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Nearly 70% of logistics executives see a 2023 global recession amid higher costs, slowing demand, and supply chain disruption
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11% say the manufacturing footprint in China is the same as before COVID
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China and India topped the latest domestic and international logistics index
Nearly 70% of global logistics executives see a 2023 recession as certain or likely in 2023 amid higher costs, slowing demand, and supply chain disruption arising from China’s battle to contain COVID, Russia’s war in Ukraine, and the impact of climate change, according to Transport Intelligence (Ti), which conducted the survey.
Of the 750 industry professionals surveyed for the 2023 Agility Emerging Markets Logistics Index, 66.4% are bracing for a recession this year. This number increased by 6 percentage points in December from October 2022. The forecast comes amid sharp growth slowdowns across the largest economies.
The index is compiled by Ti Insights, a leading analysis and research firm for the logistics industry.
About 90% of those surveyed also say their shipping, storage and other logistics costs remain well above the pre-pandemic levels in early 2020.
The survey and the Agility Emerging Market Logistics Index make up the contents of Ti Insight’s 14th annual snapshot of industry sentiment and ranking of the world’s 50 leading emerging markets. The Index ranks countries for overall competitiveness based on their logistics strengths, business climates and digital readiness — factors that make them attractive to logistics providers, freight forwarders, air and ocean carriers, distributors and investors.
China topped the index.
The survey revealed that 17% of respondents that have moved production/sourcing activities have chosen China as their alternative destination. Only 11% of the respondents say their company’s manufacturing footprint is the same as before COVID.
Asia Pacific remains the most attractive global manufacturing hub, with 23.1% of respondents making their products in the region over the past decades, driven by steadily increasing investment flows and GDP growth, results of the survey conducted by Transport Intelligence showed.
Some 13.6% of respondents said their firms will move production or source activities to Southeast Asia while 13.4% said they consider India as the most attractive relocation site.
The survey showed 42.3% of respondents believe that air freight rates will normalize in 2023, although at higher levels than pre-COVID; in contrast, 46.8% said they think that sea freight rates will normalize this year, but at higher levels than before COVID.
“Carriers and shippers are feeling the effects of higher energy prices, tight labour markets and broader inflation even though freight rates have fallen and ports have cleared cargo backlogs,” said Agility vice chairman Tarek Sultan.
“Three years after the start of the pandemic, there is still a lot of volatility in supply chains. Now there’s fresh uncertainty as consumers and businesses pull back on spending and hiring.”
John Manners-Bell, founder of Ti Insights and data platform GSCi, said, “It is not possible to overstate the challenges faced by emerging market countries in the past couple of years.
“Geo-political tensions have combined with financial uncertainty and the lingering effects of the pandemic to create an ever more complex business and investment environment. The role that the Agility Emerging Market Logistics Index plays in providing insight into this volatile and uncertain environment landscape is more critical than ever.”
China and India, the world’s two largest countries, held their spots at No.1 and No.2 in the overall rankings. UAE, Malaysia, Indonesia, Saudi Arabia, Qatar, Thailand, Mexico and Vietnam rounded out the top 10. Turkey, No. 10 in 2022, dropped to 11th.
No. 24 South Africa and No.25 Kenya were highest among countries in Sub-Saharan Africa.
Arabian Gulf countries UAE, Qatar, Saudi Arabia and Oman again offered the best business conditions. Malaysia, the 4th best environment for business, was the only non-Gulf country in the top 5.
China and India were tops for domestic and international logistics. India jumped four spots to No. 1 in digital readiness, followed by UAE, China, Malaysia and Qatar.
Farther down, there was more volatility in the rankings than in any prior year of the Index. Conflict, sanctions, political tumult, economic missteps and continued COVID fallout damaged the competitiveness of Ukraine, Iran, Russia, Colombia, Paraguay and others.
Leaping forward in certain categories are Bangladesh, Pakistan, Jordan, Sri Lanka and Ghana.
2023 index highlights:
- In the Middle East and North Africa, overall rankings were: UAE (3); Saudi Arabia (6); Qatar (7); Turkey (11); Oman (12); Bahrain (14); Kuwait (15); Jordan (16); Morocco (20); Egypt (21); Tunisia (32); Lebanon (33); Iran (36); Algeria (41); Libya (50).
- Rankings in Sub-Saharan Africa: South Africa (24); Kenya (25); Ghana (29); Nigeria (34); Tanzania (37); Uganda (43); Ethiopia (45); Mozambique (46); Angola (48).
- Overall Index rankings in Asia: China (1); India (2); Malaysia (4); Indonesia (5); Thailand (8); Vietnam (10); Philippines (18); Kazakhstan (22); Pakistan (26); Sri Lanka (30); Bangladesh (35); Cambodia (38); Myanmar (49).
- Rankings for Latin America: Mexico (9); Chile (13); Brazil (19); Uruguay (23); Peru (27); Colombia (28); Argentina (31); Ecuador (39); Paraguay (40); Bolivia (44); Venezuela (47).
- In Europe: Russia (17); Ukraine (42).
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