Respondents foresee that among emerging market regions, only Asia Pacific is likely to recover during this year
Vietnam, India and Indonesia lead relocation choices away from China, followed by Thailand and Malaysia
Just 7.8% of industry executives would re-shore production to home countries
Sixty percent of logistics executives said the pandemic has permanently changed the way their businesses operate globally or regionally
Global economic recovery from the Covid-19 pandemic is farfetched for this year and is more likely to happen by 2022, according to the latest Agility Emerging Markets Logistics Index survey findings.
Supply chain industry executives surveyed for the index—which ranks 50 of the world’s most promising emerging logistics markets—hold little hope for a global recovery this year, and more than half of those surveyed (51.5%) said it will be at least 2022 before the global economy is back on track, said Transport Intelligence (Ti).
Ti has compiled and published the logistics index annually in partnership with logistics company Agility for more than a decade.
The over 1,200 survey respondents also foresee that amongst emerging market regions, only Asia Pacific is likely to recover during this year. In fact, most respondents believe it could be 2024 before the South American and Sub-Saharan African markets recover.
China and India once again claimed the top ranking positions in the index, which gauges countries’ competitiveness based on the strength of their domestic and international logistics market and business fundamentals.
In 2021, Vietnam emerges as a top performer, having effectively suppressed the spread of Covid-19 and maintained its attractiveness as an investment destination. Vietnam leaped to No. 8, up three spots, as Asia Pacific and Gulf markets dominated the top 10.
The top 10 in this report’s ranking are (from first place to tenth): China, India, Indonesia, UAE, Malaysia, Saudi Arabia, Mexico, Vietnam, Qatar and Turkey.
Among ASEAN member countries, Thailand is in 11th place, Philippines is No. 21, Cambodia, No. 41, and Myanmar, No. 46.
Other survey highlights:
- Vietnam, India and Indonesia are the leading choices for relocation away from China, followed by Thailand and Malaysia. Just 7.8% of industry executives would re-shore production to home countries
- Despite the caution, the global downturn has the logistics industry feeling opportunistic—if not optimistic about emerging markets. Fifty-two percent of respondents said they plan to increase business activity in emerging markets or are expressing more confidence in those markets.
- There has been a considerable shift in the factors driving emerging markets investment. Nearly half (45.5%) of survey respondents indicate that overall cost is a top consideration—but only 2.2% assert that low-cost labor is a key factor in assessing emerging market investment opportunities.
- After total cost, the most important factors are government bureaucracy and regulation (25.8%), infrastructure quality (14.1%), and supply of skilled labor (8%). Moreover, as companies examine new production locations, their biggest concerns are insufficient infrastructure and additional cost.
- Logistics executives felt disruption across the entire supply chain in 2020. Significant percentages say they have struggled to cope with port congestion, transportation capacity, supplies of parts and inputs, distribution and delivery, maintaining international operations, and storage.
- Sixty percent of the logistics executives said the pandemic has resulted in permanent changes to the way their businesses operate globally or regionally. About 25% said it was too soon to tell.
- Logistics executives are trying to build more resilient supply chains by accelerating adoption and integration of technology plus enhanced digital business (40.3%). About 20.9% are looking to move production through multi-shoring, near-shoring or re-shoring strategies.
- The online retail and healthcare/pharma sectors are expected to see extremely strong growth in 2021. The automotive, store-based retail and industrial sectors will struggle.
- The sustainability movement is proving to be durable. Twenty-seven percent of executives surveyed said their companies are boosting implementation of environmentally sustainable practices in the wake of the pandemic. Another 45.9% said their plans are unchanged, suggesting no plan to retreat from sustainability commitments.