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Despite its growing trade and economic problems, China continues to lead the top emerging logistics markets, as improvements in core strengths across domestic and international logistics opportunities offset some declines in business fundamentals, according to the newly released Agility Emerging Markets Logistics Index 2020.

The new report said that despite economic uncertainty and trade disruption as a result of its trade war with the US, China continues to lead the way, supported by its distinct structural advantages.

“The scale, capacity and capability [that] China has developed so rapidly over the last several decades have combined with a vast and increasingly rich population to produce high levels of resilience to the effects of the trade war,” said the survey report published by global logistics company Agility and supply chain market researcher and analyst Transport Intelligence (Ti).

“China maintains particular strength in the international logistics opportunities sub-Index, which propels its overall performance. The market’s export-oriented manufacturing sector remains a global leader while favourable import policies are helping to fuel consumer demand for international brands, resulting in high inbound e-commerce growth,” the paper continued.

In second place is India, which may be in for a tough year as it faces several challenges, including faltering growth, slumping automotive sector, and falling consumer lending amid slowing global economic growth.

“The challenges appear manageable, however, with analysts calling the credit squeeze ‘cyclical’. While 2020 may be another tough year, medium- and long-term prospects remain bright,” said the report.

Bringing up the rest of the Top 10 are UAE, Indonesia, Malaysia, Saudi Arabia, Qatar, Mexico, Thailand, and Turkey.

Indonesia’s large domestic market drives its performance in the Index, as its large population helps to create the second biggest domestic express market among the 50 Index countries, second only to China. The market has been lifted by investments from Chinese e-commerce companies, although it remains stifled by creaking infrastructure, inefficiencies and high logistics costs. A growing consumer segment in the country is also advancing demand for contract logistics provision.

“The World Bank estimates one fifth of Indonesia’s 264 million inhabitants can now be categorised as middle-class and retailers are seizing upon this market,” said the report.

Thailand has entered the top 10 of the Index for the first time, rising two spots this year. Growth in the domestic logistics opportunities sub-Index is driven by relatively high express and contract logistics market growth, showing a healthy degree of resilience to regional trade uncertainty. In fact, both Thailand’s contract logistics and domestic express markets are close to double the size of Vietnam’s, the market displaced by Thailand’s move up the rankings.

Thailand, ASEAN’s second largest economy, has seen strong growth in recent years, with GDP increasing by $100 billion since 2015. Steadily rising incomes in the country and a rapidly urbanizing population have further spurred demand for consumer goods and e-commerce expansion is solid. The Thai population is one of the most connected in the region, with 57 million online, helping to drive demand for fulfillment and last mile services.

Moreover, recent investments from global automotive manufacturers including BMW, Honda, Nissan and Toyota have powered growth in an air freight market that was already one of the largest in the region.

Among emerging countries in Asia, Vietnam is in 11th place, the Philippines in 22nd, Sri Lanka in 34th, Cambodia in 41st, and Myanmar in 47th spot.

The Agility Emerging Markets Logistics Index 2020 also reveals the highly integrated position of emerging markets in the global economy and the extent to which that integration leaves them vulnerable to changes in macroeconomic trends and policy decisions of global partners. For each market subject to sanction or increased trade barriers, the Index reveals how others find new opportunities for growth.

The Agility Emerging Markets Logistics Index 2020 presents a data-driven analysis of 50 of the world’s most promising emerging logistics markets, reflecting the complexity, connectedness and opportunities each market provides.

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