India the ‘darling’ emerging market, Agility Index finds

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The Agility Emerging Markets Logistics Index 2017 has ranked China as top once again while India is seen as having the “most logistics potential” ranking in second, up one place from last year.

Analysis and research firm Transport Intelligence (Ti), compiled the Index, which says India was an “Index darling for the second consecutive year”, while India and China remain the top two emerging markets due to their size and dynamism.

In the survey of more than 800 supply chain industry executives, India was the leading pick as an investment destination, which Agility says is an indication of the enthusiasm generated by some of the reforms undertaken by the Modi government.

However, looking into 2017, there is uncertainty as a result of the government’s surprise decision in November to take 500-rupee and 1,000-rupee bank notes out of circulation.

The Index says that move will undoubtedly be jarring in the immediate term for a society where use of mobile payments, credit cards and other cashless forms of payment is not widespread.

The UAE is third in the Index, Malaysia is in fourth spot and is the top Southeast Asia country, in fifth is Saudi Arabia, sixth is Indonesia, seventh is Brazil, eighth is Mexico, ninth is Turkey and rounding out the top 10 is Russia.

The biggest mover in the index is Iran in 18th place and up eight places, while the biggest emerging market faller in the Index is Nigeria in 24th spot, down nine places.

The Index found big geopolitical events across the globe have an impact on emerging markets and emerging markets remain “essential area for growth and investment despite global realities”.

And 24 out of the 50 countries in the Index – including seven of the top 10 – experienced a year-over-year deterioration in their Index scores, “reflecting stagnation in global trade growth and turbulence in emerging markets”.

Emerging market growth was 4.1 per cent in 2016, the first rise in five years and it is forecast to reach 4.6 per cent in 2017.

Agility Global Integrated Logistics chief executive officer, Essa Al-Saleh says logistics providers and their customers are concerned that anti-globalization feeling and populist policies in the UK and United States could spread and harm trade in emerging markets that rely heavily on exports.

“Emerging markets continue to deliver the highest growth rates in the world, but as links in the global supply chain, countries can be extremely hard to evaluate,” Al-Saleh says. “The Index and the survey are useful when it comes to identifying the relative strengths and weaknesses of individual markets.”

Ti chief executive, John Manners-Bell adds: “Uncertainty and volatility have characterized many emerging markets in 2016. This has been compounded by the political environment in Europe and the US, which will have direct consequences on trade with Latin America, Asia and Africa. However there have been many positives too – for example, the strong performance of India. More than ever, the Index identifies and contrasts those markets which will prosper from the most vulnerable and poorest performing.”

As for airfreight specifically, the Index says the busiest emerging markets airfreight lanes originating in the European Union (EU) or US tend to connect to larger markets in the Index: China, UAE, India, Mexico, Turkey, Saudi Arabia, Brazil and South Africa, but volume growth along these lanes in 2016 appears to be “subdued”.

Only EU-India is likely to show double-digit growth (forecast 10.5 per cent), with the next best being EU-Mexico (7.6 per cent).

For all other lanes in the top 10, growth is expected to be in the low single digits or negative. EU air shipments to emerging markets are on pace to decrease by 1.8 per cent for 2016, while US air shipments to those same markets look set to shrink by 6.3 per cent.

For airfreight from emerging markets flowing in the other direction – from markets to the EU and US – the picture is mixed and the two busiest lanes, exports to the EU in 2016 are being propped up by China-EU growth of 4.8 per cent; and exports to the US are being hamstrung by a 10.5 per cent decline in China-US volumes.

And the Index forecasts indicate airfreight shipments from the 50 emerging markets countries to the EU will increase 3.3 per cent, but shipments to the US will decline by 6.2 per cent.

The Index, in its eighth year, ranks emerging markets countries by factors that make them attractive to logistics providers, freight forwarders, shipping lines, air cargo carriers and distributors.