an

Phili

pp

ines

Arg

enti

na

Peru

Co

lom

bia

Ven

ezu

ela

Alg

eria

Tan

zan

ia

Cam

bo

dia

Slov

akia

Oth

er

Figure 5: Connectedness Sub-Index Scores


3.1

1�


Figure 6 provides another way of displaying the

relative positions of the countries in the survey. The

chart is divided into four quadrants and countries

are plotted on axes of ‘Market Compatibility and

Connectedness’ (an average of their scores in both

these sub-indices) and ‘Market Size and Growth’,

with the size of the bubble denoting the size of the

opportunity.

Countries in the top right quartile are those

which represent the biggest targets for logistics

investment as well as the easiest markets in which to

operate; they already have good compatibility and

connections.

In the top left quartile are those countries which

represent smaller market opportunities, but are also

easily penetrated, such as the UAE.

The bottom half of the chart includes countries in

which there are signifi cant barriers to market entry

and diffi culties in operating. As these economies

become more mature, de-regulated and better

connected with the global markets, they will move

towards the upper quartiles.

China’s dominance as the most important emerging

market is obvious from the chart. Its size and growth

potential are massive, but it still has potential for

improvements in terms of ‘Market Compatibility and

Connectedness’. Clustered in the quadrant denoting

smaller markets, but with good prospects for market

penetration are several Middle Eastern countries

led, as can be seen, by the UAE. Larger markets, but

compromised by barriers to entry, include Pakistan

and Nigeria. Those with much less potential (except

on a niche basis) include Colombia and Kenya.

3.2 Emerging Markets Quadrant

Figure 6: Emerging Market Potential Quadrant

3.2


1�


4.0In December 2010, Ti undertook an electronic survey

to ascertain the prevailing views on likely future

logistics hotspots. 338 respondents took part in

the survey, representing a range of industries and

markets right across the world.

The following information supplements the Agility

Emerging Markets Logistics Index 2011, providing

additional evidence on logisticians’ perceptions

of which countries globally are more attractive

propositions as logistics markets.

Due to its sheer size and the level of developments

that have taken place, and are continuing to do so,

China has been left out of this study as the inclusion

of this leading market would skew any results.

4.0 Emerging Market Survey

17


4.1 Question 1 – With the exception of China, which markets will emerge as major logistics hubs?

The sample audience was asked to rate, from a list of

potential emerging markets, those they considered

would emerge as major logistics hubs in the future.

As can be seen below, the BRIC economies, which

have long been regarded as offering the most

potential to global logistics operators, continue to

dominate individuals’ thoughts.

However, surprisingly, the UAE was believed by

many respondents (10.7% of the total sample) to

represent a greater opportunity for 3PLs than Brazil.

This may be due to the country’s development as

both an import gateway for the GCC States as well

as an important transit hub for goods between Asia

and Europe / Africa.

Figure 7: Perceived Important Logistics Hubs of the Future

160

140

120

100

80

60

40

20

0 Ind

ia

Bra

zil

UA

E

Russ

ia

Sau

di A

rab

ia

Turk

ey

Vie

tnam

Qat

ar

Mal

aysi

a

Cze

ch R

epu

blic

Mex

ico

Jord

an

Ukr

ain

e

Ind

on

esia

Ch

ile

Thai

lan

d

Egyp

t

Paki

stan

Sou

th A

fric

a

Om

an

Phili

pp

ines

Arg

enti

na

Peru

Co

lom

bia

Ven

ezu

ela

Alg

eria

Tan

zan

ia

Cam

bo

dia

Slov

akia

Oth

er


4.1

18


If we look at the top ten markets ranked as potential logistics hubs of the future in greater detail, a couple of

further surprises emerge.

Figure 8: Top Ten Potential Logistics Hubs

140

120

100

80

60

40

20

0

Res

po

nd

ents

Ind

ia

Bra

zil

UA

E

Russ

ia

Sau

di A

rab

ia

Turk

ey

Vie

tnam

Qat

ar

Mal

aysi

a

Cze

ch R

epu

blic


Turkey has long been touted as a potential near-

sourcing market to serve the ever enlarging

European Union. The country already has strong

manufacturing bases in the automotive and clothing

/ textile industries, as well as having a direct land

link to the EU through the newest members,

Bulgaria and Romania. Likewise, Vietnam has been

called ‘China+One’, for some time, eluding to its

far cheaper cost base and the opportunities this

provides as an alternative manufacturing base. It

is, therefore, somewhat surprising that Saudi Arabia

is considered, by many, to represent a greater

opportunity than these.

This is, undoubtedly, due in part by its position as

the world’s leading oil producer but is also likely to

be affected by the wealth of much of the indigenous

population and their desire for western luxury

products.

Saudi Arabia is also developing six ‘economic cities’,

in an attempt to replicate the success witnessed

in Dubai. The largest of these will be the King

Abdullah Economic City which will comprise six key

components – a seaport, an industrial zone, a central

business district, a resort district, an educational

zone and residential communities. Once completed

the Economic City will be a hub for at least 2,700

manufacturing companies and the 13.8 sq km port

is estimated to emerge as one of the world’s top fi ve

largest industrial ports.

4.1

19


With the exception of the BRIC economies, the

Middle Eastern / North African region has attracted

most attention from the respondents, with 55% of

the sample identifying countries located within this

region as potential future logistics hubs.

In addition to the UAE and Saudi Arabia, mentioned

above, markets of interest in the region include Qatar

(possibly due in part to the recent development and

coverage of the successful World Cup bid), Jordan,

Egypt, Oman and Algeria.

Of these countries, Egypt is less of a surprise as it

possesses many of the characteristics required of a

developing nation. It has a large and predominantly

young population, largely located within a relatively

small geographic area (the Nile Delta). It acts

as both a growing consumer market as well as a

manufacturing hub for Europe and the Middle East

and is developing its infrastructure, particularly its

roads and ports, as well as dedicated logistics parks.

Figure 9: Regional Analysis


4.1

�0


4.2 Question 2 - Why are these countries considered to be important emerging markets?

The main reasons cited for countries emerging as

potential logistics hubs are highlighted below.

Economic growth is, by far, the predominant

factor with all of the countries listed in the top ten

experiencing higher than average growth rates.

Geographic location was also deemed an important

factor. India, for example, is seen as a preferable

manufacturing base for European and Middle Eastern

markets, having far less distance to cover than

Chinese exporters.

Figure 10: Factors behind Countries’ Emergence as Potential Logistics Hubs


4.2

�1


Looking at the factors affecting the top 3 markets

potential to be future logistics hubs it can be noted

that for the two BRIC economies (India and Brazil)

they are both dominated by economic growth,

although India is also believed to benefi t from its

location.

The UAE, on the other hand, is perceived to be

important due mainly to its geographic location.

Figure 11: Factors behind India’s, Brazil’s and UAE’s Emergence as Potential Logistics Hubs

120

100

80

60

40

20

0 Ind

ia

Bra

zil

UA

E

Economic growth

FDI

Growing population

Geographic location

Near sourcing market

Growing exporter


4.2

��


4.3 Question 3 - Which markets will offer the least opportunities for logistics companies in the next 5 years?

Pakistan was viewed, by far, as the least attractive

market, with concerns over security being the most

widely held.

Interestingly, Brazil, which was considered to be the

second most attractive market, also ranks as the

third least attractive potential logistics hub. Security

and poor infrastructure were cited as major issues.

It is obvious that this market polarises views – it is

attractive from the perspective of size and growth,

but not from the practicalities of doing business.

Figure 12: Least Attractive Markets as Logistics Hubs

50

45

40

35

30

25

20

15

10

5

0


4.3

�3


4.4 Question 4 – What factors do you believe prevent these markets from emerging as major logistics hubs of the future?

Looking at the factors affecting the three least

attractive potential logistics hubs, security was the

main concern for Pakistan and Brazil, while poor

infrastructure was an important factor for all three.

Interestingly, no respondents cited customs issues

as a negative factor, perhaps due to the large

dependence on local companies handling this activity

in many emerging markets.

Figure 13: Least Attractive Markets as Logistics Hubs

40

35

30

25

20

15

10

5

0

Security

Poor infrastructure

Corruption

Human rights issues

Ease of doing business

Difficult customes procecures

Geographical location

Government policies

Pakistan Bangladesh Brazil


4.4

�4


4.5 Question 5 - Which markets have you expanded into in the past 5 years?

India has witnessed the highest level of FDI in

the past 5 years, followed by Brazil, the UAE.

This correlates directly with question 1, which

investigated the markets believed to represent major

logistics hubs in the future.

Along with those companies expected to fi gure in

the top ten (India, Brazil, Russia and the UAE), the

near-sourcing markets of Turkey and Mexico have

been on the recent expansion list of companies.

Interestingly, Saudi Arabia, the surprise from

question 1, was also a target market for 21% of the

respondents.

Vietnam and South Africa have also experienced a

reasonable level of FDI recently.

Figure 14: Overseas investment in the past 5 Years (number of respondents)

140

120

100

80

60

40

20

0


4.5

The African nations of Ethiopia and Tanzania were among the least that had experienced FDI from the sample

audience, perhaps highlighting that these markets are not yet ready to exploit.

��


4.6 Question 6 - Which markets do you expect to expand into in the next 5 years?

As with past investments, India is the market that the

majority of the respondents expect to expand into

in the next 5 years, with the other BRIC countries

of Brazil and Russia, along with the UAE, also of

continued interest.

South Africa, Vietnam, Mexico and Turkey have also

been highlighted as areas on interest in the future.

Figure 15: Overseas investments anticipated in the next 5 years (number of respondents)

80

70

60

50

40

30

20

10

0


4.6

��


4.7 Question 7 - Which regions will emerge as the next major low cost manufacturing locations in the next 15 to 20 years?

Western China is believed by most respondents as

being the next low cost manufacturing opportunity.

This location is already starting to benefi t from

increases in the costs in coastal areas of China

with some manufacturers moving further inland.

However, poor infrastructure, particularly with regard

to roads, has impeded on the growth potential.

Developments of new roads and airports are

underway, attempting to link this region with the

eastern part of China but it is too early to determine

how effective these are.

South East Asia (including Vietnam, Thailand and

India) was also identifi ed as a major potential

manufacturing hub of the future. Vietnam and

India already compete with China as major global

manufacturing hubs, both having lower labour costs.

They also represent important consumer bases in the

future.

Although a number of nations are investing in Sub-

Saharan Africa, predominantly for its natural minerals

(China leading the way), the continent is some way

behind these other two regions and Latin America.

Figure 16: Future Potential Low Cost Manufacturing Locations (number of respondents)

140

120

100

80

60

40

20

0Sub-Saharan

AfricaSouth East

AsiaLatin

AmericaWestern

ChinaCISMiddle East

and NorthAfrica


4.7

�7


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 25,000 employees in 550 offices across 100 countries.

Agility’s commercial business, Global Integrated Logistics (GIL), is headquartered in Switzerland. Agility GIL

provides supply chain solutions to meet complex and traditional customer needs. GIL offers air, sea and road

freight forwarding, warehousing, distribution and specialized services in project logistics, fairs and events,

fuels and chemicals.

Agility’s unique collection of portfolio businesses includes Agility Defense & Government Services, a logistics

provider to governments, ministries of defense and international organizations. Agility’s Infrastructure group

of companies manages commercial and industrial real estate and offers solutions in customs optimization and

clearance, waste management and recycling, aviation services, remote infrastructure and life support.

For more information about Agility, visit www.agilitylogistics.com/emergingmarkets

Ti is one of the world’s leading providers of expert research and

analysis dedicated to the global logistics industry. Utilising 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 and Transport Intelligence

If you have any feedback on this Index please do not hesitate to get in touch with us by any of the

following means:

Telephone: +44 (0)1�� 19900

Email: [email protected]

Web: www.transportintelligence.com

�8


All rights reserved. No part of this publication may be reproduced in any material form including photocopying or storing

it by electronic means without the written permission of the copyright owner, Transport Intelligence Limited.

This report is based upon factual information obtained from a number of sources. Whilst every effort is made to ensure

that the information is accurate, Transport Intelligence Limited accepts no responsibility for any loss or damage caused by

reliance upon the information in this report.

Documents

Agility Emerging Markets Index - WordPress.com · Agility Emerging Markets Logistics Index 2011 3.0 Analysis and results of the index China, the largest economy in the survey, retained