Home » 3PL/4PL, Aviation, Breaking News, Maritime » Global logistics execs see recession as ‘likely’ in 2020—Agility logistics index

Following a rough year in logistics and shipping, nearly two-thirds of global supply chain executives surveyed say global recession is “likely” or “very likely” this year, according to the Agility Emerging Markets Logistics Index 2020.

Recession is the top concern for a solid majority of survey respondents as the world “faces a tempestuous economic scene” in 2020, said the survey report conducted by logistics company Agility and industry research and analysis service provider Transport Intelligence (Ti).

During 2019, global trade growth slowed to an estimated 1.1%, the lowest level since the 2008-09 financial crisis, even as a number of factors are combining to weigh on prospects as the new decade begins: Tariffs and tensions between the world’s largest consuming and producing nations; an anemic European Union economy; slowdowns in key developed and emerging economies; and social and political unrest are just some of the factors causing concern for leaders across the logistics industry.

Of the 780 logistics industry professionals surveyed by Ti between October and December 2019, 64% said “a global recession is ‘likely’ or ‘very likely’ in 2020.”

“Downward pressure on global trade volumes, uncertain growth prospects and the ongoing trade war between the US and China are driving this belief,” the report said.

“Logistics industry professionals said a ‘slowdown in the global economy’ is the most significant threat to emerging markets over the next five years. Emerging markets are expected to suffer as much as developed markets should a global recession take hold this year,” it added.

The US has imposed tariffs on more than US$360 billion of Chinese goods, and China has retaliated with tariffs on more than $110 billion of US products.

This is contributing to slower trade growth, noted the report. In the first nine months of 2019, US exports to China are down 15.5% compared with the same period a year ago, a bigger drop than the 13.5% fall for Chinese exports.

Yet despite this uncertainty, a commanding majority (70%) said their operations or investment plans in China have not changed due to the Trump administration’s trade war, the report said. Another 10% said they have actually expanded their operations in China.

The worst shocks from the trade war may have passed—industry professionals said they expect a reduction of about 4% in trade volumes between the US and China as opposed to respondents last year saying there would be a 10.4% decline in trade volume.

If businesses are going to relocate from China, Vietnam and India are the most likely investment destinations, according to 48% of those surveyed. Mexico and Cambodia were the lowest rated relocation options amongst survey respondents.

Compared to last year, fewer survey respondents believe that Southeast Asian countries that both feed Chinese supply chains and compete with China’s manufacturing sector will benefit overall as a result of US-China trade tensions. A combined 58% of those surveyed believe either that the positive and negative effects will cancel each other out or that Southeast Asian countries will suffer overall.

Rising trade barriers and protectionist trade policies are creating concerns over the future of global trade. One fifth (19.7%) of those surveyed see additional trade barriers as the most important inhibitor of emerging market trade growth, as the future of the global trading system is under more scrutiny than at any point in at least three decades.

In order to boost growth prospects, survey respondents implore emerging markets to modernize customs and trade systems, while also encouraging the development of skills that will prepare the workforce for the coming era of digital supply chains.

Photo by sergio souza on Unsplash


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