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Agility Emerging Markets Logistics Index2017

Agility Emerging Markets Logistics Index 2017

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Contents

2

Section 1: The Agility Emerging Markets Logistics Index 4

Section 2: Sources 7

Section 3: Methodology 8

Section 4: Key Findings 11

EmergingMarkets:HowLogisticsExecutivesSeeThem 11

MarketsontheMove 12

TradeLanes 15

Section 5: The 2017 Agility Emerging Markets Logistics Index 17

OverviewandOutlook 17

TheTop10 21

ChangesOutsidetheTop10 28

The2017Index 32

EmergingMarketsQuadrant 43

Section 6: Emerging Market Trade Lanes 45

TradebyAir 50

TradebySea 60

Section 7: The 2017 Agility Emerging Markets Logistics Survey 72

PerceivedMajorLogisticsMarketsoftheFuture 73

FactorsbehindthePotentialEmergenceofMarkets 75

ProblemsAssociatedwithDoingBusinessinEmergingMarkets 76

SupplyChainRisk 78

LeastAttractiveEmergingLogisticsMarkets 82

ProspectsforEmergingTradeLanes 84

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Contents

VerticalSectors 85

MarketsforPotentialInvestmentovertheNextFiveYears 88

PerceivedEffectofChina’sEconomicSlowdownontheTransportation&LogisticsMarket 90

StrategiesforSub-SaharanAfrica 92

Sub-SaharanAfrica’sMostPromisingMarkets 93

DriversbehindtheEmergenceofSub-SaharanAfrica’sEmergingMarkets 95

StrategiesforIndia 97

BarrierstoGrowthinBrazil 98

MostSignificantDriversintheGlobalEconomy 99

TheFutureofFreeTrade 100

CommodityPriceDevelopment 101

ProspectsforEmergingMarketGrowth 102

Section 8: About Agility and Transport Intelligence 104



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The Agility Emerging Markets Logistics Index

Essa Al-Saleh, CEO & President Agility Global Integrated Logistics (GIL)

Summary:

•Biggeopoliticaleventsacrosstheglobehavean

impactonemergingmarkets

•EMsremainanessentialareaforgrowthand

investmentdespiteglobalrealities

•China,IndiaremaintheleadingcountriesontheIndex

giventheirsizeanddynamism

•MorethaneverAgilityEMIndexhelpsclearthefogon

EMdynamics.

TheUKBrexitvoteandtheUSpresidentialelection

broughtatorrentofspeculationabouttheireffecton

emergingmarkets.TypicalwasaBloombergNews

headline:“EmergingMarketWinnersandLosers

afterTrump.”Thereisnothingwrongwiththatsortof

analysis.Biggeopoliticaleventsinevitablyripplethrough

emergingeconomies,affectingportfolioflows,interest

rates,exchangerates,commodityprices,manufacturing

demandandforeigndirectinvestment,amongother

things.

John Manners-Bell, CEO Transport Intelligence

Thegrowthofemergingmarketshasoverthepastfew

decadesbeenpredicatedontheirintegrationwiththe

consumermarketsoftheWest.Foryearsthisrelationship

hasgoneunchallenged,withconsumersenjoyinglower

pricesanddevelopingmarketsbenefitingfromjobs

andrisinglevelsofdisposableincome.Yet,theimpact

ofglobalisationhasnotbenefitedeveryone.Fears

havegrownoverthelossofjobsinEuropeandtheUS,

particularlytoAsia,andbubblingresentmentfinally

manifesteditselfinpoliticalchangein2016.

Potentiallythiscouldhavesignificantconsequencesfor

thefutureofemergingmarkets.Growingprotectionism,

especiallyintheUS,couldhindereconomicdevelopment

inregionssuchasAsiaandLatinAmericainparticular.

LongatargetofthenewTrumpadministration,theTrans-

PacificPartnershipagreement(involvingtheUSand

manyotherAsiancountries)isregardedasalreadydead

inthewaterandspeculationisrifethatUScompanies

whichinvestabroadcouldbesubjecttopunitivetaxation.

Takingastepbackandassessingwhathastranspiredin

One



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Butforcompaniesfocusedonemergingmarketsover

thelongterm,instantanalysisisnosubstituteforcloser,

morecarefulexamination.Companiesthatarelooking

atindividualmarketsorweighingtherelativemeritsof

differentdevelopingeconomiesshouldfindthe2017

AgilityEmergingMarketsLogisticsIndexusefulfor

perspective,contextandinsights.

Thisisthe8thyearwehaveproducedtheIndexin

partnershipwiththeleadinglogisticsresearchfirm

TransportIntelligence.WiththeadditionthisyearofIran,

Myanmar,Ghana,AngolaandMozambique,theIndex

hasgrownto50countries.Weputoffplanstoadda

sixthnewmarket,Cuba,despitetheexcitementabout

itsprospectsandpotential.Fornow,thereisashortage

ofsounddatafromtrustedsourceswhenitcomesto

Cuba’seconomyandinfrastructure.

IndiaisanIndexdarlingforthesecondconsecutiveyear.

Inoursurveyofmorethan800supplychainindustry

executives,Indiawastheleadingpickasaninvestment

destination,anindicationoftheenthusiasmgenerated

bysomeofthereformsundertakenbytheModi

government.InthedataportionoftheIndex,robust

economicgrowthpropelledIndiatotheNo.2spot

overallbehindonlyChina.Lookinginto2017,however,

thereisuncertaintyasaresultofthegovernment’s

surprisedecisioninNovembertotake500-rupeeand

1,000-rupeebanknotesoutofcirculation.Thatmove

willundoubtedlybejarringintheimmediatetermfora

societywhereuseofmobilepayments,creditcardsand

othercashlessformsofpaymentisnotwidespread.

Twocountriesemergingfrominternationaleconomic

isolation–IranandArgentina–performedwellinthe

2017Index.TransportIntelligencecalculatedaprior-

yearscoreforbothcountriesinordertoofferabasis

foryear-on-yearcomparison.Theresultswerestartling:

IndexnewcomerIranranked18th,whichwouldhave

meantayear-on-yearleapofeightspotsintherankings.

Argentina,whichistryingtore-integratewiththe

globaleconomyafterturningitsbackoninternational

creditors,climbedthreespotstoNo.28.Elsewhere,

Bahrain,damagedbysectarianunrestinrecentyears,

appearstohavebenefittedfromrecentstability:itrose

fivespotsto23rd.Africa’slargesteconomies,Nigeria

andSouthAfrica,performedpoorlythisyear,tumbling

lowerintheIndexamidpoliticaluncertaintyandlow

pricesforoil,mineralsandothercommodities.Smaller

theyeargoneby,itseemsappropriatetodescribe2016

asachallengingyearforemergingmarkets.

China’seconomyisstilltrendingdownfromthe

historicgrowthratesseenoverthelasttwodecades,

withanalystsconcernedaboutbothofficialgrowth

numbersandtherateatwhichtheeconomy’stransition

isprogressing.Thefortunesofemergingmarkets

worldwideremainboundupwithChinatoo,inLatin

Americawherecommodityexportdependantmarkets

likeBrazil,ChileandPerusendbetween15%and25%of

alltheirexports,forexample.

Otherdriversofuncertaintyincludeoilprices,with

lowerrevenuespromptingawiderangeofoutcomes.

InVenezuela,aneconomyalmostentirelydependent

onincomefromitsoilsectorhaseffectivelygroundto

ahalt,whileinSaudiArabia,wide-rangingeconomic

transformationplanshavebeenintroducedalongsidethe

removalofsubsidies,oneofthekeymechanismsthrough

whichtheKingdomsharedoilwealthwithcitizens.

Inaddition,emergingmarketcurrenciesremain

vulnerable.Lesscertaintythatemergingmarketswill

sustainrapidgrowthratesasdemandfortheirexports

declinehasbeenmatchedwiththeloomingspectreof

interestraterisesintheUS.Vastsumsofcreditmade

availabletoemergingmarketsduringthe2000sis

denominatedinUS$.Weakercurrenciesmeannotonly

thatrepaymentsaremoreexpensive,butcapacityto

investineconomicdevelopmentisreduced.

Inawidercontext,emergingmarketsmustdealwith

theseissuesagainstabackdropofslowingglobal

growth.FiguresfromtheIMFindicatethat2016willbe

thefifthconsecutiveyearwithglobaleconomicgrowth

belowitslong-termaverageof3.7%,anditsprojections

suggest2017willbethesixth.Moreover,thereisthe

addedpressureofaslowdowninglobaltrade.WTOdata

predictsthat,forthefirsttimein15years,tradegrowth

willbeslowerthaneconomicgrowth.

While,inaggregate,thesechallengeshavecontributed

toaslowdownineconomicgrowthmorewidelyacross

emergingmarkets,notallarestruggling.Indiahasseen

boominggrowthofmorethan7%inrecentyears,with

vastdemographicadvantagessettocoincidewith

reforms,suchasthelong-awaitedGoods&Services

Tax,thatlookssettointroduceefficienciesandunlock

valueinthemarket.Iran,too,onthebackofre-



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Africaneconomies–Uganda,TanzaniaandEthiopia–all

improvedtheirIndexrankingssignificantly.

Brazilheldsteadyintherankings,butinthesurvey,

industryexecutivesputblameforitsrecenteconomic

woessquarelyon“poorgovernance.”Inashortspan,

BrazilhashostedtheWorldCupandtheOlympics,and

witnessedthehistoricimpeachmentofPresidentDilma

Rousseff–allofwhichtookplacewiththecountryin

recession.Investorsandsupplychainprofessionals

areeagertoseegrowthandstabilityrestoredinLatin

America’slargesteconomy.

The50Indexcountriesarerankedbyweightedsets

offactors.Thefactorsusedtocalculatemarketsize

andattractivenessaccountfor50%;infrastructureand

transportconnectionsprovidea“connectedness”score

weightedat25%;“compatibility”dataofferapictureof

theoverallbusinessandtradeclimate,andalsocountfor

25%.Twenty-fourofthe50countriesinthisyear’sIndex

experiencedyear-to-yearerosionintheiroverallscores.

It’sunclearwhetherthatisananomalyorthestartofa

trend,butit’sworthwatching.

TheIndexandsurveyofferasnapshot,alookathow

these50countriesstackupagainstoneanother

inthedataandasenseofsentimentaboutthem

amonglogisticsindustryexecutives.TheIndexisnot

meanttotaketheplaceofin-depthmarketresearch

intoanemergingmarket.Norwillitsubstitutefor

longconversationsandcarefulscrutinyofpotential

commercialandgovernmentpartners.Evenso,we

believeitwillproveusefultocompanieslookingfor

adeeperunderstandingoftheworld’smostvibrant

markets–andtherisksandrewardsthatawaitthere.

Thankyouforreading.

emergenceontotheglobaleconomylookssettoprovide

significantopportunitiestothelogisticssectoroverthe

nextfewyears.Thecountry’ssizeableandrelatively

wealthypopulation,aswellasitsoil&gassectorand

manufacturingbase,willbenefitfromrenewedinterest

ininvestment.Indeed,Iranlookssettobecomeamajor

subjectonboardroomagendasacrossthelogistics

industry–inthedata-drivenIndex,thecountryentered

thetop20forthefirstevertimethankstoariseofeight

rankingpositions,thehighestofanyofthe50markets

assessedthisyear.Iranalsoenteredthetop10emerging

marketswiththemostpotentialtogrow,accordingto

surveyrespondents,andbecametheemergingmarket

withtheeighthmostplannedinvestments.

Overall,emergingmarketsretainmuchofthecapacity

forgrowthandthedynamismwithwhichtocreateand

capturevaluethatmuchoftheinvestmentinthemwas

builton.Intheyearahead,though,apotentmixof

challenges,downwardpressuresandrisksthreatensto

revealwhichemergingmarketshavefoundationsbuilton

sand.



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Sources

TheAgilityEmergingMarketsLogisticsIndexhasthree

maincomponents.FirstistheIndexcountryrankings,a

lookatthecompositescoresofthe50Indexcountries

basedonacombinationoftheirmarketsizeand

attractiveness;marketcompatibilityoroverallbusiness

climate;andmarketconnectednessortransport

infrastructureandcustoms/borderefficiency.Second,

isanexaminationbyvolumeandmodeoftransport

ofmajortradelaneslinkingemerginganddeveloped

markets.Thirdisasurveyoftradeandlogisticsindustry

professionals.

DatafortheIndexcountryrankingscomesfromthe

InternationalMonetaryFund,OrganizationofEconomic

CooperationandDevelopment,WorldBank,government

statisticalagencies,UnitedNationsandUNagencies,

WorldEconomicForum,InternationalTradeCentreand

InternationalAirTransportAssociation.

TradelanedatacomesfromtheUnitedStatesCensus

BureauandEurostat.

Two



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Methodology

Definition of ‘Emerging Markets’

Theterm‘emergingmarkets’wasfirstcoinedbythe

WorldBank’sInternationalFinanceCorporation(IFC)in

1981.Accordingtoitsdefinition,anemergingmarketis

acountrymakinganefforttoimproveitseconomywith

theaimofreachingthesamelevelofsophisticationas

nationsdefinedas‘developed’.Anemergingmarketis

furthercharacterisedbytheIFCasmeetingatleastone

ofthetwofollowingcriteria:

1.Itisalowormiddleincomeeconomy,asdefinedbythe

WorldBank

2.Itsinvestablemarketcapitalisation(IMC)islowrelative

toitsmostrecentGrossDomesticProduct(GDP).

The Agility Emerging Markets Logistics Index

TheAgilityEmergingMarketsLogisticsIndexusesthree

metricstoassessandrank45emergingmarkets.The

metricsmeasurethecountries’:

•MarketSize&GrowthAttractiveness(50%ofoverall

Indexscore)

•MarketCompatibility(25%ofscore)

•MarketConnectedness(25%ofscore).

MarketSize&GrowthAttractiveness(MSGA)ratesa

country’seconomicoutput,itsprojectedgrowthrate,

financialstabilityandpopulationsize.

MarketCompatibilityratesemergingmarketsaccording

totheirmarketaccessibilityandbusinessregulation,

foreigndirectinvestment(FDI),marketriskandsecurity

threats,aswellastheleveloflikelydemandforlogistics

servicesbasedonthecountry’seconomicdevelopment.

MarketCompatibilityisablendof:

•Acountry’sdevelopmentthroughtheimportanceofits

servicesector–indicativeofthelevelofoutsourcingof

logisticsservices

Thre

e



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•Urbanisationofpopulation–adriverofmanufacturers’

centraliseddistributionstrategiesandthelikely

consolidationofretailing

•Distributionofwealththroughoutthepopulation–

indicativeofthewidespreadneedforhighervalue

goodsoftenproducedbyinternationalmanufacturers,

asmeasuredbytheGiniIndex

•ForeignDirectInvestment(FDI)–anindicatorofthe

penetrationofaneconomybyinternationalcompanies

•Marketaccessibility–howeasyitisforforeign

companiestoenterthemarketanddealwithexisting

bureaucracyandregulation

•Security–thismeasurestherisktocompanies’

operationsfromthreatssuchastheft,piracyand

terrorism.

MarketConnectednessassessesacountry’sdomestic

andinternationaltransportinfrastructureandhowwell

theyconnect.

Specifically,thisinvolves:

•Thefrequencyandrangeofdestinationsofitsliner

shippingconnections

•Thelevelofairportinfrastructurerelativetothemarket’s

size

•Aratingofitsoveralltransportinfrastructure

•Aratingoftheefficiencyofitscustomsandborder

controls.

The Agility Emerging Markets Logistics Index for Countries with GDP more/less than US$300bn

GDPismeasuredincurrentUS$.GDPdatahasbeen

obtainedfromtheWorldBank.

New Countries in Agility Emerging Markets Logistics Index 2017

Thisyear’sAgilityEmergingMarketsLogisticsIndex

hasbeenexpandedto50countrieswiththeaddition

offivemarkets:Iran,Ghana,Myanmar,Angolaand

Mozambique.

AsIranemergesfrominternationalisolation,theglobal

logisticsindustryhastakenmuchinterestinthecountry,

nowwidelyregardedasanemergingmarketoffering

significantopportunities.Myanmarhasalsogarnered

greaterinterestfromlogisticsprovidersinrecentyearsas

anumberofmajorLSPshaverampeduptheiroperations,

manyestablishingtheirownofficesthereforthefirst

timeratherthanusingagents.ThethreeAfricanmarkets

ofAngola,GhanaandMozambiquewereaddedinpart

togivesub-SaharanAfricaagreaterpresenceinthe

Index.Thoughtheyarealsointerestingmarketsintheir

ownright:Angolaisoneofthelargesteconomiesinthe

regionthankstoitsoilwealth,Ghanaisalsoasizeable

economywithconsiderablemineralandoilriches,while

MozambiqueisvyingwithKenyaandTanzaniatobecome

aregionalhubinEastAfrica.Cubawasalsoconsidered

forpossibleinclusioninthe2017Index.Transport

IntelligenceandAgilitydecidedagainstaddingCuba

untilthereismorereliabledataontheCubaneconomy,

infrastructure,customsregimeandbusinessclimate.

Restatement of 2016 Index Data

Withtheinclusionofthefivenewcountries,Indexscores

andrankingsfor2016havebeenrestated.Thisisbecause

themodelhasanelementofrelativescoringtoit.Inother

words,foreachmetric,wheneveranewcountryisadded

totheoverallgroupofcountriesbeingexamined,the

scoresofalltheothercountrieschange.

Thismethodidentifiesimportantdifferencesbetween

emergingmarkets.ConsideracomparisonofGDPin

absoluteandrelativemodels.

Inanabsolutemodel,assumingChinagetsascoreof10,

ChileandMozambiquewouldgetscoresof0.21and0.01

respectivelyastheirGDPsare47and755timessmaller



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thanChina’s.Clearlythen,mostcountrieswouldhave

verylowandclosetogetherscores.

WiththerelativeIndexmodelthatisused,Chinastill

scoresveryhighlyasitisaverylargemarket,but

crucially,theothercountriesareattributedhigherscores

tomorefairlyandaccuratelyrepresenttheeconomic

opportunitiesavailablewithinthem.Overall,suchan

approachmakesforamoreusefulandinsightfulIndex.

Trade Lanes

Thetradelanesectionmeasuresthevolumeofgoods

shippedbyairandseabetweentheemergingmarkets

includedintheIndexandtheUS/EU.Thetradelane

sectionincludestwoparts:

1. Top 10 Trade Lanes – Air and Sea, Import/Export

Alistoftradelaneswiththehighestvolumes,as

measuredbytons,splitbyairandsea,andbyimport

andexport(fromemergingmarketstotheEU/USandto

emergingmarketsfromtheEU/US).

2. Fastest Growing Trade Lanes – Air and Sea, Import/Export

Forairandsea,byimportsandexports,the25fastest-

growingtradelanesforeachcasehavebeenranked

bytheirgrowthin2016.Inaddition,anindexhasbeen

calculatedwithabaseyearof2005toofferalong-term

perspectiveoneachtradelane’sperformance.

2005-2015dataare‘actual’figures,whereas2016data

areforecastfiguresbasedonactualmonthlydatafrom

January-August2016.Aforecastmodelwhichaccounts

forseasonalityhasbeenappliedtoestimatefull-year2016

figures.Forseafreight,tonnagerelatingtoHS2product

group27“mineralfuels,mineraloilsandproductsoftheir

distillation;bituminoussubstances;mineralwaxes”has

beensubtractedfromtotalfigures.Noproductgroups

areexcludedfromairfreightfigures.Toqualifyasoneof

the25fastestgrowingtradelanes,acertainvolumemust

bereached.Forseafreighttradelanesthisthresholdis

1milliontonnes.Forairfreight,itis10,000tonnes.This

preventsrelativelyinsignificanttradelanesenteringthe

rankings.

CAGRshavebeenusedtomeasureeachtradelane’s

performance.CAGRstandsforCompoundAnnual

GrowthRate.Itmeasurestheconstantannualpercentage

growthrateofatimeseriesbetweenaparticularstartand

endpoint.WhileCAGRscanbeaquickandusefulway

toanalysemediumandlong-runperformance,caution

shouldbetakenastheycanoftendisguisevolatility.

Inspectionofeachyear’sindexvalueovertimereveals

volatility.



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Key Findings

Emerging Markets: How Logistics Executives See Them

More than 800 supply chain and logistics executives

worldwide shared their views on the 2017 global

economic outlook, prospects for emerging markets, key

growth drivers and trends affecting emerging markets

countries.

•Asignificantminorityoflogisticsexecutives(42.8%)

thinktheIMFforecastfor4.6%emergingmarkets

growthistoooptimistic.Thatcompareswith35.9%

whothoughttheIMF’s4.7%forecastfor2016wastoo

rosyayearago.Nearly69%saytheyareconcerned

or“veryconcerned”thattheUK’sBrexitvoteandthe

failureofregionalandglobaltradeinitiativessuchasthe

Trans-PacificPartnershipsignalathreattofreetrade.

•Ayearago,supplychainexecutiveswerepreoccupied

withlowoilprices,whichwereidentifiedby27.1%as

thefactorlikelytohavethemostsignificantimpact

onglobaleconomicandtradegrowth.Inthe2017

Index,thereisnodominantfactor.Instead,opinionis

splitamongavarietypotentialdrivers:10.5%citethe

directionofChina’seconomyastheleadingdriver;

9.4%pickoilprices;5.7%saythedirectionoftheUS

economywillhavethegreatestimpactonglobalgrowth.

Nearly57%saytheyexpectoilpricestoincreaseat

leastsomewhat.

•Forthesecondconsecutiveyear,industryexecutives

pickedIndiaasthecountrywiththemostpotential

togrowasalogisticsmarket.Theyalsoindicated

Indiawastheleadingemergingmarketsdestination

forinvestmentbytheircompaniesoverthenextfive

years.ThatupbeatsentimentwasparalleledbyIndia’s

improvingperformanceinthedata-drivenportionof

theIndex.IndiaclimbedtoNo.2intheoverallrankings

behindonlyChina.Moresurprisingly,itleapfrogged

ChinatotoptheMarketSize&GrowthAttractiveness

portionoftheIndex,ashock,giventhefactthatChina’s

annualGDPisroughlyfivetimesthatofIndia’s.

•Thegloballogisticsindustryclearlyisfascinatedby

Iranandtheimplicationsofitsemergencefromyearsof

internationalisolation.Supplychainexecutivesranked

Iran9thamongcountrieswiththemostpotentialto

growaslogisticsmarkets,upfrom15thayearago.

Amongothercountriesselectedbysurveyrespondents,

Four



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onlyKenya(up3spotstoNo.17)andKazakhstan(up

2placestoNo.20)rosemorethanonespot.South

Africa,hobbledbypoliticalandeconomicdifficulties,

fellthreespotstoNo.12.Qatar,whichisinthemidst

ofadrivetolessenitsrelianceonenergy,alsodropped

threespotstoNo.19.Egyptslippedoutofthetop20in

thesurvey.

•Economicgrowthandforeigninvestmentlevelscontinue

tobetheoverridingfactorsininvestmentdecisionsby

globallogisticscompanies,butexecutivesaregiving

closerscrutinytodemographiccharacteristics.Survey

respondentscitedcheaplabour(No.3)andpopulation

growth(No.5)amongotherleadingdriversofthe

importanceofindividualemergingmarkets.Corruption

andpoorinfrastructurearethefactorsthatmostinhibit

growth,whilearangeofefficiency-sappingbureaucratic

impedimentsarealsohavingasignificanteffect.

•Supplychainexecutivesconsistentlyvieweconomic

shocksastheNo.1threattogrowthinAsiaPacificand

asoneofthetopthreatsinotherregions.Theyidentified

corruptionastheleadingthreatinLatinAmericaand

terrorismintheMiddleEast&NorthAfrica.

•Syria,LibyaandIraq–allinthegripofextremist

violenceandwar–wereseenbyindustryexecutivesas

thethreecountrieswiththeleastpotentialaslogistics

markets.Othercountriesconfrontingextremismalso

rankedamongthosewithleastpotential:Bangladesh

(5),Egypt(7),Algeria(8).Ethiopia,whichisinthemidst

ofacrackdownfollowingmonthsofanti-government

protests,wasNo.4.SurveyrespondentsrankedIran

asNo.6amongcountrieswiththeleastpotential–

reflectingadeepsplitamonglogisticsexecutives,who

alsopickeditasoneofthecountrieswiththemost

logisticspotential.

•SlowinggrowthinChinahashurtthetransportand

logisticsindustry,accordingto76%ofsupplychain

executivesinthesurvey.Still,fewseethisasareasonto

altertheirplansfortheworld’slargestemergingmarket:

nearly66%saytheirbusinesseswillcarryonwithplans

inChinadespitetheslowingeconomy.(Roughly22%

saytheywillmoderateentryorexpansionplansinChina

asaresultofitsslowdown.)ChinarankedNo.2,after

onlyIndia,asafutureinvestmentdestinationandasthe

mostpromisingemergingmarket.

•InBrazil,consumedwithapoliticalcrisisthatledto

theimpeachmentofPresidentDilmaRousseff,poor

governanceistheoverwhelmingpickasthebiggest

impedimenttogrowth.Itwasthetopselectionof

46%ofsurveyrespondents,followedbycorruption,

thepickof21%ofthosewhoresponded.Inthedata

portionoftheIndex,Brazilwasremarkablyresilient:it

remainedtheNo.7emergingmarketandwasseenby

industryexecutivesasthemarketwiththethird-ranking

destinationforinvestmentandformostinvestment

potential.

Markets on the Move

•Stagnationinglobaltradegrowthandturbulencein

emergingmarketsarereflectedinthe2017Index.

Twenty-fourofthe50countriesexperiencedayear-

over-yearerosionintheiroverallscores,whichcouldbe

consideredabroadgaugeoftheircompetitivenessthat

includesgrowth,marketattractiveness,infrastructure

andtransportconnections,andbusinessclimate.All

of2016’semergingmarketsremaininthetop10,but

scoresforsevenofthe10countriesdeteriorated:China

(1),Malaysia(4),SaudiArabia(5),Indonesia(6),Brazil

(7),Mexico(8),Russia(10).

•ChinaremainedatoptheIndexrankingsbyalarge

margin.Amongcountriesinthetop10,themarkets

changingplacesfromtheprioryearwereIndia(upto

No.2fromthird),UAE(downtoNo.3fromsecond),

Turkey(uptoNo.9from10th)andRussia(downtoNo.

10fromninth).

•Iranwasthemostimprovedemerginglogisticsmarket,

climbingeightspotsto18thoverallasitreintegrates

withtheglobaleconomyandbecomespartoflogistics

providers’strategies.Iranisoneoffivecountriesadded

totheIndexin2017.Theothers–Ghana(39),Myanmar

(48),Angola(49)andMozambique(50)–struggledto

perform.



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• Nigeriasufferedthelargestlossintermsofbothscore

(-0.43)andrankingpositions(downnine)andended

in24thoverall.Slashedeconomicforecasts,lowoil

prices,recessionandinstabilityallcontributedtothis.

South Africawasalsoamongthecountrieswiththe

sharpestdrops:itfellfourpositionstoNo.21,hurt

bydecreasingFDIacrossmanufacturingandmining,

stallinginfrastructuredevelopment,andsocialissues

thatweigheddowngrowth.Asaresult,nosub-Saharan

countryranksamongthetop20intheIndex,although

fiveothermarketsfromtheregion–Ethiopia(37th),

Tanzania(38th),Ghana(39th),Uganda(41st)andKenya

(43rd)–sawtheirrankingscoresimprove.

•Asnoted,IndiamovedaheadofChinatotopthe

MarketSize&GrowthAttractivenesssub-Indexin2017,

thanksinlargeparttoitssuperioreconomicgrowth

forecastsoverthemedium-term.Othercountries

makingmovesinthecategoryofMarketSize&Growth

Attractiveness:thePhilippinesrosefourspotsto12th;

Egyptclimbedfourpositionsto10th.Argentinawasup

sixto22nd,andIranrosefiveto16th.

•Whenitcomestothebestbusinessclimate–or

MarketCompatibility–theMiddleEast&North

Africaistheplacetolook.Sevenofthetop10ranked

marketsforCompatibilitynowcomefromtheMiddle

East&NorthAfricaregion,upfromfivein2016.

Forthethirdconsecutiveyear,theUAEboaststhe

bestbusinessconditionsamongemergingmarkets.

Amongitsattractions:anetworkoffreetradezones,

nocorporationtax,theofferoffullownershipand

unlimitedrepatriationofprofits–conditionsthatsetthe

benchmarkforemergingmarkets.Qatar(2nd)hasmore

orlesshalvedthegapbetweenitselfandtheUAEin

termsofscore,astradebarriersandinvestmentthere

continuetobeeroded.

•Transportinfrastructureandfrequencyofoceanand

airconnectionsdrivethecompetitivenessofemerging

markets.Inthatarea–calledMarketConnectedness–

UAE,Malaysia,ChinaandChileremainedatthetop.

Russiaregressedfrom10thto13thbecausetheoverall

qualityofitsinfrastructureisjudgedtohaveworsened,

ashastheburdenofitscustomsprocedures.Replacing

Russiainthetop10wasKazakhstan,whichjumped

upto9thonthestrengthofinfrastructureandcustoms

improvements.



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BIGGEST MOVERSPOS COUNTRY PLACES

BIGGEST MOVERSPOS COUNTRY PLACES

1 Iran +82 Uganda +63 Bahrain +54 Kazakhstan +45 Pakistan +36 Argentina +37 Ethiopia +38 Tanzania +39 Kenya +210 Bolivia +2

UP

1 Nigeria -92 Tunisia -53 South Africa -44 Uruguay -45 Paraguay -46 Kuwait -37 Libya -38 Lebanon -39 Thailand -210 Sri Lanka -2

DOWN

1

2

34

5

678

9

10

8

72

6

5

1

10

9

4

3

Source: Transport Intelligence

Markets on the Move



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Summary

Tradevolumesarestrugglinginemergingmarkets.If2015

wasayearoflowgrowthornogrowth,then2016issetto

beworsestill,theworstsincetheglobaleconomiccrisis

of2008.Importandexportvolumegrowthfigureshave

turnednegative.

Thefuturelooksnobrighter.Lastyear,annualforecasted

tradevolumegrowthratesstretchingto2020foremerging

marketswereexpectedtoreturntoratesexperienced

from2012to2014–intheregionof5%.Inthelatestset

ofIMFforecasts(October2016),theexportandimport

CAGRsfor2015to2020foremergingmarketshave

edgeddowntomorelike4%.Andtheforecastsdon’t

considertheimplicationsofthesurpriseoutcomeofthe

USelections.

Butifyoulookhardenough,brightspotscanbefound.

Withinternationalsanctionseasing,Iran’stradeprospects

arenowfarstronger.Argentinahasenjoyedabounce

thankstothenewgovernment’smoreorthodoxeconomic

policies.Vietnamhasseeminglymovedfromanalready

strongpositiontoanevenbetterone.

Withanincreasinglydifficultexternalenvironmentthough,

logisticsproviderswillhavetoworkhardertomakethe

mostoftheopportunitiesthattradeinemergingmarkets

presents.

Air Freight to Emerging Markets

Thebusiestemergingmarketsairfreightlanesoriginating

intheEUorUStendtoconnecttolargermarketsinthe

Index:China,UAE,India,Mexico,Turkey,SaudiArabia,

BrazilandSouthAfrica.Volumegrowthalongtheselanes

in2016appearstobesubdued.OnlyEU-Indiaislikelyto

showdouble-digitgrowth(forecast10.5%),withthenext

bestbeingEU-Mexico(7.6%).Forallotherlanesinthe

top10,growthisexpectedtobeinthelowsingledigits

ornegative.Brazillookstohavesufferedbadly(EU-Brazil

down6.7%,US-Brazildown11.6%).

Theeightfastest-growinglanesinvolveEUorigins.The

topfiveareEU-Vietnam(up37.2%),EU-Pakistan(up

31.0%),EU-Colombia(up18.7%),EU-Oman(up14.4%)

andEU-India(up10.5%).

EUairshipmentstoemergingmarketsareonpaceto

decreaseby1.8%for2016,whileUSairshipmentsto

thosesamemarketslooksettoshrinkby6.3%.

Air Freight from Emerging Markets

Flowingintheotherdirection–fromemergingmarkets

totheEUandUS–thepictureismixed.Lookingatthe

twobusiestlanes,exportstotheEUin2016arebeing

proppedupbyChina-EUgrowthof4.8%;andexportsto

theUSarebeinghamstrungbya10.5%declineinChina-

USvolumes.

Amongtheremainingtop10busiestlanes,Mexico-EU

(up22.3%)andBangladesh-EU(up20.7%)arethetop

performers,andinfactarethefastestgrowinglanesof

all.Cambodia-EU(up17.8%),Pakistan-EU(up15.8%),

Brazil-US(up11.0%),Tanzania-EU(up10.8%)and

Ecuador-EU(up10.1%)alsoshoweddouble-digitgrowth.

Forecastsindicatethatairfreightshipmentsfromthe

Index’s50emergingmarketscountriestotheEUwill

increase3.3%,butshipmentstotheUSwilldecline

6.2%.

Ocean Freight to Emerging Markets

Inoceanfreight,thelargestlaneconnectsUSoriginswith

destinationsinChina.Tradealongthatlanedecreasedby

7.1%.EU-Chinaoceanfreightisdownby4.8%.

Elsewhere,EU-Morocco(up25.9%)isthebestperformer

amongthetop10lanes,followedbyUS-Mexico(up

12.1%),EU-SaudiArabia(up12.1%)andUS-Brazil

(11.7%).

Amongthe25fastest-growinglanes,growthis

overwhelminglydrivenbyhighervolumesofcerealcrops,

withafewnotableexceptions.AmongEU/USorigin

oceanfreightlanes,itisalmostalwaysbulkgoodsthat

drivevolumegrowthswings.

Overall,EU-origintradelanesaresetforgrowthof0.7%

in2016,whilethecorrespondingfigureforUSlanesis

3.0%.

Trade Lanes



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Ocean Freight from Emerging Markets

Asalientfeatureofemergingmarketsseafreight

exportsisthattheyaremuchmorediversifiedcompared

toimports,whichareoverwhelminglycomprisedof

agriculturalgoods.

Thisisbestexemplifiedbythelargestexporterofall,

China,whosemostimportantexportgroupsincludea

vastarrayofmanufacturedgoods.For2016,China-US

oceanfreightvolumeisexpectedtofallby3.0%,but

China-EUwillseegrowthof3.3%.

Therestofthetop10areamixedbag:Argentina-EU

(up13.1%),SouthAfrica-EU(up6.9%)andTurkey-EU

(up6.4%)aresomestrongperformers,butMexico-

US(-13.1%),Russia-EU(-7.6%)andBrazil-US(-6.8%)

volumesareforecasttocontract.

Thelistoftradelanesthathavegrownrobustly(morethan

5%)bothin2016andoverthelastdecadeorsoincludes

Vietnam-US,whichstandsoutasaleadinglane,followed

byUruguay-EU,Qatar-US,Turkey-US,UAE-US,Algeria-

EU,Nigeria-EUandBangladesh-EU.

Overall,EUoceanfreightfromemergingmarkets

originsispredictedtogrow1.8%in2016,buttheUSis

projectingadeclineof4.5%.



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The 2017 Agility Emerging Markets Logistics Index

Entering2017,theglobaleconomylooksvulnerabletoa

rangeofdownsiderisks.China’sslowingeconomy,falling

oilprices,weakerinvestmentandvolatilecurrencieshave

allhadanunsettlingeffectondevelopedandemerging

marketsalike,aswellastheprivatesector.Inthisclimate,

thereisuncertaintyaboutemergingmarkets’abilityto

providehighlevelsofreturnoninvestment.Asaresult,

thestatusofemergingmarketsinthemindsofinvestors

haschanged,andthedaysofunboundedoptimism

aboutthesemarketshasbeentempered.Inrecentyears,

investorshavelookedtoemergingmarketstoprovidethe

greatestreturns.Itisunclearifthatwillremainthecase.

As2015drewtoaclose,andwiththeyuanalready

devalued,therewasconcernthatChinawasnotmaking

progressquicklyenoughinitseconomictransition.

Thatfearledtoturbulenceinfinancialmarketsacross

theworld.China’sdomesticmarketishighlyindebted,

anditisstrugglingtodealwithvastoversupplyand

overcapacityacrosskeymanufacturingandrealestate

sectors.Astheworld’ssecond-largesteconomy,other

countriesfindtheyarenowintrinsicallylinkedtoChina’s

fortunes.China’sslowingeconomyanditsreorientation

towardsaservices-ledeconomyaresignificantfor

anumberofemergingmarkets,manyofwhichrose

onthebackofChinesedemandforcommodities

andrawmaterialstosupplyitsvastconstructionand

manufacturingexpansion.AsChinesedemandforsuch

importsfell,anowfamiliarchainofeventsbeganto

unfold.Lowerdemandmeantthepriceofcommodities

declinedalongsideexportvolumesandrevenues,putting

jobsandeconomicgrowthinexportingnationsatrisk.

Morewidely,theuncertaintydentedconfidence,and

ledtovolatilityincurrencymarkets.Thiscompounded

thechallengesfacinganumberofemergingmarkets–

notonlywastherelessmomentumintheireconomies,

thedebttheytookontofundgrowthbecamemore

expensivetoserviceastheircurrenciesbecame

increasinglessvaluableagainsttheUSdollar.The

interventioninMarch2016oftheBeijingadministration

andtheNationalDevelopmentandReformCommission

witha$721.8bninfrastructurestimuluspackageto

fund303projectsacrossrail,road,waterways,airports

andmetrosystemsinChinawaswelcomerelieffor

thosesupplyingthematerials.Alsowelcomehasbeen

Five

Overview and Outlook



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thelackoffurtherinterestratehikesintheUS,which

allowedemergingmarketstocapturethevalueoftheir

morestablecurrencies.Thatsuchdevelopmentswhich

primarilyappearrelatedtodomesticchallengesinChina

andtheUShaveheldsomuchswayoverthefortunes

ofemergingmarketsinrecentyearsgoessomeway

toillustratinghowintegratedthesemarkets,andtrade

withandbetweenthem,havebecomewiththeglobal

economyoverthelastdecade.

Thisappearanceofstabilityledtoacalmer,more

favourablebackdropforemergingmarketsinthe

secondhalfof2016.Notallbenefitedfromit,however,

anddownwardpressuresremain.Formanymarkets,

adjustingwillnotbesimpleandwilllikely“bedifficult

andprotracted.Insomecases,itcallsforachangein

theirgrowthmodel,”accordingtoChristineLagarde,

headoftheIMF.Suchaprocessis,forexample,already

underwayintheoilexportingemergingmarkets,which

havehadtomakeeconomicadjustmentsinorderto

copewithlowenergyprices.Subsidiesonenergyand

utilities,longafeatureofmanyGCCcountries,havebeen

eliminatedorreduced,andtheintroductionofasalestax

lookslikelyinseveralcountrieswiththeUAEseemingly

firstinline.

Someemergingmarketscontinuetopoststrong

growthdespiteheadwinds,whileothersaresinking

intorecession,self-inflictedorotherwise.Onesuccess

storyisIndia,whereeconomicgrowthtopped7%in

eachofthelasttwoyears,andwhereapro-business

governmenthas,atlast,passedreformstounlockvalue,

increaseefficiency,easeforeigninvestmentrulesand

boostmanufacturingcapacity.Anotherfabledemerging

market,Brazil,presentsatextbookexampleofwhatcan

gowrong.WoefuleconomicmismanagementfedBrazil’s

budgetdeficits,causedinflationandunemploymentto

risetounsustainablelevels,andallowedcorruptionto

sapthecapacityofgovernmenttoaddresstheproblems.

Theresult:Brazil’sworsteconomicdownturnsince

theGreatDepression.Asagroup,though,emerging

marketsaregrowingmoreslowlyinrecentyears.Having

averagedgrowthof6.6%annuallybetween2000and

2007,emergingmarketslookedtohavebouncedback

when2010saweconomicexpansionhit7.5%.Sincethat

time,however,growthslowedineachyearto2015,when

a5.0%riseinoutputwasrecorded.TheIMFexpects

growthtohavereachedjust4.2%in2016.

Alongsidethechallengesemergingmarketshavefaced

inrecentyearscomestheaddedpressureofawider

slowdowninglobaltrade.WTOforecastsshowthat,

forthefirsttimein15years,tradegrowthislikelyto

beslowerthanoveralleconomicgrowth.Elsewhere,

figuresfromtheIMFindicatethat2016willbethefifth

consecutiveyearwithglobaleconomicgrowthbelowits

long-termaverageof3.7%.TheIMFpredictsthatgrowth

willlagtheaverageagainin2017.Meanwhile,as2016

progressed,adimensionhasbeenaddedtoslowing

tradegrowth.Risinganti-globalisationsentiment,from

oppositiontotradeagreementslikeTPPandTTIP,to

BrexitandtheprotectionisttonesoftheUSpresidential

election,appearsmotivatedbyadrivetoundomuchof

theintegrationthathasspurredtradegrowthsincethe

mid-1990s.Butwhiletradescepticsmayhavefounda

newformofexpressionandhighprofileleadersin2016,

anti-tradesentimentisnotlimitedtothesefewheadline-

grabbingstories.Norisitarecentphenomenon.Analysis

fromQuartzshowsthatofthe1,855trademeasuresG20

governmentshaveintroducedsince2009,some74.5%

havebeenprotectionistinnature.

Thisanti-globalisationsentimentcomesatatimeofslow

growthfordevelopedandemergingmarketsalike.When

economicgrowthisstrong,tradetendstoriseandtofuel

furthereconomicgrowth.Butasconsumptionhasfallen

andinvestmenthasslowed,sluggishgrowthhaslessened

thejobandeconomicprospectsofmiddleclassesinboth

developedandemergingmarkets.Despitetwodecades

ofunprecedentedprosperitybasedonfreetrade,the

distributionofgainshasbeenunevenandunequal.Soat

thestartof2017,thefutureofglobaltradeisuncertain.

TheWTOexpectsglobaltradetogrowby1.7%in2016,

downfromearlierforecastsof2.8%.TheWTOsays2017

tradegrowthcouldbeanywherebetween1.8%and

3.1%,highlightingitsuncertainty.“Thedramaticslowing

oftradegrowthisseriousandshouldserveasawake-up

call,”saidRobertoAzevêdo,Director-GeneraloftheWTO.



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“Itisparticularlyconcerninginthecontextofgrowing

anti-globalisationsentiment.Weneedtomakesurethat

thisdoesnottranslateintomisguidedpoliciesthatcould

makethesituationmuchworse.”

Insummary,2016wasadifficultyear.Itcamewitha

moderationinexpectationsforthefutureandfurther

indicationsthattheemergingmarketsgoldrushwas

comingtoanend.Thankfully,thestepstakenbykey

partiesincludingtheChineseandUSadministrations,

aswellasgovernmentsinmanyemergingmarkets

managingtransitionsandeconomicdiversification

projectsoftheirown,havehelpedtaketheheatoutofa

challengingyear.Whetherenoughhasbeendone,and

whethersolutionshavemovedquicklyenough,remains

tobeseen.Emergingmarketsretainmuchofthecapacity

forgrowthandthedynamismwithwhichtocreateand

capturevalue.Intheyearahead,though,apotentmixof

challenges,downwardpressuresandrisksthreatensto

revealwhichemergingmarketshavefoundationsbuilton

sand.

Asia Pacific

AsiaPacificmarkets’aggregatescoreisthehighest

acrosstheregionscoveredbytheIndex.In2017,eight

ofthetop20rankedemergingmarketsarefromtheAsia

Pacificregion,upfromsevenin2016.Itshouldbenoted,

however,thatonlytwomarkets–IndiaandPakistan

–roseintheranking,withVietnamtheonlyotherAsia

Pacificmarkettojointhetwoinincreasingitsscoreyear-

on-year.

TheAsiaPacificregionwillremaintheengineofglobal

economicgrowthwithanexpectedeconomicexpansion

of5.3%,accordingtotheIMF.Thereareanumberof

challengesintheregionwhichwillneedtobeaddressed

andeithermitigatedorovercomeiftheregionistofulfil

itspotential,however.Sluggishglobalgrowthisreducing

demandforitsexportsasvolumegrowthtomajorglobal

marketsandregionalpartners,suchasJapan,slows.

Weakinvestmentgrowthacrosstheregionhasfollowed

thevolatilityinfinancialandcurrencymarketswith

commodity-exportingmarketsmostaffected.Highlevels

ofcorporatedebtarealsoacauseforconcernasthe

prospectoftighteningfinancialconditions,particularlyin

theUS,looms.

Therealsoareanumberofpositivesintheregion.

Despitethegenerallylowerexportvolumes,anumber

ofmanufacturingsectorshaveshownresilience,while

othershaveseenvolumesgrow.Thisincludeselectronics,

anareawithsignificantpotentialforcountriessuchas

VietnamandIndonesia,marketswithstrongpotentialto

moveupthevaluechain.Creditgrowthremainshealthy,

suggestingconfidenceremainshighforthoseableto

identifyopportunities,whiledomesticdemandand

consumerconfidencearebroadlyhealthyinmarkets

acrosstheregionincludingIndia,China,Thailandandthe

Philippines.

LesspredictableforAsiaPacific,though,istheeffectthat

arisingtideofanti-globalisationsentimentwillhavein

keydestinationmarkets,mostnotablytheUS.TheTPP

tradedeallooksdeadintheUS,andamoreprotectionist

UScouldmeanreducedaccessforexportingnations.

ApotentialalternativerouteforAsiaPacificemerging

marketscouldbetopursuegreaterregionalcooperation

andintegration.TheASEANSingleWindowcanbe

improvedtobetterfacilitatecustomsandexport

procedures,whiletheRegionalComprehensiveEconomic

Partnership–aproposedfreetradeagreementbetween

theASEANnations,Australia,China,India,Japan,South

KoreaandNewZealand–couldtakeonnewimpetusas

analternativetoTPP.

Latin America

BrazilandMexico,LatinAmerica’slargesteconomiesand

topIndexperformers,maintainedtheirpositionsinthetop

10ofthe2017Indexdespitedifficultyears.Bothrecorded

lowerscoresyear-on-year,making2017thesecond

consecutiveyearthatnoLatinAmericamarketcracked

thetop5.Theregion,whichcontinuestounderperform,

gotaboostfromArgentinaandBolivia,bothofwhichsaw

theirrankingscoresrise.Still,LatinAmericawastheonly

regiontorecordadeclineinaveragescoreinthe2017

Index.

Expectationsofa0.5%contractionineconomicactivity

acrosstheregionin2016highlightthescaleofthe



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challengefacingLatinAmerica.Suchadeclinewould

markthefirsttimesince1982-1983thattwoconsecutive

yearsofnegativegrowthwillhavebeenrecorded.Within

theregion-wideforecastisahighdegreeofvariation.

Brazil,forexample,isinadeeprecession,dueto

significantcorruptionandeconomicmismanagementover

muchofthelastdecade.InVenezuela,thecollapseofoil

priceshashighlightedalackofdiversityintheeconomy

andtheabsenceofalternativemeansofvaluecreation.

Assuch,rapiddeclinesinGDPandhighlevelsofinflation

lookssettocontinueinVenezuelafortheforeseeable

future.Argentinamadegainsinthisyears’Indexand,

whilethecountrystillfacesalongandpotentiallypainful

journey,earlyindicationsofprogressundertheMacri

administrationarepromising.Elsewhere,ChileandPeru

looksettocontinuegrowth,andtheIMFexpectsPeru’s

economytoexpandby3.75%in2016,partiallyasaresult

ofongoinginvestmentintheminingsector.

LatinAmericaoverallremainsvulnerable,though.Itis

heavilyexposedtoChina.Theworld’ssecond-largest

economyisdestinationfor15%to25%ofallexportsfrom

Brazil,Chile,Peru,UruguayandVenezuelaaccordingto

IMFfigures.LatinAmerica’smarketsarealsovulnerable

tofurthervolatilityordeclinesincommodityprices.

Mexico,too,couldhavenewchallengestoovercome

shouldmanufacturershavetoconfrontnewbarrierstothe

USmarket.LatinAmericaalsomustaddressproblemsof

itsownmakingifitistoprogressoverthemedium-term.

Brazil’scurrentsituationcanbroadlybetracedbackto

thefailureofbothPresidentsLulaandRoussefftoreform

outdatedinstitutions.Brazilhascounterproductivelabour,

taxandbusinessregulationandhasshownawiderfailure

toimproveproductivityintheeconomy.

Middle East & North Africa

TheMiddleEast&NorthAfricacontinuestobea

strongperformer.Twomarkets–UAEandSaudi

Arabia–makethetopfive,despitehavingsignificantly

smallereconomiesthanotherelitemarkets.Suchsolid

performance,though,doesnotremovetheneedfor

furtherprogressoneconomicdiversification.Sevenofthe

region’s15Indexmarketsimprovedtheiroverallscores.

AmongthemwasIran,whichleapedmorespotsthanany

othercountryinthe2017Index.Manyoftheregion’sless

stablemarketssawscoresfallyear-on-year,although

Egyptcontinuedtoperformwell,risingonthebackof

post-ArabSpringreformsandstability,gainingtwospots

torank20th.

Perhapsthemostsignificantdevelopmentsintheregion

focusonhowitwilladjusttothe“newnormal”oflow

oilprices.EvenwiththepossibilitythatanewOPEC

productionagreementwilltakeholdin2017,lowoilprices

havehadamajoreffectacrosstheregion.Governments

havebeenforcedtodiversifytheireconomiesand

introducenewmethodsofrevenuecollection.Inmany

ways,thisischangingtheroleofthestateintheMiddle

East’soilexportingnationsfromonewhichsupportsthe

populationthroughvariouspublicspendinginitiativesand

subsidiestoonethatemphasisesthecreationofprivate

sectorjobsaswellasencouragingcompetitionand

choiceforconsumers.Thetransitionwillnotbepainless.

Itwillrequiresignificantinvestmentatatimewhenpublic

resourcesarestretchedandbudgetdeficitswidening.

AccordingtoWorldBankdata,theregion’soilexporters

haveseencashreservesswingfromasurplusof$128bn

in2013toadeficitof$264bnin2016,whilethoseinthe

GCC,sawoilrevenuesdeclineby$157bn2015,with

another$100bndeclineexpectedin2016.SaudiArabia

appearsmostchallengedwithreservesdown$178bn

sincemid-2014.Whilelossescouldnarrow,creatingnew

productivecapacityisatleastamedium-termproject.

Theprocessisalsopainfulforcitizenswhohavetoadjust

tonewtaxationalongsidethelossofsubsidiesinSaudi

Arabia,Kuwait,Bahrain,Oman,QatarandtheUAE,all

ofwhichplantointroduceasalestaxtooffsetdwindling

energyrevenues.

Increasedcompetitionwithintheregionisalsolikely

tobecomeafeatureoftheeconomicdiversification

process.Asthenationsseeknewsourcesofinvestment

andworktonurturethegrowthandexpansionofnon-

oilindustries,theywillhavetoremainvigilanttoensure

theyofferthecombinationofanopenandefficient

businessenvironmentandaccesstoaskilledworkforce.

Followingpoliticaldevelopmentsintheregion,too,Iran

willaddtothecompetitiveforcesintheyearsahead.



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Iran’sreintegrationwiththeWestislikelytobehaltingbut

couldchangebothmarketandtradingpatternsasIran

becomesanattractiveoptionforbusinessesfromtheUS

andEurope.Iran’sleapuptheIndexrankingsthisyear–

eightspotsto18thoverall–reflectsnotonlythepotential

ofitslargeeconomyandrelativelywealthypopulation,

butalsotherapiditywithwhichitmaycapitaliseonits

newfoundopportunities.WorldBankestimatessuggest

thatsanctionsreducedIranianexportsbyatotalof$17bn

between2012and2014,equaltoapproximately4.5%of

GDP.

Sub-Saharan Africa

WiththedecliningprospectsandperformanceofSouth

AfricaandNigeria,sub-SaharanAfricahasnomarkets

insidethe2017Index’stop20.Perhapsillustratingthe

diverseeconomicandlogisticsperformanceandpotential

acrosstheregion,however,wasthechangeinscores

oftheregion’smarketscollectively.WhileAngolaand

Mozambique–49thand50thoverall,respectively–both

recordedlowerscoresyear-on-yearin2017,fiveother

Africanmarkets–Ethiopia,Tanzania,Ghana,Ugandaand

Kenya–allsawscoresrise.Indeed,Uganda,recorded

thethirdstrongestyear-on-yearperformanceacrossthe

entire2017Indexbasedonscoredevelopment.

Anumberofmarketsexperiencedsignificantchallenges

in2016.SouthAfrica,forexample,slippedoutofthetop

20associaltensions,corruptionandfallinginvestment

grounddowneconomicgrowth.Nigeriadroppednine

spots–themostofanycountryinthe2017Indexto

24th.Nigeriaissufferingfromrecession,slashedgrowth

prospects,loweroilpricesandadepreciatingcurrency.

Evenseeminglypositivestoriesareweigheddownby

recentevents.Ethiopiarosethreepositionsto37thonthe

backofeconomicgrowththataveraged10.8%from2006

to2015,accordingtoIMFfigures.ButEthiopiahasbeen

besetbyanti-governmentprotestsanddemonstrations

thatincludedattacksonbusinessesaswellasstrikesand

boycotts.

Despiteproblems,Africa’sgrowingprosperityis

alsoevident.Consumersandbusinessesarebeing

empoweredbynewtechnologyandmobilebanking,

whichisdrivingconsumption.SpendingbyAfrican

consumersandbusinessestodaytotals$4trillion.

Householdconsumptionisexpectedtogrowatan

average3.8%ayeartoreach$2.1trillionin2025,fuelled

bothbypopulationgrowthandrisingincomes,according

toMcKinsey.Businessenvironmentsareimprovingand

regionalintegrationeffortsarecreatingnewopportunities,

particularlyinlandlockedcountries.Moreover,population

growthinsub-SaharanAfricawillexpandtheworkforce

toeclipsethoseofbothChinaandIndiaoverthenext

fewdecades.Significantly,jobgrowthintheregionis

outpacingpopulationgrowth.Sub-SaharanAfrica’s

populationisalsourbanisingatarapidpace.Totake

advantageofthis,widespreadinfrastructuredevelopment

mustoccurbecausegrowingcitiesandrapidurbanisation

haveledtosprawlingslumsandleftgroupsofthe

populationtrappedinlow-incomejobs.

Alltooofteninrecentyears,headlineperformanceacross

theregionhasdeterminedperceptionsofindividual

performance.Tosomeextent,realGDPfiguresshowing

growthat3.3%peryearbetween2010and2015,down

fromthe5.4%averageoverthe2000-2010period,

partiallyexplainthis,asdoeventsinanumberofthe

region’sindividualcountries.Thedivergingperformance

ofsub-SaharanAfrica’semergingmarketsinthe2017

Indexshow,however,thattreatingallofitsdiverse

marketsasonemeansmissingoutonmanymarketsthat

displaysignificantpotential.

The Top Ten

Despitearangeofturbulentforceswithintheglobal

economy,thetop10rankingpositionsinthe2017Agility

EmergingMarketsLogisticsIndexdisplayedasurprising

levelofcontinuityyear-on-year.Sixmarketsretained

theirpositionsandtherewasnochangeinthelistthat

madeuptheelitegrouping.Withinandacrossmarkets,

however,afargreaterdegreeofchangeisatworkthan

therankingssuggest.



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Atthetopofthe2017Index,Chinaretainsthetopspotit

hasoccupiedsincebeingintroducedtotheIndexin2011.

China’stransitiontoaconsumption-basedeconomyhas

beenrockybothinternallyandexternally.Itsreduced

demandforcommoditieshashadawidespreadimpact

acrosstheglobe,anditsslowingpaceofeconomic

expansionhasledtouncertaintyoverprospectsforthe

medium-andlong-term.Thishasprimarilybeendrivenby

weaknessintheverysectorsthatdroveitsrapidgrowth

–mostprominentlyconstructionandmanufacturingfor

export.Chineseauthoritiesrevaluedtheyuan,amove

whichcontributedsignificantlytocapitaloutflowsof

$900bnin2015,andsparkedaturbulentfewmonthsuntil

furtherinterventioninFebruary2016.Astimuluspackage

atthattimebroughtasenseofcalmtothemarket,

althoughthepackageleanedheavilyonencouragingand

incentivisingactivityinmanufacturingandrealestate,

sectorsalreadyoversupplied.Consumptionandservices

haveperformedwellsince,though.Growthhasoutpaced

investment.Otherlogisticsserviceproviders,particularly

thosespecialisinginlast-miledelivery,arelikelytofollow

ZTOExpress’movetoraisefundsviaanIPOinorder

toboostscaletoserveChina’sboominge-commerce

sector.Asitmovestowardsdomesticdemandasthe

primarydriverofeconomicdevelopment,Chinahasa

numberoffactorsinitsfavour.Primeamongstthese

areurbanisationandrobustlabourmarketsinitscities

withrapidlygrowingdisposableincomes.Unwinding

oversupplyandovercapacityinseveralmanufacturing

sectorsandintherealestatemarketremainsan

importantaspectofChina’stransition.Overall,while

Chinaseemstohaveweatheredthestorm,ifitcannot

movequicklyenough,itmayhavemerelypushedthe

inflectionpointfurtherout.

“The economic slowdown in China

is real and we are seeing it in our

China business. That said, China is

such a huge market that there are still

opportunities for everyone, big and

small. Its fragmentation is part of its

enduring resilience. We feel there’s

room to grow market share, even in

the face of an overall slowdown.”

“The fact that manufacturing is on

the move from China to other parts

of Asia is well-established. The Indian

subcontinent and Vietnam are taking

market share when it comes to retail

and high-tech manufacturing. They

continue moving the value chain in

ways that have ongoing implications

for China.”

“It’s both about price and

government policy: the average

factory worker in Vietnam earns less

than a quarter of what a factory

worker in China gets paid per day,

according to The Economist. At the

same time, both India and Vietnam

have taken important steps to ease

investment and tax rules and improve

their infrastructure.”

“People don’t appreciate what

e-commerce is doing to change

China. McKinsey says China’s online

retail market is the biggest in the

world – 80% bigger than that of the

United States. In 2015, it accounted

for $630 billion, which was about

13.5% of all retail spending in China.

And the market is growing every

day.”

“E-commerce in China is driving

inbound freight volumes in a

country that has been an export-first

economy for three-plus decades.

Cross-border e-commerce accounts

for 6% of China’s total consumer

e-commerce, a figure that is growing

at 50% or so annually. Chinese

consumers have stepped up their

purchase of imported goods.”

“Chinese e-commerce entrepreneurs

are looking to tap into the

expertise, systems, technologies,

and warehousing and distribution

networks of established logistics

players as they scale up their

operations. Not the established

e-commerce giants, but the

next generation of e-commerce

companies for whom logistics has

the potential to either be an Achilles’

heel or a major driver of growth and

profitability. They want to work with

logistics companies that already have

a strong set up. They are also willing

to learn-as-they-go in partnership

with their logistics providers, because

it’s an evolving space for everyone.”

Agility’s Take / China



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Indiaclimbedto2ndin2017,itshighestrankingsince

2013.Ithasreachedareformsstageinitstransition

withchangeneededatbothstateandcentrallevels,

accordingtoNitiAayog,apolicythink-tankestablished

byPrimeMinisterNarendraModi.TheGoods&Services

Taxistheheadlinereformsofar,andonethatshould

radicallyimproveboththeproductivityandintegrationof

thecountry’seconomybyremovingphysicalandtrade

barriersbetweenstates.AlongsidetheGSTarereforms

thatfocusoneasingaccesstofinanceandlendingfor

IndianbusinessesandarelaxationofrulesaroundFDI,

whilerisingwagesandpensionsinthepublicsector

haveincreasedspendingpower.Thesustainabilityof

investmentsisunderscrutiny,however,astherecent

growthseeninIndiahasbeenlargelyfundedbythe

publicsector,withprivatesectorinvestmentdescribed

as“listless”bytheAsianDevelopmentBank.Outsideof

reforms,India’sabilitytoraisethespendingpowerofits

vastpopulationandtodeveloptheskillsandproductivity

ofitsworkforcewillbeadeterminantofhowsuccessful

thetransitionis.Indiaisrapidlyurbanising,with

significantpotentialforthecountry.Analysisundertaken

byMcKinseyshowsthathistorically,Indiancitieshave

seenGDPpercapitaandproductivityrisemarkedlywhen

urbanisationreaches35%.By2030,theurbanisation

rateacrossthewholeofIndiaisexpectedtoreach35%,

creatingbothhugeopportunitiesandturningsomeof

India’sstatesintoeconomicentitieswiththesizeand

wealthofsomemiddle-incomecountries.Onesector

alreadyseeingthebenefitsofrisingwagesandincreased

urbanisationise-commerce,wheredomesticonline

retailersFlipkartandSnapdealarecompetingformarket

sharewithglobalgiantsAmazonandAlibaba.Seeking

tobeapartofthisgrowth,DHL,throughsubsidiary

BlueDartExpress,hasinvested€70mtostrengthen

itsnetworkinthecountrythatwillexpandairhubsin

MumbaiandNewDelhi.Downsiderisksremain,however.

Skillsareinshortsupply,andin2015,astaggering90%

ofIndia’sworkforcewereemployedintheinformalsector.

Perhapsmostsignificantly,whileeconomicgrowthof8%

istheenvyofmany,Indiarequiresdouble-digitgrowth

tocreateenoughjobstosupportthemillionsjoiningthe

workforceeachyear.

“India is one of the world’s fastest

growing economies, but its decision

to take high-value currency notes out

of circulation is already causing pain

and likely will cause more through

2017. It’s a cash-based consumer

economy, and people are going to

spend less until they understand

what’s going on and gain some level

of comfort.”

“The impact of demonetization will

have to play out. We’re seeing some

of our logistics customers shutting

down production for days at a time

and calling it ‘annual maintenance.’

The reality is that they’re trying to

reduce inventory. We’re seeing trucks

stranded and drivers who can’t afford

to buy tea or food while they’re idle.”

“Pharma is one of the brightest spots

in the Indian economy. Western life

sciences companies are increasingly

buying from India, and high-quality

Indian generic makers continue to

grow exports. India’s pharma exports

are expected to grow more than 60%

in 2017.”

“Goods & Services Tax (GST) reform

is a potential game-changer. It’s

ambitious and complex, but its

impact could be enormous. So many

industries in India are tax-optimized

rather than supply chain optimized or

strategically structured and operated.

GST will allow companies operating

in different states to consolidate,

expand and rationalize as dictated

by demand and opportunity, rather

than as part of a complex strategy to

minimize taxes.”

“Companies will have to re-gear

themselves to adjust to GST. Those

with flexible, strong systems have an

inherent advantage. One example:

Today, if a logistics company is slow

to invoice, customers don’t mind

because it gives them more time to

pay. After GST, quick billing will be

essential to customers so they can

claim their GST input credits.”

Agility’s Take / India



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Alsocharacterisedbytransitionarethetop10’smost

prominentoilexporters.BoththeUAE,whichslipsto

3rdthisyear,andneighbouringSaudiArabia,which

retainedits5thoverallranking,areundertakingaprocess

ofeconomicdiversification,privatesectorjobcreation,

andreformsdesignedtobuildabusinessenvironment

inwhichcorporations,domesticorinternational,can

succeed.TheUAE’sopeneconomy,networkoffree

tradezones,logisticsinfrastructureandtradesurplus

havehelpedgiveitastrongstartingposition.Theoil

sectoronlyaccountsforaround25%ofoutput.Other

macroeconomicindicatorsarehealthy,too.Iran’sre-

emergencewilllikelybenefittheUAE–andDubaiin

particular–iftheEmiratesmaintaintheirroleasatransit

pointforgoodsmovinginandoutofIran.Itshouldbe

notedthatnon-oilsectorgrowthhasslowedrecentlywith

someofthedeclinesaresultofmeasuresintroducedto

widenthestate’srevenuebase,suchasthederegulation

offuelprices.Theplannedintroductionofasalestax

couldseefurtherdampeningofdomesticdemand.

SimilardiversificationprojectsareunderwayinSaudi

Arabia,althoughthepressuretomovequicklyismore

acute.TheSaudistatehasusedoilrevenuestosupport

economicgrowthwithvastinfrastructureprojectsand

socialspendingprogrammes.Indeed,itsspending

commitmentsaresovastthatanalystssuggestoilprices

of$100perbarrelarerequiredinordertobreakeven.

Withpriceslikelytoremainbelowthispointforsometime

tocome,theSaudistatealreadyfaceschallengeswith

abudgetdeficitaround20%ofGDPandcentralbank

reservesdwindlingbysome$70bnannually.Bidstoboost

thenon-oilsectoroftheeconomyappeartobestruggling

–growthwasjust0.07%year-on-yearinthesecond

quarterof2016,downfrom3.5%forthesamequartera

yearearlier.Moreover,thisiscoincidingwithdemographic

challenges–SaudiArabia’slabourparticipationrateis

41%,officialstatisticsputunemploymentofthoseaged

15-24at30%,while37%ofallSaudisare14-years-old

oryounger.Thismeans,againstaweakeningbackdrop,

SaudiArabiamustfindtheeconomicmomentum

tocreateatleast3millionnewjobsby2020,while

diversifyingitseconomyandwideningitsrevenuebase.

“Low oil prices slowed regional

growth and forced Gulf countries

to adjust their fiscal strategies and

focus on economic diversification.

The slump in energy prices was a

catalyst to further explore alternative

revenue sources. Governments across

the region are at various stages in this

process.”

“The UAE began to move away from

reliance on energy some time ago.

Its economy is affected by the ebb in

global trade flows and a drop in the

construction and real estate market,

but its diversification policies will

stand it in good stead in the current

climate.”

“Saudi Arabia’s Vision 2030 is a

hugely ambitious plan to remake the

entire economy. It’s a roadmap for

the kingdom’s transformation that

bears watching in the next few years.”

“Qatar’s energy exposure is mainly

on the natural gas side, so the decline

in oil prices has had a limited impact.

Qatar has a diversification strategy of

its own. Having won the 2022 FIFA

World Cup, it is focused on hosting

showcase international sporting

events as it seeks to grow its tourism

industry.

“Qatar’s World Cup plans involve

$70bn worth of projects. Qatar’s goal

is to host 50 sporting events by 2020.

It’s a strategy based on a belief that

these events will have a multiplier

effect on the wider economy.”

“In Kuwait, we see a steady rise in

government spending and expect a

surge in projects over the coming two

years as Kuwait starts to implement a

number of infrastructure projects.”

“There has been a collective

acknowledgement in recent years that

more meaningful economic measures

are required if these countries are to

be competitive and sustain growth.

You’ve seen that with the adoption of

a GCC-wide Value Added Tax.”

Agility’s Take / GCC Countries



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Elsewhereinthetop10,anumberofmarketsdisplayed

ahealthydegreeofcontinuity,ifnotnecessarilythe

strengthofmomentum.Malaysia,whichretainedits4th

placeranking,isanexampleofamarketwithanopen

economythathaspositioneditselfasahighlyattractive

exportlocation.At148%from2010to2014,itstrade-to-

GDPratiodwarfsEastAsia’saverageof58%,and40%

ofalljobsaresupportedbytheexportsector,according

toWorldBankdata.Itisonthisbase,alongsideadiverse

manufacturingsector,thatMalaysiahassetitsambitions

ofreachinghigh-incomestatusby2020.Therewillbe

challengesahead.Externally,thepotentialdisappearance

ofTPPwillhurtanationasinvestedintradeasMalaysia.

SlowprogressonfurtherintegrationwithitsASEAN

partnersandsubdueddemandinkeyexportmarkets

suchasEuropeandChinaalsoweighdowngrowth.

Domestically,the1MBDcorruptionscandalaffecting

PrimeMinisterNajibRazakcontinuestothreatenthe

credibilityofacountryseekinginvestmentandtrading

relationshipswithothernationsandforeigninvestors.

Growthhasslowedto4.4%in2016,withaforecastfor

aslightincreaseto4.8%in2017,accordingtotheIMF.

Indonesia,meanwhile,remainedin6thpositionlargelyon

thebackonadomesticmarketthatdrivesaround60%of

economicactivity.TheslowdowninChina’seconomyand

weakeneddemandhurtIndonesia’sexportsandhitthe

widereconomyashouseholdspendingfell.Medium-term

reformsannouncedbyPresidentWidodofocusoneasing

bureaucracyandeliminatingcorruptioninordertoboost

efficiencyandstrengthenthebusinessenvironment,as

wellasanextensiveinfrastructurebuildingprogramme.

Intheprivatesector,roomexiststopushIndonesia’s

manufacturingcapabilityupthevaluechain.Exports

currentlyaredominatedbylow-techproductsand

operationsfocusedonassembly,leavingthecountry

vulnerabletothelocationstrategiesofmultinationals.The

IMFforecastsgrowthof5.3%in2017,butfallingdemand

willseevolumegrowthsubdued,buthouseholdincomes

areexpectedtogrowslowly.

Turkeyisalsohometoastrongdomesticmarketthat

contributesalmosttwo-thirdsofitsGDPgrowth.With

GDPpercapitaataround$10,000,itisanattractive

marketforbothdomesticandforeignretailers.Itsmove

upto9thinthe2017Indexistheresultoflong-termgains

–since2002.TheproportionofTurkey’spopulationliving

belowthepovertylinehasfallenfromaround30%toless

than2%,whilesocialandeconomicindicatorssuchas

lifeexpectancy,yearsofschooling,outputandformal

employmenthaveallimproved.Inaddition,thecountry

showedresiliencefollowingthesharp2008downturn.

Growthrecovered,despitelowerdemandforexports.

Turkeyisstilldependentonexternalfunding,whichleaves

itsprivatesectorvulnerabletocurrencyfluctuations,

especiallytoastrengtheningUSdollar.Despiteitslarge

consumersector,large-scaleretailmodelshavefailed

totakeoff,limitinglogisticsopportunities.Anattempted

coupandtheresultingcrackdownledtopoliticalstability

in2016.TheEuropeanParliamentvotedtoimposea

‘temporaryfreeze’onTurkey’saccessiontotheEUasa

result.Elsewhere,Mexicoalsoappearsatriskoflosing

momentum,despiteremainingin8thspotforasecond

year.ThecountryhascloselinkswithNorthAmerica’s

consumerandmanufacturingsectorsthroughNAFTAand

thepresenceofmultinationalsacrossarangeofhigh-

valuemanufacturingsectors.Itisalsoanoilexporterand

hasweatheredthefallinoilpriceswell,partlybecause

ithasreduceditsdependencyonthesector,which

accountedfor39%oftotalstaterevenuesin2012but

makesuponlyabout20%today.Therearepressing

challengesforMexico.Itreliesheavilyontradewiththe

US,DonaldTrump’spre-electionrhetoricaboutbuilding

physicalandregulatorywalls,introducingtariffs,and

renegotiating,orevenleaving,NAFTA,seemlikelyto

strainrelationsandputtradetiesinjeopardy.Morethan

80%ofMexico’sgoodsexportsbyvaluein2015went

totheUS.Noothercountryintheworldcomescloseto

thatfigure.ThevolatilityoftheMexicanpesoincurrency

marketswillalsocauseconcernforaprivatesectorthat

borrowsextensivelyindollars.Despitefaringwellduring

thewiderrecessionof2008-2009,itseconomyhas

averagedgrowthofonly2%peryearsince2010.FDIhas

stagnatedataround2%ofGDP,halfthelevelofother

LatinAmericanmarketsincludingColombia,Braziland

Peru.



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Theremainingemergingmarketsinthetop10–Brazil

andRussia–arecharacterisedbysignificantlevels

ofuncertainty,althoughbothretainpositionsinthe

elitegroupingthankstovast,ifshrinking,economies.

Brazilretainedits7thpositionin2017despiteayearof

economicandpoliticalturmoil.Widespreadcorruption

andeconomicmismanagementaretoblameforBrazil’s

currentstateasanunderperformingeconomy.There

arepositivestobefound,however.Thecountryretainsa

largeandrelativelydiverseeconomywiththepotentialfor

newproductiveactivities.Whileeconomicactivityremains

weak,signsofimprovementareslowlybecomingvisible.

Inthegrocerymarket,modernsupermarketsaccountfor

aroundhalfofallsales,requiringsophisticatedlogistics

support,whileinthewiderretailsector,e-commerceand

m-commerce(transactionsconductedviamobilephones)

aregainingtractionwiththemarketestimatedat$14bn,

accordingtotheUSDepartmentofCommerce.Brazil’s

pharmaceuticalindustrysaw2015salesof$28bn,a36%

riseover2010sales,highlightinganeedforcoldchain

facilitiesinthecountry.Furthergrowthisexpectedas

taxesonsuchproductsfall.Agriculturealsohasroomto

grow,eventhoughitalreadyaccountsforabout23%of

GDP.

“The economic crisis of the past two

years is the worst in Brazilian history.

Brazilians are optimistic that they

have seen the bottom and that the

trajectory from here is an upward

one. Interest rates are around 14%,

inflation at 6.5%, so it is a difficult

climate. The key is political stability.”

“The impeachment of President

Dilma Rousseff was a critical test for

Brazil’s institutions. They were able to

weather the situation without major

confrontations, without widespread

unrest, without risk of civil war. That’s

a sign they are strong, especially in

the context of Latin America.”

“Economic forecasts suggest the

Brazilian economy could grow slightly

in 2017 and expand 2% in 2018.

Inflation has come under control

and interest rates are starting to

come down. That would make Brazil

attractive again for investors.”

“Macro-economic factors are starting

to trend in the right direction, in part

because there are new mechanisms

to control public spending, to

modernise pension laws, to begin

privatisation. The big unknown is

whether there will be any political

surprises, particularly as the giant

anti-corruption campaign known

as Operation Carwash unfolds.

Prosecutors are pursuing big Brazilian

companies that they believe have

bribed as many as 200 members of

the congress and other politicians.”

“Operation Carwash could create

more short-term instability, but be

very good for the long term, creating

a strong, much-needed corporate

compliance mentality.”

“In a stable climate, logistics

investment could be very attractive.

Brazil desperately needs infrastructure

investment – road, rail, ocean, air,

storage, distribution.”

Agility’s Take / Brazil



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Bycomparison,Russia,whichfellto10th,appearsto

haveweathereditseconomicwoesfornow.Facedwitha

combinationofeconomicsanctionsandthefallingprice

ofoil,Russiaallowedtheroubletodepreciate,amove

thatactedasabufferagainstanyimmediateshocks.

Theweakerroubledidlowerthepurchasingpowerof

ordinaryRussiansandincreasethepriceofimports.

Russiansultimatelysawrealwagesfallforthefirsttime

underPutin.Russiahastriedtoincreaseitsattractiveness

tolong-terminvestorstosoftenorreversetheeffectsof

capitalflight.Ithastakenastrategicapproachtousing

itsreservestofillgapsinrevenues,targetingspecific

amountsofbailoutsandaidtowardsspecificcompanies,

institutionsorgovernmentministries.However,Russia’s

budgetshavebeenbasedontheassumptionthatitcan

selloilat$50perbarrel.Withpricesbelowthat,aswell

assanctionsandrecession,analystsexpectRussia’s

optionstobecomeincreasinglylimited.Morewidely,the

recessionisthreateningtoundomanyofthegainsin

livingstandardstheaverageRussianhasseeninthelast

twodecades.TheEconomicsMinistryhasdowngraded

itsgrowthforecaststhroughto2019,whilereportingin

August2016,thatrealincomeshaddropped8.3%year-

on-year.Overthewholeof2015,averagemonthlywages

inRussiafell9.5%,tobelow$450,lessthaninChina,

RomaniaandSerbia.WorldBankfiguressuggestthat

GDPfellfrom$2.03trillionin2013to$1.33trillionin2015,

afallof40%,highlightingboththelossofmomentumin

theeconomyaswellasthefallingvalueoftherouble.



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Iran

Iran’sabsolutescoregainof0.38issubstantial.Iran

climbedmorespots–eightpositionsto18th–thanany

countryinthe2017Index.

Iranrepresentsaneweconomicopportunity,aswellas

anewcentreofgravityinregionalissues,asitemerges

fromWesternandinternationalsanctions.Abigreason

foritsimprovementintheIndexisupwardrevisionofits

GDPforecasts.TheIMF’sprojectionsforthenextfive

yearsorsohaveincreasedfromanaverageofroughly

2%growthtoover4%.

Whilethecountryistakingstepstofindaplaceinthe

globalandregionaleconomiclandscape,creating

sustainablegrowthonthedomesticfrontmayproveto

bethemoreimportantpillar.Achievingthiswillrequirea

policymixthatemphasisesandincentivisesjobcreation

inthenon-oilsector.Iranmustencourageentrepreneurial

activity,anincreaseininvestment,andhigherproductivity

tocreatejobs,raisinglivingstandardsandspending

power.Short-termgainscanbemadebyopeningup

marketstonewdomesticandinternationalplayersand

removingbarrierstocompetitionandforeigninvestment,

therebyfurtheringintegrationwiththeworldeconomy.

FreetradezoneprojectssuchasKishIslandmaybe

aquickwaytoboostinternationalactivity.Nineteen

kilometresofftheIraniancoastintheGulf,itisgearing

uptobecomeoneofIran’snewestinternationalbusiness

hubs.Itisalreadyexperiencingafootfallofamillion

visitorsannuallytoitsduty-freezones,positioningitself

asahavenforforeigninvestors,freefromtherulesand

regulationsofthemainland.

ForeignLSPsseemtobeincreasinglycastingtheireye

towardsIran,particularlyEuropeanroadfreightoperators.

DHLFreight,DelamodeandGebruderWeisshaveall

announcedthelaunchofnewservicesbetweenEurope

andIranin2016.

“Even after years of international

sanctions and isolation, Iran has

the second-largest economy in the

Middle East. It’s got an educated

workforce and good infrastructure,

although it needs investment. Foreign

companies are extremely interested.”

“The signs are positive for Iran, but

we haven’t seen the same optimism

reflected in demand from our

customers. Most are taking a more

tempered, pragmatic approach to

the market. Shell recently agreed to

look at potential investments in three

of Iran’s largest oil and gas fields – a

sign that the nuclear agreement is

generating interest and building

confidence. But at this stage, it’s too

early to judge the impact that easing

of sanctions is having.”

“Companies are very eager to visit,

to look closely at the market and talk

to the government and potential

partners. Most are not ready to be

operational there for now. Payments

and banking remain a concern

because there are still constraints that

prevent Iran’s full reintegration into

the international banking system.”

Agility’s Take / Iran

Changes outside the Top 10



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Argentina

Argentinamovedupthreespotsto28thintheIndex.Its

rawscorerose0.38,matchingthegainpostedbyIran.

Improvementwasbroad-basedacrossallthreefacets

oftheIndex,asGDPprospectsbettered,FDIwas

higheryear-on-year,tradebarriersreducedandoverall

infrastructureisjudgedtohaveimproved.Asnotedinlast

year’sIndex,thedepartureofPresidentKirchnerandthe

electionofthemoreorthodoxMauricioMacriwasalways

likelytoleadtoanimprovement.

FDIsurgedby130%in2015althoughthiswasskewedby

onetransactionthatledtoabnormallylowflowsin2014.

Excludingthis,growthwasamoremoderate15%.Still,

policychangestoattractfurtherFDIareencouraging.

Argentinahasadoptedacrudeoilproductionand

stimulusprogrammeprovidingfinancialsubsidiesfor

oilproductionandexports.Thetaxregimehasbecome

morefavourable.ChevronandPetronashaverecently

initiatedprojectsofmorethan$1bn.

Argentinahasadopteda“muchneededtransitionto

amoreconsistentandsustainableeconomicpolicy

framework,”accordingtotheIMF.Whileinflictingsome

short-termpain,growthshouldstrengthento2.7%in

2017thankstomoderatinginflationandmoresupportive

monetaryandfiscalpolicystances.

Attheendof2015,Argentinaterminatedorreduced

theimpactofseveralmeasuresthathadasubstantial

adverseeffectontrade.Thesemeasuresincludeda

systemofimporterdeclarationsforgoods,foundtobe

incompatiblewithWTOrules,exporttaxes,aluxurytax

forvehiclesandaccesstoforeigncurrencies.

Uganda

UgandahasmovedupsixspotsintheIndexto41st,with

itsscorerisingby0.33.

Itsadvanceislargelythankstoimprovementsinits

Connectednesssub-index.Ugandaappearstohave

bettereditsunderlyingstructuressupportinginternational

trade–lowertradebarriers,significantimprovementsto

customsproceduresandsuperiorinfrastructure.

Aten-yearinfrastructureoverhaulworth$11bnisplanned,

whichisexpectedtohavepositivespilloversonagro-

processing,manufacturingandtrade,accordingtoan

IMFreport.Upgradingitstransportationnetworkand

electricitygenerationcapacityisitstopeconomicpriority.

Onthedownside,2016wasanelectionyear.Yoweri

Museveni,whohasruledUgandafor30years,wasre-

electedaspresidentamidarrestsofoppositionpoliticians

andallegationsofrigging.Themainoppositionleaderhas

beenarrestedmultipletimessincetheelection.

Nigeria

Nigeriawastheworstperformerinthisyear’sIndex,

fallingbyninespotsto24thasitsscorefellby0.43

points.

Theprimarydriverofitscollapseisthatitseconomic

growthforecastshavebeenslashed.IntheIMF’sOctober

2014WorldEconomicOutlook,GDPgrowthratesfor

2015-2020averagedaround7%.Thefollowingyear,they

werecutto4%,andthelatestroundofforecastshas

thefigureintherangeof1-2%,withrecessionoverall

for2016.Theeconomyshrankinthefirsthalfof2016,

signallingthatNigeriaisexperiencingitsfirstrecession

since2004.

Lowoilpricesareinteractingwithdifficultdomestic

politicalandeconomicconditions.Economicactivityis

beingdisruptedbyshortagesofforeignexchange(thanks

toloweroilrevenues),militantactivityintheNigerDelta,

andelectricityblackouts.

Theactivitiesoftheso-calledNigerDeltaAvengers,

includingthedestructionofpipelinesandsabotageof

wells,havecontributedtoafallinoilproduction.Forthe

secondquarterof2016,productionwasdownbynearly

20%year-on-year.InJune,withthevalueofthenaira

underpressure,theNigerianCentralBankabandoned

itspegof197perUSdollar.ForAugust,Septemberand

October,thevalueofthenairahasaveragedover300per

dollar.Theeffectofoiltroublesonthe‘real’economyis

evident,particularlybadforthosereliantonimportsgiven

theweakeningexchangerate,orthosewithgovernment

contracts.



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PresidentMuhammaduBuharitookuntilNovember2015

toformanewgovernment,havingbeenelectedinspring

ofthesameyear.Thebudgetfor2016wasn’tapproved

untilMay2016,delayinginfrastructurespending,further

suppressinggrowth.

Thailand

Thailand’sscorefell0.24points,pushingthecountry

downtwospotsto15thintheIndex.

Broad-baseddeclineacrossallthreesub-indiceshas

beenrecorded,asGDPgrowthprospectsandquality

ofinfrastructureworsenedyear-on-year.Onamore

positivenote,thegovernmentismullingoverdoublingthe

infrastructurebudgetto$102bn.

IMFdatasuggestsGDPforecastsforthenextfiveyears

haveslippedfromthe4%-5%rangetoanaverageof3%.

Thailandappearstobestuckintheso-calledmiddle-

incometrap.Itisadevelopingeconomythatgrewquickly

thankstocheaplabourandheavycapitalinvestment,

buthassincefailedtoadvanceastheseadvantages

havedriedup.Growthwasfuelledbyexports,butmajor

exportsfromThailandsuchashard-diskdrivesare

becominglessandlessimportant.Ithasn’tinnovatedand

progressedupthevaluechain,likeChina.

South Africa

SouthAfricaslippedfourplacesintheIndexto21st.

CertainMarketCompatibilitysub-Indexmeasures,such

asrisksofcrime,violenceandterrorismhurtSouthAfrica.

Furthermore,FDI,alsopartoftheMarketCompatibility

sub-Index,felltoa10-yearlowin2015,according

toUNCTADdata.FDIdecreasedby69%to$1.8bn.

UNCTADattributedtheweakperformanceto“lacklustre

economicperformance,lowcommoditypricesand

higherelectricitycosts”.Sell-offsofnon-coreassets

inmanufacturing,mining,consultingservicesand

telecommunicationscontributedtothedeclineinFDI.

Evenexcludingdivestments,however,inflowswere

considerablylowerowingtotheeconomy’scontinued

relianceonmineral-basedexports.

Aparticularconcernisthatinfrastructuredevelopment

appearstohavestalled,bothintransportandelectricity,

withpowershortagesstillchronic.

TheIMFprojectedthatGDPwouldremainflatin2016

withonlyamodestrecoveryin2017ascommodityand

droughtshocksdissipateandpowersupplyimproves.

Biggest movers by rank

Thetwolargestmoversupbyrank,Iran(+8)andUganda

(+6),arealsotwoofthethreelargestmoversbyscore.

Bahrain(+5)hashadthethirdhighestjumpinrank,with

itsscorerisingby0.21points.Itsimprovementslargely

stemfrombroad-basedgainsinitsMarketCompatibility

sub-Index.HigherFDI,lowertradebarriersandlower

businesscostsofcrime,violenceandterrorismwere

reported.

ThelargestmoversdowninrankareNigeria(-9),

Tunisia(-5),Paraguay(-4),Uruguay(-4)andSouth

Africa(-4).Tunisia’sscorefell0.12,asthecountry

lostgroundinCompatibilityandConnectedness.Its

customsproceduresarejudgedtobeconsiderably

moreburdensomethisyear.Theremainingtwomarkets,

Paraguay(-0.05inscore)andUruguay(-0.13inscore),

bothconsiderthemselvesvictimofthewidereconomic

malaiseinSouthAmerica,theepicentrebeingBrazil.In

2015,BrazilianimportsfromSouthAmericadroppedby

28%.Around30%ofParaguay’sexportsgotoBrazil,

whileforUruguaythefigureisaround20%.

New Index Entrants

Iranisthemostimprovedemergingmarketinthis

year’sIndex,risingeightpositionsto18thoverallas

itincreasinglybecomespartoftheglobaleconomy

andlogisticsproviders’strategies.AlongsideIran,four

otheremergingmarketswereaddedtotheIndexfor

2017–Ghana(39th),Myanmar(48th),Angola(49th)and

Mozambique(50th).Asrelativelysmallmarketswith

difficultbusinessenvironmentsorpoorinfrastructure,it

isnotsurprisingthattheyranktowardthebottomofthe

Index.

TheIndexscoresofMyanmar,AngolaandMozambique

allfellmodestlyyear-on-year,whileGhana’sscore

improvedby0.13,adecentifnotspectacular

performance.Thesemarketsobviouslypresent

challengesforanylogisticsprovider,buttherearealso

opportunitiesforthemtotaketheleadinofferingmore

advancedservices.



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Cubagarneredmuchinterestin2016becauseofthethaw

initsrelationshipwiththeUSandinitialstepsaspartofa

gradualliftingofthe56-yearUStradeembargoonCuba.

USPresident-electDonaldTrumphassuggestedhe

mightreversecourseandtakeatougherlineoneconomic

tieswithCuba,soprospectsareuncertainfornow.

Cubawasconsideredforpossibleinclusioninthe2017

Index.However,TransportIntelligenceandAgilitydecided

againstaddingCubauntilmorereliabledataisavailable.

ComparedtoemergingmarketsintheIndex,Cubalacks

comparabledataforfinancialstability,FDI,prevalence

oftradebarriers,qualityofinfrastructure,efficiencyofits

customsandborderregime,andthebusinesscostsof

crime,violenceandterrorism.

WhatcanwesayaboutCuba’sbusinessclimate?It

appearstobechallenging.TheCubangovernment

controlsmorethanthree-quartersoftheeconomy.

Someassertthatprivateenterpriseisontheincrease,

thoughcriticsmaintainthatsmallbusinessesmustobtain

licencestooperate,givingthestatealmostfullcontrol.

Cubancitizenshaverelativelylowpurchasingpower,and

Cuba’sphysicalinfrastructureisbadlyoutdated.Despite

allofthis,someCanadianandEuropeancompanies

havebeenoperatingsuccessfullyinCubaforovertwo

decades.Amovethatinterestedmanyin2014wasthe

creationofaspecialeconomiczoneatthePortofMariel.

Thegovernmenthopestoattract$8.2bnofFDIandmore

than300ventures.

WhatdoesavailabledatatellusaboutCubainrelation

tothe50Indexmarkets?Cubaisarelativelysmall

market,ranking39thinbothGDP(PPP)andpopulation.

Itseconomicgrowthforecastisbetterthanmost,

ranking17thhighest,althoughthisiscloudedwithmore

uncertaintythanmanyotheremergingmarketsgiventhe

uncertaincourseofitsrelationshipwiththeUS.Perhaps

theclosestavailableproxyfortheCompatibilityand

Connectednesssub-IndicesistheWorldBank’sLogistics

PerformanceIndex.Bythismeasure,Cubaranks47th.

ItisclearthenthatCubawouldnotentertheEmerging

MarketsIndexasimpressively,forinstance,asIran.More

likely,itwouldbeamongthelowerechelonsoftheIndex

alongsidetheothernewentrants,intherangeof30th

to45thplace.Itisnotappropriatetoofferanarrower

estimategiventheconsiderableuncertaintysurrounding

thisintriguingmarket.

Cuba: A Market Turning Heads

“When you hear that multi-nationals

are betting on Cuba, it gives you a

level of comfort, but Cuba remains

largely opaque as a market. There

is very little reliable information

about the market – no business or

competitive intelligence, no data or

government reporting. There is a

need for greater transparency.”

“If you go to events with Cuban

delegations and inquire about

opportunities, you inevitably

get assigned to a government

company as your partner. There is

still strong state control. The need

for infrastructure development is

creating pressure to free up pieces

of the logistics market, but it’s still

premature.”

“Major freight forwarders are

intrigued by Cuba but generally

have not established an operational

presence there. You still have an

environment where all the steps

of the supply chain are under

government control.”

Agility’s Take / Cuba



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Ranking Country 2017 Index 2016 Index Change in Ranking1 China 7.88 8.00 -

2 India 7.14 6.83 1

3 UAE 7.07 7.02 -1

4 Malaysia 6.66 6.71 -

5 Saudi Arabia 6.48 6.67 -

6 Indonesia 6.41 6.50 -

7 Brazil 6.23 6.46 -

8 Mexico 6.15 6.25 -

9 Turkey 6.09 6.05 1

10 Russia 6.09 6.23 -1

11 Chile 5.88 6.01 -

12 Qatar 5.78 5.88 -

13 Oman 5.62 5.63 1

14 Kazakhstan 5.60 5.34 4

15 Thailand 5.53 5.77 -2

16 Philippines 5.42 5.48 -

17 Pakistan 5.39 5.21 3

18 Iran 5.35 4.97 8

19 Vietnam 5.33 5.25 -

20 Egypt 5.29 5.16 2

21 South Africa 5.26 5.43 -4

22 Morocco 5.23 5.19 -1

23 Bahrain 5.16 4.95 5

24 Nigeria 5.07 5.50 -9

25 Colombia 4.99 5.05 -1

26 Kuwait 4.98 5.12 -3

27 Bangladesh 4.94 4.96 -

28 Argentina 4.94 4.56 3

29 Uruguay 4.90 5.03 -4

30 Peru 4.78 4.85 -1

31 Algeria 4.73 4.55 1

32 Sri Lanka 4.67 4.67 -2

33 Jordan 4.58 4.40 1

34 Ecuador 4.44 4.44 -1

35 Ukraine 4.14 4.26 -

36 Bolivia 4.03 3.84 2

37 Ethiopia 4.00 3.78 3

38 Tanzania 3.98 3.76 3

39 Ghana 3.97 3.84 -

40 Paraguay 3.86 3.91 -4

41 Uganda 3.81 3.48 6

42 Tunisia 3.78 3.90 -5

43 Kenya 3.76 3.55 2

44 Venezuela 3.72 3.74 -2

45 Cambodia 3.58 3.55 1

46 Libya 3.57 3.70 -3

47 Lebanon 3.50 3.62 -3

48 Myanmar 3.45 3.46 -

49 Angola 3.38 3.40 1

50 Mozambique 3.38 3.46 -1

Source: Transport IntelligenceNote: In 2017, Iran, Ghana, Myanmar, Angola and Mozambique have been added to the Index. As such, scores for 2016 have been restated to include these emerging markets.Note: For further explanation, please refer to Section 3: Methodology.

The 2017 Index



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ChinaIndiaUAE

MalaysiaSaudi Arabia

IndonesiaBrazil

MexicoTurkeyRussia

ChileQatarOman

KazakhstanThailand

PhilippinesPakistan

IranVietnam

EgyptSouth Africa

MoroccoBahrainNigeria

ColombiaKuwait

BangladeshArgentina

UruguayPeru

AlgeriaSri Lanka

JordanEcuadorUkraineBolivia

EthiopiaTanzania

GhanaParaguay

UgandaTunisiaKenya

VenezuelaCambodia

LibyaLebanon

MyanmarAngola

Mozambique

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00


The 2017 Index



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Whilethereremain16economieswithGDPabove

$300bn,newlyintroducedIranmovesinto11thinthe

groupingandreplacesMalaysiawhich,duetolower

growthandcurrencyvolatility,slipsintothelower

grouping.AlsofallingoutofthetopgroupisColombia,

whileEgyptrisesfromthesecondgrouping.Despitethis,

itremainstruethatthereisastrongcorrelationbetween

sizeofeconomyandhighpotentialasanemerging

logisticsmarket.

Todependsolelyonmarketsize,however,wouldpainta

misleadingpictureofwhattruelogisticsmarketpotential

lookslike.AmongstthisgrouparetheUAEandSaudi

ArabiawithGDPjust3.4%and5.9%thesizeof1st

rankedChina,whilebothoutperformthemuchlarger

economiesofBrazilandRussia,forexample.

Note: GDP here is measured in current US$. Venezuela is included here based on the latest available GDP data for the country, which reflects 2013.

Agility Emerging Markets Logistics Index for Countries with GDP more than US$300bn

Ranking Country Market size and growth sub-index

Market compatibility sub-index

Market connected-ness sub-index

Total Index

1 China 9.23 6.91 6.80 7.88

2 India 9.39 5.39 5.43 7.14

3 UAE 5.73 8.77 7.74 7.07

4 Saudi Arabia 6.48 6.88 6.25 6.48

5 Indonesia 8.64 4.52 4.79 6.41

6 Brazil 7.65 5.95 4.72 6.23

7 Mexico 7.42 4.75 5.41 6.15

8 Turkey 6.76 5.67 5.53 6.09

9 Russia 6.80 5.45 5.59 6.09

10 Thailand 6.53 4.27 5.02 5.53

11 Iran 5.98 5.09 4.76 5.35

12 Egypt 6.77 2.82 4.88 5.29

13 South Africa 5.52 4.25 5.49 5.26

14 Nigeria 7.07 3.37 3.63 5.07

15 Argentina 5.16 5.25 4.51 4.94

16 Venezuela 3.55 3.74 3.91 3.72




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Thetwomarketsthatfellintothisgrouping–Malaysia

andColombia–experienceddifferentfortuneshere.

Malaysia’seconomyisstilllarge,anditsopennessto

tradeandhighvalueexportsmeansitranksasthetop

market.Colombia,however,despiteaneconomywhich

rivalsthatofMalaysia,hasperformedmuchlesswellin

openingitsmarkettointernationaltrade,withexports

heavilyreliantonoilandagriculturalproducts.

Comparingthescoresofthecountriesherewiththose

inthegroupingwithGDPabove$300bnrevealsthat28

ofthe34outperformVenezuela,while13wouldbetteror

matchArgentina.WithMalaysiarankedhereasaresult

ofcurrencyfluctuations,itismoreinsightfultolookat

Chile’scomparativescore–theLatinAmericanmarket

wouldhaverankedinthetop10,dueprimarilytoalower

rankingintheMarketSize&GrowthAttractivenesssub-

Index.Indeed,Chile’sCompatibilityandConnectedness

scoresrivalthoseofSaudiArabiaandChina.

Agility Emerging Markets Logistics Index for Countries with GDP less than US$300bn



Market connected-ness sub-index

Total Index

1 Malaysia 6.65 6.22 6.91 6.66

2 Chile 5.29 6.25 6.38 5.88

3 Qatar 4.71 8.26 5.71 5.78

4 Oman 4.12 7.80 6.22 5.62

5 Kazakhstan 4.81 6.95 5.80 5.60

6 Philippines 7.03 4.36 4.08 5.42

7 Pakistan 7.25 2.95 4.51 5.39

8 Vietnam 5.73 5.32 4.87 5.33

9 Morocco 4.34 6.41 5.65 5.23

10 Bahrain 3.45 6.99 6.20 5.16

11 Colombia 5.94 2.89 5.01 4.99

12 Kuwait 4.69 6.33 4.60 4.98

13 Bangladesh 6.05 4.52 3.85 4.94

14 Uruguay 3.56 6.83 5.45 4.90

15 Peru 4.94 4.31 4.84 4.78

16 Algeria 5.02 4.96 4.26 4.73

17 Sri Lanka 3.44 5.77 5.51 4.67

18 Jordan 3.05 5.98 5.64 4.58

19 Ecuador 2.92 4.73 6.06 4.44

20 Ukraine 3.62 4.31 4.66 4.14

21 Bolivia 3.01 5.83 4.27 4.03

22 Ethiopia 3.72 4.00 4.32 4.00

23 Tanzania 3.44 4.72 4.21 3.98

24 Ghana 3.12 5.16 4.33 3.97

25 Paraguay 3.06 4.75 4.32 3.86

26 Uganda 3.18 3.75 4.59 3.81

27 Tunisia 3.28 4.09 4.19 3.78

28 Kenya 3.61 2.29 4.71 3.76

29 Cambodia 2.80 4.61 3.95 3.58

30 Libya 2.97 2.20 5.01 3.57

31 Lebanon 2.71 4.37 3.97 3.50

32 Myanmar 3.69 2.67 3.60 3.45

33 Angola 3.31 3.39 3.46 3.38

34 Mozambique 2.78 3.61 3.95 3.38




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Agility Emerging Markets Logistics Index – Sub-Indices



Market connectedness sub-index

Total Index

1 China 9.23 6.91 6.80 7.88

2 India 9.39 5.39 5.43 7.14

3 UAE 5.73 8.77 7.74 7.07

4 Malaysia 6.65 6.22 6.91 6.66

5 Saudi Arabia 6.48 6.88 6.25 6.48

6 Indonesia 8.64 4.52 4.79 6.41

7 Brazil 7.65 5.95 4.72 6.23

8 Mexico 7.42 4.75 5.41 6.15

9 Turkey 6.76 5.67 5.53 6.09

10 Russia 6.80 5.45 5.59 6.09

11 Chile 5.29 6.25 6.38 5.88

12 Qatar 4.71 8.26 5.71 5.78

13 Oman 4.12 7.80 6.22 5.62

14 Kazakhstan 4.81 6.95 5.80 5.60

15 Thailand 6.53 4.27 5.02 5.53

16 Philippines 7.03 4.36 4.08 5.42

17 Pakistan 7.25 2.95 4.51 5.39

18 Iran 5.98 5.09 4.76 5.35

19 Vietnam 5.73 5.32 4.87 5.33

20 Egypt 6.77 2.82 4.88 5.29

21 South Africa 5.52 4.25 5.49 5.26

22 Morocco 4.34 6.41 5.65 5.23

23 Bahrain 3.45 6.99 6.20 5.16

24 Nigeria 7.07 3.37 3.63 5.07

25 Colombia 5.94 2.89 5.01 4.99

26 Kuwait 4.69 6.33 4.60 4.98

27 Bangladesh 6.05 4.52 3.85 4.94

28 Argentina 5.16 5.25 4.51 4.94

29 Uruguay 3.56 6.83 5.45 4.90

30 Peru 4.94 4.31 4.84 4.78

31 Algeria 5.02 4.96 4.26 4.73

32 Sri Lanka 3.44 5.77 5.51 4.67

33 Jordan 3.05 5.98 5.64 4.58

34 Ecuador 2.92 4.73 6.06 4.44

35 Ukraine 3.62 4.31 4.66 4.14

36 Bolivia 3.01 5.83 4.27 4.03

37 Ethiopia 3.72 4.00 4.32 4.00

38 Tanzania 3.44 4.72 4.21 3.98

39 Ghana 3.12 5.16 4.33 3.97

40 Paraguay 3.06 4.75 4.32 3.86

41 Uganda 3.18 3.75 4.59 3.81

42 Tunisia 3.28 4.09 4.19 3.78

43 Kenya 3.61 2.29 4.71 3.76

44 Venezuela 3.55 3.74 3.91 3.72

45 Cambodia 2.80 4.61 3.95 3.58

46 Libya 2.97 2.20 5.01 3.57

47 Lebanon 2.71 4.37 3.97 3.50

48 Myanmar 3.69 2.67 3.60 3.45

49 Angola 3.31 3.39 3.46 3.38

50 Mozambique 2.78 3.61 3.95 3.38



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Market Size & Growth Attractiveness

ThemostsymbolicdevelopmentwithintheMarketSize

&GrowthAttractivenesssub-IndexthisyearisthatIndia

hassurpassedChinatotakethetopspotintheranking

forthefirsttime.ThisismainlythankstoIndia’ssuperior

economicgrowthforecastsoverthemedium-term.

Anothermajordevelopmentintheyearisthedeclineof

Nigeria’sscoreandrank–itseconomicoutlookhasbeen

substantiallydowngradedfollowingtheoilpricecrash

amongotherthings.Othermajoroilproducershave

alsosufferedtoonedegreeoranother,thoughNigeria

appearstohavebeenthehardesthit.

Givendifficultglobaleconomicconditions,therearen’t

toomanymarketsmakingdecentstridesforward,but

thePhilippinesisoneofthem,movingupfrom12thto

8th.Egyptisanother,upfrom14thto10th,asitsscore

hasimprovedto6.77.Argentinahasjumpedfrom28thto

22ndprimarilybyvirtueoftheMacrigovernmentsetting

outacredibleeconomicplan.

OfthefivecountriesincludedintheIndexforthefirst

time,Iranentersat16th,sandwichedbetweenitsregional

rivalsSaudiArabia(14th)andUAE(19th).Iranalso

madesubstantialgainsinthissub-Indexyear-on-year,

movingupfrom21stto16th.Theremainingfournew

entrants,Angola,Ghana,MozambiqueandMyanmar,are

unsurprisinglyalltowardsthebottomoftheranking.Their

scoresandranksdidnotchangemuchcomparedtolast

year.



1 India 9.39

2 China 9.23

3 Indonesia 8.64

4 Brazil 7.65

5 Mexico 7.42

6 Pakistan 7.25

7 Nigeria 7.07

8 Philippines 7.03

9 Russia 6.80

10 Egypt 6.77

11 Turkey 6.76

12 Malaysia 6.65

13 Thailand 6.53

14 Saudi Arabia 6.48

15 Bangladesh 6.05

16 Iran 5.98

17 Colombia 5.94

18 Vietnam 5.73

19 UAE 5.73

20 South Africa 5.52

21 Chile 5.29

22 Argentina 5.16

23 Algeria 5.02

24 Peru 4.94

25 Kazakhstan 4.81

26 Qatar 4.71

27 Kuwait 4.69

28 Morocco 4.34

29 Oman 4.12

30 Ethiopia 3.72

31 Myanmar 3.69

32 Ukraine 3.62

33 Kenya 3.61

34 Uruguay 3.56

35 Venezuela 3.55

36 Bahrain 3.45

37 Sri Lanka 3.44

38 Tanzania 3.44

39 Angola 3.31

40 Tunisia 3.28

41 Uganda 3.18

42 Ghana 3.12

43 Paraguay 3.06

44 Jordan 3.05

45 Bolivia 3.01

46 Libya 2.97

47 Ecuador 2.92

48 Cambodia 2.80

49 Mozambique 2.78

50 Lebanon 2.71



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IndiaChina

IndonesiaBrazil

MexicoPakistan

NigeriaPhilippines

RussiaEgypt

TurkeyMalaysiaThailand

Saudi ArabiaBangladesh

IranColombiaVietnam

UAESouth Africa

ChileArgentina

AlgeriaPeru

KazakhstanQatar

KuwaitMorocco

OmanEthiopia

MyanmarUkraine

KenyaUruguay

VenezuelaBahrain

Sri LankaTanzania

AngolaTunisia

UgandaGhana

ParaguayJordanBoliviaLibya

EcuadorCambodia

MozambiqueLebanon

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00

Market Size & Growth Attractiveness Sub-Index




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Market Compatibility

Sevenofthetop10rankedmarketsforCompatibility

nowcomefromtheMiddleEast&NorthAfricaregion,

comparedtojustfivelastyear.TheUAEretainsits

positionatthetopforathirdconsecutiveyear,with

itsabundanceoffreetradezones,nocorporationtax,

theofferoffullownershipandunlimitedrepatriationof

profitsstillsettingthebenchmarkforemergingmarkets.

Thatsaid,Qatar(2nd)hasmoreorlesshalvedthegap

betweenitselfandtheUAEintermsofscore,astrade

barrierscontinuetobediminished.

WhileOman’sscorealsoimproved,Bahrain’sgainwas

muchmorepronounced.Ithasmovedfrom11thto4th

onthebackoflowertradebarriersandbusinesscosts

ofcrimeandterrorism.Morocco(9th)wastheothernew

entrytothetop10,asChileandMalaysiafelloutside.

Russiacontinuesitsdescentdowntherankings

from16thto18thasitsrelationshipswithmostofthe

internationalcommunitycontinuetobefrosty,though

therelationshipbetweenPutinandTrumpwillbeoneto

watchgoingforward.

Indiahasprogressedfrom21stto19thasFDIhas

increasedandtradebarriershavelowered.Enhanced

internationalinvestmentwillnodoubtdependon

improvementstothecountry’sregulatoryand

bureaucraticstructure.ThenewsaroundGSTappears

tohavegeneratedrenewedhopethatmeaningful

improvementscanandwillbemade.

AmongthefivenewentrantstotheIndex,Ghanaranks

highestat22nd,oneplacebetterthanIranat23rd.

Ghanahasimprovedyear-on-yearthankstolowertrade

barriersandbusinesscostsofcrimeandterrorism.Its

aboveaverageoverallscoresinthesefacetsarecore

driversbehinditsdecentranking.Mozambique,Angola

andMyanmaralllanguishbelow40thplace.


Ranking Country Market Compatibility sub-index

1 UAE 8.77

2 Qatar 8.26

3 Oman 7.80

4 Bahrain 6.99

5 Kazakhstan 6.95

6 China 6.91

7 Saudi Arabia 6.88

8 Uruguay 6.83

9 Morocco 6.41

10 Kuwait 6.33

11 Chile 6.25

12 Malaysia 6.22

13 Jordan 5.98

14 Brazil 5.95

15 Bolivia 5.83

16 Sri Lanka 5.77

17 Turkey 5.67

18 Russia 5.45

19 India 5.39

20 Vietnam 5.32

21 Argentina 5.25

22 Ghana 5.16

23 Iran 5.09

24 Algeria 4.96

25 Mexico 4.75

26 Paraguay 4.75

27 Ecuador 4.73

28 Tanzania 4.72

29 Cambodia 4.61

30 Indonesia 4.52

31 Bangladesh 4.52

32 Lebanon 4.37

33 Philippines 4.36

34 Ukraine 4.31

35 Peru 4.31

36 Thailand 4.27


38 Tunisia 4.09

39 Ethiopia 4.00

40 Uganda 3.75

41 Venezuela 3.74

42 Mozambique 3.61

43 Angola 3.39

44 Nigeria 3.37

45 Pakistan 2.95

46 Colombia 2.89

47 Egypt 2.82

48 Myanmar 2.67

49 Kenya 2.29

50 Libya 2.20



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UAEQatarOman

BahrainKazakhstan

ChinaSaudi Arabia

UruguayMorocco

KuwaitChile

MalaysiaJordan

BrazilBolivia

Sri LankaTurkeyRussia

IndiaVietnam

ArgentinaGhana

IranAlgeriaMexico

ParaguayEcuadorTanzania

CambodiaIndonesia

BangladeshLebanon

PhilippinesUkraine

PeruThailand

South AfricaTunisia

EthiopiaUganda

VenezuelaMozambique

AngolaNigeria

PakistanColombia

EgyptMyanmar

KenyaLibya

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00

Market Compatibility Sub-Index




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Market Connectedness

Aswasthecaselastyear,thetop10rankingpositions

forMarketConnectednessexhibitalargeamountof

continuityyear-on-yearasthemarketstooccupythetop

fourpositions–UAE,Malaysia,ChinaandChile–were

identical,whilenineofthe10retainedtheirpositionsin

thetop10.

Russiaregressedfrom10thto13thastheoverallquality

ofitsinfrastructureisjudgedtohaveworsened,ashas

theburdenofitscustomsprocedures.Itwasreplacedin

thetop10byKazakhstan,whichhasjumpedupto9th

onthebackofascoregainofalmost0.7,thankstobetter

infrastructureandcustomsprocedures.

Twomajormarkets,IndiaandBrazil,appeartobegoing

indifferentdirections.Indiaisclearlytakingstepsto

addressitsinfrastructuredeficit,havingmovedupto

18th,whileBraziliscontinuingitsslideintomediocrityas

ithasfallento28th.

AmongthefivenewIndexmarkets,Iranranksbestat

27th,followedbyGhana(35th),whileMozambique(44th),

Myanmar(49th)andAngola(50th)areamongthepoorest

connectedemergingmarkets.


Ranking Country Market Connectedness sub-index

1 UAE 7.74

2 Malaysia 6.91

3 China 6.80

4 Chile 6.38

5 Saudi Arabia 6.25

6 Oman 6.22

7 Bahrain 6.20

8 Ecuador 6.06

9 Kazakhstan 5.80

10 Qatar 5.71

11 Morocco 5.65

12 Jordan 5.64

13 Russia 5.59

14 Turkey 5.53

15 Sri Lanka 5.51


17 Uruguay 5.45

18 India 5.43

19 Mexico 5.41

20 Thailand 5.02

21 Colombia 5.01

22 Libya 5.01

23 Egypt 4.88

24 Vietnam 4.87

25 Peru 4.84

26 Indonesia 4.79

27 Iran 4.76

28 Brazil 4.72

29 Kenya 4.71

30 Ukraine 4.66

31 Kuwait 4.60

32 Uganda 4.59

33 Pakistan 4.51

34 Argentina 4.51

35 Ghana 4.33

36 Paraguay 4.32

37 Ethiopia 4.32

38 Bolivia 4.27

39 Algeria 4.26

40 Tanzania 4.21

41 Tunisia 4.19

42 Philippines 4.08

43 Lebanon 3.97

44 Mozambique 3.95

45 Cambodia 3.95

46 Venezuela 3.91

47 Bangladesh 3.85

48 Nigeria 3.63

49 Myanmar 3.60

50 Angola 3.46



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UAEMalaysia

ChinaChile

Saudi ArabiaOman

BahrainEcuador

KazakhstanQatar

MoroccoJordanRussiaTurkey

Sri LankaSouth Africa

UruguayIndia

MexicoThailand

ColombiaLibyaEgypt

VietnamPeru

IndonesiaIran

BrazilKenya

UkraineKuwait

UgandaPakistan

ArgentinaGhana

ParaguayEthiopia

BoliviaAlgeria

TanzaniaTunisia

PhilippinesLebanon

MozambiqueCambodiaVenezuela

BangladeshNigeria

MyanmarAngola

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00

Market Connectedness Sub-Index




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Theemergingmarketsquadrantdisplaystherelative

positionsofthecountriesintheIndex.Thechartis

dividedintofourareasbasedonsizeandpotential

barrierstoentry(anaverageofMarketCompatibilityand

MarketConnectedness).

Countriesinthetoprightquartile,suchasChina,

representthebiggesttargetsforlogisticsinvestments

aswellastheeasiestmarketstooperatein.Inthetop

leftquartilearethosecountriesthatrepresentsmaller

opportunities,butareeasilypenetrated.OmanandQatar

representthesetypesofopportunities.

Thebottomhalfofthechartincludescountriesinwhich

therearesignificantbarrierstoentryanddifficultiesin

operating.Astheseeconomiesmatureandconnect

morewithglobalmarketstheyarelikelytomovetowards

theupperquartiles.NigeriaandKenyaareexamplesof

thesetypesofopportunities.

10.00

9.00

8.00

7.00

6.00

5.00

4.00

3.00

2.00

1.00

0.00

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00Market Size and Growth

Smaller markets but good prospects and easy entry High market potential with few barriers to entry

Low potential except niche markets, challenging market environment Large markets but potential constrained by barriers to entry

Mar

ket C

ompa

tibili

ty a

nd C

onne

cted

ness

Oman Qatar

Iran

UAE

MalaysiaSaudi Arabia

RussiaBrazil

Mexico

Pakistan

Philippines

Nigeria

Indonesia

India

China

Turkey

South AfricaBangladesh

Colombia

Egypt

ThailandPeru

Vietnam

Algeria

Uruguay

Bahrain

Sri LankaJordan

Ecuador

Paraguay

Myanmar

Tunisia

Angola

Ethiopia

Tanz

ania

Ukraine

Argentina

MoroccoKazakhstan

Kuwait

Chile

VenezuelaKenya

Bolivia

LebanonCambodia

Libya

UgandaMozambique

Ghana

Emerging Markets Quadrant




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45

Emerging Market Trade Lanes

Tradevolumesarestrugglinginemergingmarkets.The

followinggraphtrackstheiryear-on-yearexportand

importvolumegrowth.Specifically,itmeasuresthetotal

valueoftradeovertime,butholdsthepricesofallgoods

constant,sothatchangesareonlydrivenbyvariationin

thequantityofgoodsexportedorimported.

If2015wasayearoflowornogrowth,then2016issetto

beworsestill.ForJanuary-August2016,emergingmarket

importvolumesaredownby2.6%year-on-year,while

forexportsthedrophasbeen0.3%.Alargepartofthe

storyisweaknessinAsia,specificallyChina.Emerging

Asiaimportsandexportsaredownby1.4%and2.0%

respectivelyoverthesameperiod.Importvolumesin

LatinAmerica(-3.9%)andAfrica&MiddleEast(-11.9%)

arefaringfarworsestill,thoughtheirexportvolumesare

doingconsiderablybetter(4.9%and2.2%).Overall,2016

hasbeenaverypooryearforemergingmarkettrade,the

worstsincethecrisis.

Six



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46

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%

-5.0%

-10.0%

-15.0%

-20.0%

2008 2009 2010 2011 2012 2013 2014 20162015

Imports Exports

Emerging market merchandise trade volumes, six-month average, % change on a year earlier

Source: Ti calculations, using data from CPB World Trade Monitor

Inlastyear’sIndex,itwasnotedthatwhilethesituation

wasdirein2015,atleastemergingmarkettradewas

predictedbytheIMFtopickupoverthenextfiveyears

orso.Tradevolumegrowthratesto2020foremerging

marketsoverallwereexpectedtoreturntosomething

likethoseexperiencedfrom2012-2014,intheregionof

5%.Certainlyshortoftheratesexperiencedpriortothe

crisis(typicallyintherangeof5-10%),butstillbetterthan

thelow/nogrowthperformanceof2015.Inthelatestset

ofIMFforecasts(October2016),theexportandimport

CAGRsfor2015-2020foremergingmarketshaveedged

downtomorelike4%.

Thismasksquitesubstantialdifferencesacrosscountries

however,asthenextchartillustrates.Overthecourse

ofthelast18months,theIMFhasdowngradedChina’s

importandexportvolumegrowthforecastsfromboth

measuresbeingover6%tonowbeingjustover2%.With

FactoryAsiafeedingChina,thishasverymuchputthe

brakesonemergingmarketsgenerally.Elsewhere,Brazil’s

importvolumeforecastisnownegative,asisNigeria’s.

Itisnotalldoomandgloomthough.Withinternational

sanctionseasing,Iran’stradeprospectsarenowfar

stronger.Argentinahasenjoyedasimilarbouncethanks

tothenewgovernment’seconomiccompetence.Vietnam

hasmovedfromanalreadystrongpositionofgrowth

inthehighsingledigitstodouble-digitgrowthinboth

importsandexports.



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47

Trade Volume Forecasts for Selected Emerging Markets 2015-2020 CAGRs

14.0

12.0

10.0

8.0

6.0

4.0

2.0

0.0

-2.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0

Import Volume Forecast 2015-2020

Expo

rt V

olum

e Fo

reca

st 2

015-

2020

Import ExportChina 6.6% 6.5%India 7.8% 8.1%UAE 11.0% 8.7%Indonesia 5.7% 7.0%Brazil 3.0% 5.6%Mexico 6.7% 6.8%Nigeria 3.8% 1.6%Argentina 0.8% 1.4%Iran -0.2% 0.4%Vietnam 6.7% 6.1%

Import ExportChina* 2.5% 2.4%India* 7.3% 6.8%UAE* 5.0% 4.1%Indonesia* 7.5% 7.3%Brazil* -0.3% 3.9%Mexico* 5.1% 5.6%Nigeria* -1.3% 1.8%Argentina* 5.5% 4.8%Iran* 5.4% 5.6%Vietnam* 11.9% 12.7%

Soifyoulookhardenough,brightspotscanbefound.

Thatsaid,giventhelatestCPBdata,theIMFpredictions

for2016emergingmarketimportandexportvolume

growthof2.5%and3.0%respectivelylookliketheywill

beover-estimates.Havetheyalsoover-estimatedtrade

volumegrowthto2020?Onefactornotincludedintheir

forecastswillbetheimplicationsoftheelectionofDonald

Trump.

WhatdoesPresidentTrumpmeanforemergingmarket

trade?Basedonhisrhetoric,hemaywellbethesingle

biggestrisktoemergingmarketandworldtradeoverthe

medium-term.Atthisstage,itseemsprudenttoputin

theobligatoryprovisothattryingtopredictthecourseof

actionofDonaldTrumpisdifficult,butitisworthwhileto

lookatafewpotentialscenarioswithsomeharddatain

thebackgroundforcontext.

ThemostobviouswaythatTrumpcanimpactemerging

marketsisthroughtradepolicy.Lookingatthe

importanceoftheUSasanexportpartnertoarangeof

emergingmarkets,itcomesasnosurprisethatMexico’s

exportprofileismoreexposedtotheUSthananyother

emergingmarket.Over80%ofitsgoodsexportsbyvalue

in2015weretotheUS.Noothercountrycomesclose

tothatfigure,thoughthereisagooddealofvariation

amongotheremergingmarkets.Thelabelsonthegraph

displayanestimateofnon-bulkgoodsexportstothe

USasaproportionofeachcountry’stotalnon-bulk

goodsexports.Inmostcases,thedifferencebetween

thisandtheshareofallgoodsissmall,althoughthere

isa5-percentagepointdifferenceforbothBraziland

Indonesia,suggestinglogisticsprovidersexposed

tonon-bulkgoodsinthesemarketscouldbehit

disproportionatelyhard.

Source: Ti calculations, using IMF dataNote: Countries whose names appear without a * are IMF 2015-2020 forecasts released in their April 2015 World Economic Outlook. Countries whose names appear with a * are IMF 2015-2020 forecasts conducted in their October 2016 World Economic Outlook.



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48

Goods Exports to US as a % of Total Goods Exports for Selected Emerging Markets

Goods Exports to US as a % of GDP for Selected Emerging Markets

Source: Ti calculations, using International Trade Centre data

Source: Ti calculations, using International Trade Centre and IMF data

Mexico

Colombia

Cambodia

Vietnam

China

India

Philippines

Brazil

Indonesia

South Africa

Turkey

Nigeria

0%

All Goods Non-Bulk Goods

20%

84%

31%

26%

21%

19%

17%

15%

18%

16%

8%

5%

3%

40% 60% 80% 100%

Mexico

Vietnam

Cambodia

China

Colombia

Philippines

India

Indonesia

South Africa

Brazil

Turkey

Nigeria

0% 5%

27%

15%

12%

4%

3%

3%

2%

2%

2%

1%

1%

1%

10% 15% 20% 25% 30%

LookingathowimportantUSexportsaretoemerging

marketeconomiesoverall,itisclearjusthowpotentially

gravethesituationisforMexico.Morethanaquarterof

itseconomyisaccountedforbygoodsexportstotheUS.

ForVietnamandCambodia,thefiguresareinexcessof

10%.Forprettymuchallothermajoremergingmarkets

though,exposureisnotnearlyashigh.



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AlthoughitisnotclearwhichcountryTrumpmay

targetthemostwithhistradepolicy(hehassuggested

withdrawingfromtheWTO),itseemsagoodbetthat

Mexicoisattheheadofthelist.

HehasthreatenedtoscrapNAFTA,blamingthe

agreementforshippingAmericanjobsoverseas.Hehas

talkedaboutimposingtariffsof35%onMexicangoods

(althoughChinahasbeenthreatenedwith45%).Mexican

centralbankgovernorAgustinCarstenshasstatedthan

an“adverse”resultintheelectioncouldhitthecountry

likea“hurricane”.

Andthisdoesn’tevenconsidertheimpactthatanyother

TrumpcommentsorpossiblepoliciesrelatingtoMexico

hemighthave.Whileemergingmarketseverywherewill

likelybebuffetedby‘Trumptrade’,themiseryforMexico

seemssuretobemanytimesgreaterthanelsewhere.

Fornowthough,aswillbecomeclearbytheendofthe

chapter,anexaminationofemergingmarketairandsea

freighttradefor2016appearstoconcurwiththeCPB’s

ratherdowncastestimationofthestateofemerging

markettradeintheyear.Asisalwaysthecasewith

emergingmarketshowever,2016hasstillseensomevery

stronggrowthoncertaintradelanesdrivenbyexceptional

volumegrowthinparticularcommoditygroups.More

thaneversincethecrisisthough,thosestoriesseemto

befewandfarbetween.Withanincreasinglydifficult

externalenvironment,logisticsproviderswillhavetowork

everhardertomakethemostoftheopportunitiesthat

tradeinemergingmarketspresents.



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Rank Origin Destination 2015 Tons 2016* Tons 15-16 Growth

1 EU China 708,817 722,237 1.9%

2 US China 308,168 308,936 0.2%

3 EU UAE 237,317 242,409 2.1%

4 EU India 156,631 173,090 10.5%

5 EU Mexico 109,240 117,500 7.6%

6 EU Turkey 113,909 116,258 2.1%

7 EU Saudi Arabia 124,538 101,867 -18.2%

8 EU Brazil 99,373 92,730 -6.7%

9 EU South Africa 97,106 87,344 -10.1%

10 US Brazil 96,871 85,680 -11.6%

n/a EU All 50 EM 2,546,513 2,500,547 -1.8%

n/a US All 50 EM 1,091,857 1,023,509 -6.3%

n/a EU and US All 50 EM 3,638,370 3,524,056 -3.1%

Air Freight Top 10 Trade Lanes – EU/US to Emerging Markets

Air Freight EU/US to Emerging Market Top 5 Trade Lanes 2005-2016 Growth

Note: 2016* figures are forecasts Source: Transport Intelligence

400

350

300

250

200

150

100

50

0

2005 2006 2007 2008 2009 2010 2011 2012 20142013 2015 2016

EU-China

2005

= 1

00

US-China EU-UAE EU-India EU-Mexico Source: Transport Intelligence



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The100airfreighttradelanesgoingfromtheEU/US

tothe50selectedemergingmarketsintheIndexare

forecasttonnagegrowthof-3.1%in2016.EUtradelanes

arepredictedgrowthof-1.8%,whereasUStradelanes

areanticipatedvolumegrowthof-6.3%.Thetop10lanes

areexpectedtoaccountforapproximately58%oftotal

airtonnagein2016.Thisforecastimpliesanincreaseof

1.7percentagepointsyear-on-year,signallingthatthetop

10emergingmarketairfreightdestinationsarebecoming

relativelymoreimportantcomparedtothechasingpack.

Chinacontinuestooccupythetoptwospots.Outofall

airfreightgoingfromtheEUtothe50emergingmarkets,

Chinaisexpectedtobetherecipientof28.9%oftonnage

in2016.FortheUS,thecorrespondingfigureis30.2%.

EU-Chinaairfreighttonnageisonceagaincomfortably

morethantwiceaslargeasUS-Chinatonnage,with

thegapwideningfurtherin2016asEUgrowth(1.9%)

exceedstheUS’performance(0.2%).Bothgrowthrates

wereweakhowever.

Bycommodity,EU-Chinaairfreightisenduringamixed

year.Coremanufacturingsub-sectorgroupssuch

asmachinery&machineryparts(141,000tonnesin

2015)andelectronics(97,000tonnes)-whichtogether

accountedforoverathirdoftotalairfreighttonnagein

2015–haveperformedpositivelyintheyear-to-date.For

January-August2016,volumesfortheseproductgroups

haveincreasedby11.7%and4.8%respectivelyyear-

over-year.Otherimportantsectorslikeplastics&plastic

articles(+22.9%)andoptic,photo,medicandsurgical

instruments(+9.2%)arealsodoingwell,thoughvehicles

&vehiclepartstonnageisdown(-6.5%).Theoverall

growthfigurehoweverispulleddownbyweakvolumes

ofdairyproducts(69,000tonnesin2015)andfertilisers

(55,000tonnes).ForJanuary-August2016,volumeshave

collapsedby24.3%and63.6%respectivelyyear-on-year.

US-Chinaairfreightisdominatedbymachinery&

machineryparts(53,000tonnesin2015),electronics

(41,000tonnes),optic,photo,medicandsurgical

instruments(26,000tonnes)andplastics&plasticarticles

(25,000tonnes),whichtogethercomprisedalmosthalfof

airfreighttonnagein2015.ForJanuary-August2016,the

fourgroupshadmixedperformances.Machinery(-3.8%)

andplastics(-14.1%)volumeshavedeteriorated,though

electronics(+8.6%)andoptic,photo,medicandsurgical

instruments(+9.6%)haveincreased.Fruitstonnageis

continuingitsrapidascentseenoverthepastfewyears

andisup39.2%year-on-yeartoover9,000tonnes.

TurningawayfromChina,theonlytradelanesinthe

top10projectedtorecorddecentgrowthratesare

EU-India(+10.5%)andEU-Mexico(+7.6%).EU-India’s

forecastisaresultofbroad-basedgains:its13largest

productgroupsin2015haverecordedhigheryear-on-

yeartonnageforJanuary-August2016.Machinery&

machineryparts(+8.0%to27,000tonnes),optic,photo,

medicandsurgicalinstruments(+7.8%to6,000tonnes),

plastics&plasticarticles(+13.3%to6,000tonnes)

andvehicles&vehicleparts(+29.9%to4,000tonnes)

aresomeofthestandoutperformers.ForEU-Mexico,

althoughmachinery&machinerypartsandvehicles&

vehiclepartstonnagehasdeclinedforJanuary-August

2016year-on-year,electronics(+10.7%),plastics&plastic

articles(+15.8%)andespeciallyappareltonnage(+25.5%

to7,000tonnes)boostedgrowth.Onelogisticsprovider

bettingstronglyonMexicoisDHLExpress.InOctober

2016,itannouncedthatitwouldinvest$100minits

Mexicoinfrastructure.ItsMexicoCEOsaidthatDHLsaw

double-digitgrowthin2015andattributedalargepart

ofthistogrowthfromtheelectronicssector,aswellas

strongMexico-USvolumes.

Elsewhere,EU-UAEtonnageisforecastsubduedgrowth

ofjust2.1%,thoughmachinery&machineryparts

(+14.3%to22,000tonnes)volumehasdevelopedwell

forJanuary-August2016year-over-year.Thestoryis

remarkablysimilarforEU-Turkey:overallvolumegrowth

for2016isweakat2.1%,thoughmachinery&machinery

partstonnagehasincreasedstronglyfortheyear-to-date

(+43.3%to19,000tonnes).

Theremainingfourlanesinthetop10areexpectedto

endurevolumecontractionsfor2016.EU-SaudiArabia

sufferedwidespreaddeclines,thoughonceagain

machinery&machinerypartstonnageheldupwell,

whileforEU-SouthAfricathestorywassimilarexcept



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theonlymajorproductgrouptorecorddecentyear-on-

yeargrowthwasplastics&plasticarticles(+14.6%for

January-August2016).

Aswasthecaselastyear,Brazilianairimportsfrom

boththeEU(-6.7%)andtheUS(-11.6%)areexpected

tofallin2016.Itishardlysurprisingthatimportdemand

issuppressedgivenitsongoingeconomicdifficulties.

Comparedtothesameperiodlastyear,EU-Brazil

tonnageforJanuary-August2016isdownbymore

than20%acrossseveralmajorsectors(machinery&

machineryparts,electronicsandpharmaceuticalsetc.).

Thelonebrightspotwasthatvehicles&vehicleparts

tonnagewasupby38.1%toover8,000tonnes,aswas

thecaseforUS-Brazil,withvehicles&vehicleparts

tonnageupby24.0%toover2,000tonnes.Thatsaid,it

alsostruggledwithdeclinesinexcessof20%acrossa

rangeofproductgroups(machinery&machineryparts,

optic,photo,medic&surgicalinstruments,plastics&

plasticarticlesetc.).



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Rank Origin Destination 2015 Tons 2016* Tons

15-16 Growth

2013 Index

2014 Index

2015 Index

2016 Index*

2013-2016 CAGR

2005-2016 CAGR

1 EU Vietnam 35,775 49,088 37.2% 245 316 344 472 24.5% 15.2%

2 EU Pakistan 16,711 21,893 31.0% 122 72 67 88 -10.1% -1.1%

3 EU Colombia 24,934 29,591 18.7% 118 127 162 192 17.7% 6.1%

4 EU Oman 14,037 16,059 14.4% 154 172 179 205 10.0% 6.7%

5 EU India 156,631 173,090 10.5% 155 163 166 183 5.6% 5.7%

6 EU Bahrain 12,683 13,737 8.3% 84 107 117 126 14.5% 2.1%

7 EU Thailand 72,329 78,076 7.9% 162 107 149 161 -0.3% 4.4%

8 EU Mexico 109,240 117,500 7.6% 120 126 155 167 11.5% 4.7%

9 US Russia 14,751 15,850 7.5% 205 200 125 134 -13.1% 2.7%

10 EU Tunisia 13,072 14,039 7.4% 67 75 73 78 5.0% -2.2%

11 EU Chile 27,068 28,878 6.7% 139 122 141 150 2.6% 3.8%

12 EU Ukraine 14,559 15,415 5.9% 102 61 87 92 -3.4% -0.7%

13 EU Iran 21,365 22,441 5.0% 46 65 94 99 28.9% -0.1%

14 EU Lebanon 19,749 20,699 4.8% 130 136 161 169 8.9% 4.9%

15 EU Qatar 60,833 63,470 4.3% 275 306 373 389 12.2% 13.2%

16 EU Philippines 21,651 22,370 3.3% 107 120 141 146 11.0% 3.5%

17 EU UAE 237,317 242,409 2.1% 157 172 202 206 9.6% 6.8%

18 EU Turkey 113,909 116,258 2.1% 155 152 186 189 7.0% 6.0%

19 EU Argentina 21,267 21,698 2.0% 141 123 133 135 -1.5% 2.8%

20 EU China 708,817 722,237 1.9% 338 297 354 361 2.2% 12.4%

21 US Vietnam 25,326 25,790 1.8% 341 491 603 615 21.7% 17.9%

22 US China 308,168 308,936 0.2% 215 230 251 251 5.3% 8.7%

23 EU Russia 86,512 85,563 -1.1% 61 56 62 61 -0.1% -4.4%

24 EU Kuwait 24,316 24,022 -1.2% 89 94 104 103 4.9% 0.3%

25 EU Peru 12,543 12,252 -2.3% 189 193 223 218 4.9% 7.3%

n/a EU All 50 EM 2,546,513 2,500,547 -1.8% 159 151 176 173 2.8% 5.1%

n/a US All 50 EM 1,091,857 1,023,509 -6.3% 163 168 160 150 -2.7% 3.7%

n/a EU and US All 50 EM 3,638,370 3,524,056 -3.1% 160 156 171 165 1.1% 4.7%

Air Freight Fastest Growing Trade Lanes – EU/US to Emerging Market (Index of Tons, 2005=100)




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Outofthe54airfreighttradelanesfromtheEU/UStothe

Index’semergingmarketswhichrecordedvolumeofat

least10,000tonnes,only22reportedpositivegrowth.

Vietnamappearstwiceinthelist,asadestinationfrom

theEU(1st)andUS(21st).EU-Vietnamairfreightis

expectedtobethefastestgrowingemergingmarketair

importtradelane,growingat37.2%in2016,notallthat

surprisinggivenitsstrongmedium-term(13-16CAGR

of24.5%)andlongertermperformance(05-16CAGR

of15.2%).2016growthisbeingprimarilydrivenby

electronicsvolumegrowth,whichforJanuary-August

2016isuptoover5,000tonnesfromunder2,000tonnes

inthesameperiodin2015.FromtheUS,growthhasalso

beenstrongoverthemediumandlongrun,althoughitis

anticipatedtobesubduedin2016(+1.8%).Electronics

tonnagehassoaredfromunder1,000tonnestoaround

3,000tonnesfortheyear-to-date,butdeclineinother

groupssuchasfishandmachinery&machineryparts

haveheldgrowthback.

Threeothertradelanesareprojecteddoubledigitgrowth

for2016,oneofwhich(EU-India)hasalreadybeen

discussedintheprevioussection.EU-Pakistanhas

thesecondhighestgrowthforecastfor2016at31.0%,

thoughitsvolumeisbelow2005and2013levels,hardly

adynamicmarketoveralongertimeframe.Ontheother

hand,EU-ColombiaandEU-Omanlookmoreattractive

prospects,withfarbettermediumandlong-term

performance.EU-Colombiaisforecasttonnagegrowthof

18.7%in2016,largelyduetofertilisersvolumeincreasing

fromaround3,000tonnestoover7,000tonnesfor

January-August2016year-on-year.Onthesamebasis,

EU-Omanvolumegrowthhasbeenmorebroad-based:

iron&steelarticles,fertilisersandchemicalproducts

havedriventheimprovement.

Withvolumeofover78,000tonnesexpectedin2016,

EU-Thailandisarelativelysubstantialtradelanewhichis

predictedtogrowwellin2016(+7.9%).Infactithasnow

fullyrecoveredfromaslumpin2014,possiblyassociated

withitspoliticalcrisis,ayearwhichsawrealGDPgrowth

reachonly0.8%.Overthelongrunthough,itsairvolume

growthhasbeenrobustenough,increasingataCAGRof

4.4%from2005to2016.Thetradelane’smostimportant

commoditiesaremachinery&machineryparts(21.7%

oftonnagein2015),fertilisers(18.9%)andelectronics

(9.3%).ForJanuary-August2016,volumeinthese

productsgroupshasrisenby14.2%,6.3%and17.9%

respectively.

Acountrygarneringconsiderableinterestfromlogistics

providerslatelyisIran.WhileEU-Iranisarelativelysmall

airfreightlaneatpresentwithvolumeonlysettoexceed

22,000tonnesin2016,whatisinterestingisitsgrowth

resurgencein2015,although2016isexpectedtoseejust

5.0%growth.Volumeattheendoftheyearisanticipated

tobejustshyofthelevelin2005.Fortheyear-to-date,

commoditygroupstoperformwellarepharmaceuticals

(+17.6%toaround2,000tonnes),optic,photo,medicand

surgicalinstruments(+36.1%toaround1,000tonnes)and

machinery(+146.0%toover2,000tonnes).

EU-Qatarispredictedgrowthofjust4.3%in2016,mainly

thankstooil&gassectorandvegetablesvolumesrising

by7.7%and8.4%respectivelyinJanuary-August2016

comparedtothesameperiodin2015.While2016growth

looksrelativelysubdued,thelong-termperformanceof

thistradelaneisamongthebest,exemplifiedbya2005-

2016CAGRof13.2%.Inaddition,itsgrowthtrajectoryis

remarkablyconsistent,displayingrelativelylittlevolatility.



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1 China EU 1,111,507 1,164,740 4.8%

2 China US 1,259,570 1,127,256 -10.5%

3 Kenya EU 201,390 208,768 3.7%

4 India EU 180,069 184,184 2.3%

5 Colombia US 156,059 165,640 6.1%

6 Chile US 143,089 138,180 -3.4%

7 India US 124,457 129,693 4.2%

8 Mexico EU 82,986 101,467 22.3%

9 Peru US 108,161 99,887 -7.7%

10 Bangladesh EU 73,035 88,165 20.7%

n/a All 50 EM EU 2,501,236 2,583,475 3.3%

n/a All 50 EM US 2,369,754 2,223,115 -6.2%

n/a All 50 EM EU and US 4,870,990 4,806,590 -1.3%

Air Freight Top 10 Trade Lanes – Emerging Market to EU/US


Air Freight Emerging Market to EU/US Top 5 Trade Lanes 2005-2016 Growth

2005 2006 2007 2008 2009 2010 2011 2012 20142013 2015 2016

400

350

300

250

200

150

100

50

0

China-EU

2005

= 1

00

China-US Kenya-EU India-EU Colombia-US Source: Transport Intelligence



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Intotal,itisestimatedthattheIndex’s50emerging

marketswillexport3.3%moreairfreighttotheEUin

2016comparedto2015,but6.2%lesstotheUS.

Outofthe100tradelanesgoingfromthe50emerging

marketstotheEU/US,thetop10lanesarepredictedto

accountfor70.9%oftotalairtonnagein2016.Chinais

byfarthelargestexporter,havingcomprised44.4%of

allemergingmarketairfreighttotheEUand53.2%ofair

freighttotheUSin2015.Inanutshell,Chinarepresents

aroundhalfofemergingmarketairexporttonnagetothe

USandEU.

China-USairfreightlookssettoendureatough2016

asvolumeisprojectedtodecreaseby10.5%.Having

displacedChina-EUasthelargesttradelanein2015,

ithasnowfallenbacktosecondplaceasChina-EU

tonnageisanticipatedtoincreaseby4.8%.Forairfreight

totheUS,thetwolargestproductgroups(machinery&

machinerypartsandelectronics)haverecordedvolumes

declinesof36.9%and12.2%forJanuary-August2016

year-on-year.Thesetwogroupsaccountedfor29.4%and

28.2%respectivelyoftotalfreightonthislanein2015.

Declineshereweresomewhatoffsetbyimprovement

insectorssuchasplastics&plasticarticles(+13.9%),

vehicles&vehicleparts(+11.4%)andfurniture(+21.2%).

ForChina-EUairfreight,thetwolargestgroupsof

electronicsandmachinery-whichrepresented25.4%

and23.2%oftotaltonnagein2015-haveseenvolume

growthof5.2%and12.6%respectivelyfortheyear-

to-date.Plastics&plasticarticles(+21.6%),furniture

(+13.8%)andvehicles&vehicleparts(+49.1%)aresome

othersignificantproductgroupswhichhavereported

substantialgrowthfortheyearsofar.

Kenya-EUisnowtheonlyAfricantradelaneinthetop

10,asEthiopia-EUtonnagefor2016isanticipatedto

fallby8.7%to86,000tonnes.Kenya-EUremainsthe

thirdlargestemergingmarketairexporttradelaneby

tonnage,exceedingevenIndia’stradewiththeEU,an

economywhichis30timeslarger.Tonnageispredicted

toincreaseby3.7%in2016toalmost209,000tonnes.

Twoproductgroupsareresponsibleforalmostall

ofKenya’sairexports–flowers(73.0%in2015)and

vegetables(24.0%in2015).ForJanuary-August2016,

exportsofflowerstotheEUhaveincreasedby0.9%

whereasforvegetablesgrowthhasbeenmoredynamic

at7.1%.Kenyacontinuestointerestmajorlogistics

providers.InNovember2015,Panalpinaannouncedthat

itwouldacquireamajoritystakeinAirflo–aKenyanand

Netherlandsbasedforwarderspecialisedinhandling

flowersandvegetables.Panalpinaclaimsthecompanyis

thesecondlargestforwarderinKenya.InFebruary2016,

UPSexpandeditsalliancewithitsKenyancontractor

FreightinTime(FIT)byconsolidatingbothitsexpress

andfreightforwardingservicesthroughFIT.Accordingto

UPS,thelocalplayerhasinvested$9minitsoperations

andhasa5,000sqmwarehousewithsixofficesacross

thecountry.Ithasalsoinvestedinanewairsidefacility

atthecountry’smainairportinNairobitohandleand

processexpressoperations.Finally,thesamemonthsaw

BDPInternationalstatethatitwasstudyingthepossibility

ofexpandinginKenya.

India’sairfreightexportstotheEU(+2.3%)andUS

(+4.2%)areperhapsnotgrowingasdynamicallyin

2016asonewouldexpectgiventheheadlinesofrobust

economicgrowth.ExportstotheEUarebeingheldback

bynegativegrowthinitssecondmostimportantproduct

group,machinery&machineryparts.ForJanuary-

August2016,volumeisdownby6.8%year-on-year.The

storyisdifferentforitslargestexportgroup,apparel,

wheretonnagehasincreasedby7.4%toalmost34,000

tonnesoverthesameperiod.Leatherarticles(+5.2%to

10,000tonnes),vegetables(+13.9%to9,000tonnes)and

vehicles&vehicleparts(+24.1%to3,000tonnes)have

alsorecordeddecentgrowth.TotheUS,thebiggest

exportgroupispharmaceuticals(29,000tonnesin2015).

Fortheyear-to-date,volumeshavecontractedby2.1%,

whilemachinery&machinerypartsvolumehasfallen

by3.8%.Onapositivenote,appareltonnageisupby

4.4%to24,000tonnes,whileforelectronics,volumehas

expandedby12.1%to5,000tonnes.

Twotradelaneswhichareforecastrapidgrowthare

Mexico-EU(+22.3%)andBangladesh-EU(+20.7%).

Mexico’sprojectionislargelyasaresultoffruitstonnage

morethandoublingfromaround8,000tonnesinJanuary-



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August2015tonearly18,000tonnesinJanuary-August

2016,thoughelectronics(+6.9%toover15,000tonnes)

andvegetables(+21.1%toalmost9,000tonnes)have

alsorecordedgoodincreases.Bangladesh-EUtonnage

growthisduealmostexclusivelytoappareltonnage

increasingby42.6%tonearly56,000tonnesforJanuary-

August2016year-on-year.

TurningtoSouthAmerica,therearemixedperformances.

Colombia-USairfreightisanticipatedtogrowby6.1%,

whereasChile-USandPeru-USarepredicteddropsof

3.4%and7.7%respectively.ForColombia,around90%

ofitsexporttonnagetotheUSiscomprisedofflowers.

ForJanuary-August2016,volumehasimprovedby5.1%

year-on-year.ForChile,thedominantcommodityisfish

(over80%oftotaltonnagein2015).Fortheyear-to-date,

tonnagehasslidby1.7%.ForPeru,vegetablesaccount

foralmost90%oftotaltonnage,andforJanuary-August

2016,volumeshavecontractedby16.5%year-on-year.



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Air Freight Fastest Growing Trade Lanes – Emerging Market to EU/US (Index of Tons, 2005=100)

Rank Origin Destination 2015 Tons 2016* Tons

15-16 Growth

2013 Index

2014 Index

2015 Index

2016 Index*

2013-2016 CAGR

2005-2016 CAGR

1 Mexico EU 82,986 101,467 22.3% 169 194 208 255 14.6% 8.9%

2 Bangladesh EU 73,035 88,165 20.7% 222 162 198 239 2.5% 8.2%

3 Cambodia EU 10,971 12,925 17.8% 300 344 316 372 7.4% 12.7%

4 Pakistan EU 48,506 56,189 15.8% 121 112 101 117 -1.1% 1.4%

5 Brazil US 42,666 47,376 11.0% 41 42 46 51 7.8% -5.9%

6 Tanzania EU 12,129 13,436 10.8% 128 120 105 117 -3.1% 1.4%

7 Ecuador EU 26,554 29,244 10.1% 294 332 332 365 7.5% 12.5%

8 Peru EU 38,227 41,630 8.9% 182 222 211 230 8.2% 7.9%

9 Brazil EU 68,423 74,410 8.7% 99 142 108 118 5.9% 1.5%

10 Colombia US 156,059 165,640 6.1% 125 123 117 124 -0.2% 2.0%

11 UAE EU 16,569 17,557 6.0% 104 114 109 116 3.6% 1.3%

12 Turkey EU 70,069 74,084 5.7% 111 117 147 156 12.1% 4.1%

13 Thailand EU 53,631 56,568 5.5% 78 89 76 81 1.0% -1.9%

14 Mexico US 50,406 52,894 4.9% 86 82 78 82 -1.6% -1.8%

15 China EU 1,111,507 1,164,740 4.8% 147 173 146 153 1.5% 4.0%

16 Sri Lanka US 22,826 23,833 4.4% 104 102 140 147 12.0% 3.5%

17 India US 124,457 129,693 4.2% 111 120 128 134 6.3% 2.7%

18 Kenya EU 201,390 208,768 3.7% 280 294 302 313 3.7% 10.9%

19 Vietnam EU 52,894 54,730 3.5% 220 236 241 250 4.4% 8.7%

20 Malaysia EU 38,658 39,599 2.4% 124 106 99 101 -6.4% 0.1%

21 India EU 180,069 184,184 2.3% 130 137 129 132 0.7% 2.6%

22 Ecuador US 54,389 55,492 2.0% 96 91 104 106 3.3% 0.5%

23 Uganda EU 29,929 30,462 1.8% 150 140 141 144 -1.4% 3.4%

24 Pakistan US 13,993 14,135 1.0% 62 61 57 58 -2.5% -4.9%

25 Turkey US 26,505 26,524 0.1% 101 126 150 150 14.0% 3.8%

n/a All 50 EM EU 2,501,236 2,583,475 3.3% 123 136 125 129 1.6% 2.4%

n/a All 50 EM US 2,369,754 2,223,115 -6.2% 110 121 127 119 2.6% 1.6%

n/a All 50 EM EU and US 4,870,990 4,806,590 -1.3% 117 128 126 124 2.0% 2.0%




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Outofthe44emergingmarketairfreighttradelanesto

theEU/USforwhichvolumesexceeded10,000tonnes,

only25areexpectedtoincreasetheirtonnagein2016.

Asstatedintheexaminationofthe10largestemerging

marketairexporttradelanes,MexicoandBangladesh

arebothexpectedtorecordtonnagegrowthratesin

excessof20%for2016,mainlydowntohigherfruitsand

appareltonnagerespectively.ForMexico,thegrowth

appearsmoreimpressiveasitmarksacontinuationof

robustgrowthoverthemedium-term:volumeshave

recordeddecentgainseveryyearsince2013.Thisis

trueofthelongruntoo,from2005to2016,volumehas

grownatacompoundannualgrowthrate(CAGR)of

8.9%.ForBangladesh,thislongrunstoryholdstoo,

itsCAGRonthesamebasisis8.2%.Butitisworth

highlightingthatitsvolumespeakedin2013atjustover

80,000,thencollapsedtoaround60,000in2014,before

thenrecoveringin2015and2016.Thisstuntedtrajectory

isperhapsinpartaresultoftheRanaPlazaandMirpur

textilefactorytragediesof2013.

Fiveothertradelanesreporteddoubledigitgrowthin

2016–Cambodia-EU,Pakistan-EU,Brazil-US,Tanzania-

EUandEcuador-EU.Ofthose,thelargestlanesare

Pakistan-EUandBrazil-US,andwhiletheyachieved

stronggrowthin2016,overthelong-term,theirgrowth

isfarlessimpressive(2005to2016CAGRsof1.4%and

-5.9%respectively).Tanzania-EUisasmallerlanewitha

similarstory(CAGRof1.4%).Cambodia-EUhasbeena

dynamicmarketinrecentyears,itsgrowthhastakenoff

since2011,albeitwiththeoddbumpintheroad.Volumes

havegrownfromaround3,000tonnesin2011toan

estimated13,000tonnesin2016.Almost90%ofvolume

isapparel.Ecuador-EUhasrecordedgoodgrowth

overboththemediumandlong-term,withitsvolumes

expectedtoreachover29,000tonnesin2016.Over90%

ofitsvolumeisflowers.

Outsidethedouble-digitgrowthclub,Peru-EUwasthe

nextbestperformerwithtonnageforecasttoexpandby

8.9%in2016.Ithasalsorecordedrobustgrowthoverthe

medium-term(13-16CAGRof8.2%)aswellasthelonger

term(05-16CAGRof7.9%).Thecoredriverofgrowthis

theagriculturalsector:vegetablesandfruitsaccounted

foraround65%and25%oftotaltonnagerespectivelyin

2015.

Turkeyisaninterestingairexportmarketforboththe

EUandUS.Thedestinationshaveincommonthatthey

haveexperiencedmoderategrowthoverthelongrun,but

muchmorerobustgrowthoverthelastthreeyears(13-16

CAGRsof12.1%and14.0%respectively).TotheUS,

themostimportantexportisapparel,whichhasgrown

by32.0%year-on-yearforJanuary-August2016,though

declinesinfish(-18.4%)andfurniture(-86.4%)areholding

overallgrowthback.TotheEU,apparelisalsothemost

importantcommoditybytonnage,andhasincreased

by7.0%year-on-year,withchemicals(+24.1%toover

9,000tonnes)alsoperformingwell.Lowermachinery&

machineryparts(-45.5%to3,000tonnes)shipmentsare

stuntinggrowth.

SriLanka-USisatradelanewhichstruggledforgrowth

untilrecently.In2005,volumeswerearound16,000

tonnes.Itrecordedfigureslowerthanthatinmostofthe

interveningperioduntilaround2013whengrowthpicked

up,andthenvolumesreallybouncedin2015tonearly

23,000tonnes.Almost80%ofitstonnagein2015was

apparel,withfishaccountingfor15%.Althoughapparel

exportsfellby1.6%year-on-yearforJanuary-August

2016,fishexportsincreasedby43.9%.SriLankahas

interestedanumberofmajor3PLsinrecentyears.The

likesofAPLLogisticsandDBSchenkerdevelopedtheir

presenceinthecountryin2015byestablishinganew

100,000sqftregionalconsolidationhubandforminga

newoperationalpartnershipwithconglomerateAitken

Spencerespectively.

Vietnam-EUisexpectedtogrowonlymoderatelyin2016

(+3.5%),thoughitslongrunperformanceishealthier

(05-16CAGRof8.7%).Itsexportsofelectronicsand

machinery&machinerypartslooktobestrugglingthis

year,butitsfashion&textilessectorappearstobemuch

moredynamic.



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1 US China 82,255,938 76,389,887 -7.1%

2 EU China 40,169,830 38,234,238 -4.8%

3 EU Turkey 29,988,335 31,360,587 4.6%

4 EU Algeria 23,520,821 21,215,860 -9.8%

5 US Mexico 16,026,639 17,968,782 12.1%

6 EU Saudi Arabia 15,738,231 17,637,021 12.1%

7 EU Morocco 11,243,177 14,157,753 25.9%

8 EU Egypt 14,577,968 13,191,263 -9.5%

9 US Brazil 10,261,710 11,459,874 11.7%

10 EU India 9,716,481 10,639,501 9.5%

n/a EU All 50 EM 239,118,834 240,907,367 0.7%

n/a US All 50 EM 193,778,564 199,628,287 3.0%

n/a EU and US All 50 EM 432,897,398 440,535,653 1.8%

Sea Freight Top 10 Trade Lanes – EU/US to Emerging Market


Sea Freight EU/US to Emerging Market Top 5 Trade Lanes 2005-2016 Growth


2005 2006 2007 2008 2009 2010 2011 2012 20142013 2015 2016

400

350

300

250

200

150

100

50

0

US-China

2005

= 1

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EU-China EU-Turkey EU-Algeria US-Mexico



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Overall,seafreighttonnagetoemergingmarketsfrom

theEUandUSispredictedtoexpandby1.8%in2016.

EUtonnageisforecasttoincreaseby0.7%,whileforthe

USthefigureisbetterat3.0%.Theanaemicgrowthcan

largelybeattributedtoChina’swoesalone.

Startingwiththelargestlane,US-Chinatonnageis

expectedtoshrinkby7.1%in2016.ForJanuary-to-

August2016,exportsofcerealsandfoodindustry

residues,waste&animalfeedhavesuffereddeclines

of30.8%and56.9%respectively,althoughsoybeans

growthof38.4%hasoffsetthistoanextent.Evenin

substantialnon-bulksectorslikevehicles&vehicle

partsandmachinery&machineryparts,volumeswere

downby8.6%and27.1%respectively.ForEU-China,

thestoryisquitesimilar.Overallvolumeisprojectedto

contractby4.8%in2016,drivenbyacollapseincereal

volumes,andonceagainvehicles&vehicleparts(-4.6%)

andmachinery&machineryparts(-16.9%)tonnageis

strugglingfortheyear-to-date.

ExcludingtheimpactofChina,EUandUSexporttonnage

totheremaining49emergingmarketswouldhave

increasedby1.9%and10.5%respectively.Cumulatively,

EUandUStonnagewouldhavegrownby5.0%.

Fivetradelanesinrelativelyclosegeographicalproximity

totheEUfeatureinthetop10.ForEU-Turkey,tonnage

growthof4.6%isforecastfor2016,drivenbyJanuary-

August2016growthof6.9%foriron&steel,which

accountedforoverathirdofvolumealonein2015.For

EU-Algeria,2016growthisexpectedtobe-9.8%.The

year-to-datehasseenitsmajorproductsgroupssuchas

cereals(-2.6%)salt,sulphur,earths&stone(-12.4%)and

iron&steel(-18.9%)suffersignificanttonnagedeclines.

EU-SaudiArabiatonnagegrowthof12.1%for2016is

largelypredicatedoncerealsvolumegrowthof38.8%

fortheyear-to-date.Cerealsaccountforoverathird

ofthelane’stotaltonnage.Majorcontainerisedfreight

commoditygroupingssuchasmachineryandvehicles

&vehiclepartshavenotfaredverywell,withvolume

slumpingbymorethan30%forbothfortheyear-to-date.

EU-Moroccoseafreightisalsobeingboostedbycereals,

thoughinorganicchemicalsalsolooktobeastrong

sourceofgrowthin2016.UnlikeEU-SaudiArabia,the

majorcontainerisedcommoditygroupingsofmachinery

andvehicles&vehiclepartshavejumpedby15.6%

and30.5%respectivelyfortheyear-to-date.Morocco

inparticularlookstobeanupcominglocationforthe

automotivesector.PSAPeugeot-Citroenhasrevealed

planstobuilda€557mproductionplantwithoperations

beginningin2019,withinitialcapacityof90,000engines

andvehicles,possiblyrisingto200,000.Engineparts

manufacturerLinamarhasalsopledgedtobuilda$280m

enginepartsplant(whichwillsupplythePSAplant),while

fellowpartsmanufacturerDelphiwilllaunchanewfactory

tomakeelectricaldistributionsystemsaswellasanR&D

centre.ElsewhereinNorthAfrica,acollapseincereals

tonnageistoblameforEU-Egyptvolumegrowthof-9.5%

in2016,thoughvegetablesandfruitsexportslookto

bedynamicgroupswithtonnagerisingby102.9%and

16.7%fortheyear-to-daterespectively.

ThefinaltradelaneinvolvingtheEUinthetop10is

EU-India.Tonnageispredictedtoincreaseby9.5%in

2016.Iron&steel,whichaccountsforaroundaquarter

oftonnage,hasgrownby18.2%fortheyear-to-date.

Vegetablestonnagehasexplodedfromjustover50,000

tonnesforJanuary-August2015toalmost300,000

tonnagesforJanuary-August2016.

US-MexicoandUS-Brazilaretheremainingtradelanes

inthetop10,andtheybotharepredicteddoubledigit

growth(12.1%and11.7%).US-Mexicogrowthislargely

beingdrivenbyhighervolumesofcerealsandorganic

chemicals(+8.0%and+15.7%fortheyear-to-date).For

Brazil,inorganicchemicals(+19.5%fortheyear-to-date)

arebehindthegrowth.



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2013 Index

2014 Index

2015 Index

2016 Index*

2013-2016 CAGR

2005-2016 CAGR

1 US Algeria 606,448 1,377,695 127.2% 31 37 42 96 45.2% -0.4%

2 US South Africa 890,317 1,456,148 63.6% 115 99 102 166 13.0% 4.7%

3 EU Vietnam 2,730,711 4,441,480 62.6% 336 394 419 681 26.6% 19.1%

4 US Morocco 1,287,457 2,012,024 56.3% 93 103 102 160 19.9% 4.4%

5 EU Ethiopia 916,524 1,343,777 46.6% 198 304 721 1058 74.9% 23.9%

6 US Vietnam 4,202,789 6,131,796 45.9% 655 795 748 1091 18.6% 24.3%

7 US Pakistan 1,234,849 1,713,468 38.8% 143 139 216 300 28.0% 10.5%

8 US Indonesia 5,350,845 7,184,218 34.3% 177 187 153 206 5.1% 6.8%

9 EU Pakistan 2,465,845 3,257,268 32.1% 93 108 109 144 15.7% 3.4%

10 EU Kenya 1,184,064 1,558,688 31.6% 172 195 319 419 34.5% 13.9%

11 EU Morocco 11,243,177 14,157,753 25.9% 145 174 166 209 12.9% 6.9%

12 US Peru 4,677,001 5,713,159 22.2% 235 385 343 419 21.3% 13.9%

13 EU Jordan 2,271,138 2,742,489 20.8% 163 188 188 227 11.5% 7.7%

14 US Philippines 5,200,109 6,239,439 20.0% 143 161 158 189 9.9% 6.0%

15 US UAE 2,254,512 2,612,039 15.9% 297 284 253 293 -0.6% 10.3%

16 US Chile 3,275,287 3,746,627 14.4% 269 224 228 261 -0.9% 9.1%

17 EU Malaysia 2,289,930 2,603,779 13.7% 122 113 94 107 -4.3% 0.6%

18 EU Tunisia 4,134,291 4,660,873 12.7% 136 116 119 134 -0.6% 2.7%

19 US Mexico 16,026,639 17,968,782 12.1% 114 121 131 147 8.9% 3.6%

20 EU Saudi Arabia

15,738,231 17,637,021 12.1% 172 149 175 197 4.6% 6.3%

21 US Brazil 10,261,710 11,459,874 11.7% 408 373 290 324 -7.4% 11.3%

22 US India 6,568,693 7,328,074 11.6% 214 228 235 262 6.9% 9.1%

23 EU Ghana 3,044,002 3,353,174 10.2% 221 227 276 304 11.3% 10.6%

24 EU Indonesia 3,135,958 3,440,086 9.7% 122 117 103 113 -2.4% 1.1%

25 EU India 9,716,481 10,639,501 9.5% 116 129 139 152 9.3% 3.9%

n/a EU All 50 EM 239,118,834 240,907,367 0.7% 175 179 177 178 0.6% 5.4%

n/a US All 50 EM 193,778,564 199,628,287 3.0% 186 194 185 191 1.0% 6.1%

n/a EU and US All 50 EM 432,897,398 440,535,653 1.8% 179 185 180 184 0.8% 5.7%

Sea Freight Fastest Growing Trade Lanes – EU/US to Emerging Market (Index of Tons, 2005=100)




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Outofthe60tradelaneswithvolumesofatleast1m

tonnes,38areexpectedtorecordhighervolumesin2016

thanin2015.23arepredictedgrowthinexcessof10%,

while14areexpectedtohavegrowthofover20%.

Foralmostallthetop25fastestgrowingtradelanes,

growthisoverwhelminglydrivenbyhighervolumesof

cerealcrops,withafewexceptions.

ForEUorigintradelanes,allexceptforEU-Pakistan(iron

&steel),EU-Malaysia(plastics&plasticarticles,paper

andwood&woodarticles)andEU-Ghana(salt,sulphur,

earths&stone)areseeingtheirgrowthbeingdrivenby

highercerealstonnage.

FortheUS,somequasi-exceptionsareUS-Vietnam,

withhighertonnageofsoybeans,foodindustryresidues,

cottonandwood&woodarticlescontributingtoits2016

growthprojectionof45.9%,thoughcerealstonnage

alsogrewverystrongly.AnotherisPakistan,whereiron

&steelisdrivingsignificantgrowthalongsidecereals,

asisIndonesia(soybeansandfoodindustryresidues,

alongsidecereals).

TheUAEisagenuineexceptionwithcerealsplaying

verylittlerole,assoybeansandinorganicchemicalsare

behindits2016predictionof15.9%growth.ForUS-

India,cerealsplayalmostnoroleinitsexportprofile.

ForJanuary-August2016,woodpulp(+8.8%),iron&

steel(+21.0%),organicchemicals(+6.5%),inorganic

chemicals(+88.5%),plastics&plasticarticles(+26.7%)

andbeverages(+151.2%)aredrivingmuchofitsexpected

growthof11.6%for2016.



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2005 2006 2007 2008 2009 2010 2011 2012 20142013 2015 2016

250

200

150

100

50

0

China-US

2005

= 1

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China-EU Russia-EUBrazil-EU Ukraine-EU


1 China US 65,427,160 63,438,316 -3.0%

2 China EU 53,136,391 54,883,827 3.3%

3 Brazil EU 30,056,097 31,557,772 5.0%

4 Russia EU 30,874,150 28,530,118 -7.6%

5 Ukraine EU 22,426,823 23,650,964 5.5%

6 Turkey EU 17,912,817 19,057,976 6.4%

7 Mexico US 19,097,837 16,597,859 -13.1%

8 Argentina EU 13,971,133 15,795,099 13.1%

9 Brazil US 16,386,899 15,266,341 -6.8%

10 South Africa EU 10,612,381 11,343,973 6.9%

n/a All 50 EM EU 271,484,788 276,242,042 1.8%

n/a All 50 EM US 178,127,702 170,190,728 -4.5%

n/a All 50 EM EU and US 449,612,490 446,432,770 -0.7%

Sea Freight Top 10 Trade Lanes – Emerging Market to EU/US

Sea Freight Emerging Market to EU/US Top 5 Trade Lanes 2005-2016 Growth





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Outofthe100tradelanesgoingfromthe50emerging

marketstotheEUandUS,thetop10areforecastto

constitute62.7%oftotaltonnagein2016.Chinaalone

willrepresent26.5%oftonnage.Howeverthisdisguises

China’sgreaterimportancetotheUScomparedto

Europe.China-UStonnagerepresents37.3%ofall

tonnagetotheUS,whereasfortheEUthecorresponding

figureisjust19.9%.

Anothersalientfeatureofemergingmarketseafreight

exportsisthattheyaremuchmorediversifiedcompared

toimports,whichareoverwhelminglycomprisedof

agriculturalgoods.Suchvariationholdsgenerallyacross

theboardforemergingmarketexports,butChinais

perhapsthebestexampleofit.

In2015,thetop10productgroupsbytonnagefor

China-USseafreightwerefurniture(7.0m),machinery&

machineryparts(5.7m),electronics(5.0m),iron&steel

articles(3.9m),plastics&plasticarticles(3.6m),salt,

sulphur,earths&stone(3.2m),vehicles&vehicleparts

(2.8m),toys,games&sportsequipment(2.8m),wood

&woodarticles(2.3m)andceramicproducts(2.2m).

Moreover,21differentproductgroupshadvolumesin

excessof1mtonnes.

For2016,China-USexporttonnageisexpectedtofall

backby3.0%.ForJanuary-August2016,thereare

fewmajorproductgroupswhichhaverecordedstrong

tonnagegrowthyear-on-year.Thebestperformances

havecomefromfurniture(+3.3%)andtoys,games&

sportsequipment(+4.8%).Mostothermajorcommodity

groupshaverecordedlowsingledigitcontractions.

ForChina-EUseafreight,thetop10productgroupsby

tonnagein2015were:iron&steel(7.5m),machinery

&machineryparts(5.1m),electronics(4.5m),furniture

(3.5m),iron&steelarticles(3.2m),stonearticles(2.5m),

plastics&plasticarticles(2.2m),wood&woodarticles

(2.0m),organicchemicals(1.6m)andtoys,games&

sportsequipment(1.4m).Intotal,exportvolumesin17

differentproductgroupswereabove1mtonnes.

Overall,China-EUtonnageisanticipatedtoriseby3.3%

in2016.ForJanuary-August2016,year-on-yearexport

growthhasbeensolidifnotspectacularformanymajor

commoditygroupsthatnecessitatecontainerisedsea

freight:machinery&machineryparts(+3.2%),furniture

(+4.3%),toys,games&sportsequipment(+5.3%)and

vehicles&vehicleparts(+8.9%).Theonemajorgroup

thatisstrugglingiselectronics(-16.1%).

Theonlyotheremergingmarkettoappeartwiceinthe

top10isBrazil.ExportstotheEUareforecasttoexpand

by5.0%in2016,whilethecorrespondingfigureforthe

USis-6.8%.ForJanuary-August2016,Brazil-EUgrowth

isprimarilybeingdrivenbyhighsoybeansandcereals

tonnage,whereasforBrazil-US,weakeriron&steel

volumesaredraggingdowngrowth.

Elsewhere,thetwoCISmarketsinthetop10–Russia-

EUandUkraine-EU–areforecastcontrastinggrowthof

-7.6%and5.5%respectivelyin2016.ForJanuary-August

2016,year-over-yeargrowthofRussianexportsofiron

&steel(-5.4%)andwood&woodarticles(-24.6%)has

beennegative.Ontheotherhand,Ukrainianexportsof

cereals(+4.1%)andsalt,sulphur,earths&stone(+18.7%)

aredrivingitsexpectedannualimprovement.

Turkey-EUandSouthAfrica-EUareprojectedsimilar

growthratesof6.4%and6.9%for2016.Whilebulk

commoditiesarestillmostimportantforTurkey-EUsea

freight,vehicles&vehicleparts(8.3%oftotaltonnage

in2015)andmachinery&machineryparts(3.6%of

tonnage)arerelativelymoreimportantcomparedtomost

otherlanes.Volumesfortheyear-to-dateareupby4.0%

and7.7%respectively.Turkeyhaslongbeenconsidered

anintriguingnearsourcinglocationformanufacturers

lookingtoexporttoEurope,notleastamongautomotive

manufacturers,whocontinuetodeveloptheirpresence

there.Atthebeginningof2016,around$1.2bnof

investmentwasatthereadyforTurkey,withfivevehicle

manufacturers–Fiat,Renault,Toyota,Hyundaiand

Honda–allsettorampupoperations.Themedium-term

outlookforthecountry’smanufacturingsectorappears

toberobust.TheoutlookforSouthAfricaislessclear,

thoughits2016performancewasencouragingtoo.Its

seafreightexportprofileislargelyinterestingtologistics

providersbecauseitexportsvastquantitiesoffruit(1.2m



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tonnesorover10%oftotaltonnagein2015,1.8%year-

to-dategrowthin2016),mainlybananas.Othersectors

ofinterestincludevehicles&vehiclepartsexports,which

amountedtoover200,000tonnesin2015,andtheyhave

increasedby28%fortheyear-to-date.

ThetworemainingLatinAmericantradeslanesinthe

top10arepredictedcontrastingresults.Mexico-USis

expectedtoseetonnageslideby13.1%,whileArgentina-

EUvolumeispredictedtoincreaseby13.1%.The

former’swoesareprimarilyonaccountofsalt,sulphur,

earths&stonetonnagecontractingby14.3%.This

groupcompriseswelloverhalfoftotaltonnage.Even

inrelativelyimportantnon-bulksectorslikevehicles&

vehiclepartsthough,tonnageisstilldownby5.9%for

January-August2016year-on-year.Argentina’sdouble

digitgrowthislargelyasaresultof17.8%year-to-date

growthinfoodindustryresiduesexports.



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67


2013 Index

2014 Index

2015 Index

2016 Index*

2013-2016 CAGR

2005-2016 CAGR

1 Egypt EU 4,201,865 5,568,236 32.5% 95 79 61 81 -5.1% -1.9%

2 Vietnam US 4,260,111 5,417,519 27.2% 291 319 356 453 15.9% 14.7%

3 Saudi Arabia US 1,350,184 1,657,024 22.7% 90 99 102 126 11.6% 2.1%

4 Uruguay EU 2,707,486 3,233,356 19.4% 144 114 179 214 14.0% 7.2%

5 Qatar US 1,558,177 1,843,064 18.3% 148 194 196 232 16.2% 8.0%

6 Turkey US 5,504,479 6,501,930 18.1% 81 117 151 179 30.3% 5.4%

7 UAE US 1,477,293 1,744,130 18.1% 124 176 220 260 28.0% 9.1%

8 Mexico EU 2,535,476 2,966,653 17.0% 125 173 127 148 5.9% 3.6%

9 Argentina US 2,296,173 2,674,311 16.5% 123 82 111 130 1.7% 2.4%

10 Peru EU 2,413,937 2,767,048 14.6% 110 124 122 140 8.4% 3.1%

11 Argentina EU 13,971,133 15,795,099 13.1% 69 69 77 87 8.1% -1.3%

12 Algeria EU 6,301,851 7,058,387 12.0% 47 179 190 213 65.0% 7.1%

13 Thailand EU 2,901,157 3,236,439 11.6% 90 94 86 96 2.2% -0.4%

14 Thailand US 3,740,832 4,105,623 9.8% 48 50 54 60 7.7% -4.6%

15 Ukraine US 1,107,201 1,214,175 9.7% 52 43 47 52 -0.4% -5.8%

16 Nigeria EU 1,381,516 1,502,909 8.8% 144 323 417 454 46.7% 14.7%

17 Bangladesh EU 999,605 1,079,395 8.0% 160 181 198 214 10.2% 7.2%

18 Indonesia US 4,583,754 4,914,349 7.2% 93 96 105 113 6.7% 1.1%

19 South Africa EU 10,612,381 11,343,973 6.9% 92 89 81 87 -2.0% -1.3%

20 Egypt US 1,133,846 1,207,741 6.5% 55 72 72 77 11.5% -2.4%

21 Turkey EU 17,912,817 19,057,976 6.4% 86 90 95 101 5.6% 0.1%

22 Philippines US 1,343,156 1,423,663 6.0% 82 79 77 82 -0.1% -1.8%

23 Vietnam EU 3,479,975 3,671,879 5.5% 160 194 197 208 9.1% 6.9%

24 Ukraine EU 22,426,823 23,650,964 5.5% 164 193 202 213 9.0% 7.1%

25 Malaysia US 3,152,501 3,317,031 5.2% 101 100 101 107 1.7% 0.6%

n/a All 50 EM EU 271,484,788 276,242,042 1.8% 107 110 114 116 2.5% 1.3%

n/a All 50 EM US 178,127,702 170,190,728 -4.5% 93 107 110 105 4.1% 0.4%

n/a All 50 EM EU and US 449,612,490 446,432,770 -0.7% 101 109 112 111 3.1% 1.0%

Sea Freight Fastest Growing Trade Lanes - Emerging Market to EU/US (Index of Tons, 2005=100)




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68

Ofthe100possibletradelanesfromthe50emerging

marketstotheUS/EU,only54havevolumesinexcess

of1mtonnes.Ofthese,36areexpectedtoincreasetheir

volumein2016.

Amongthefastestgrowers,Vietnam-USstandsoutboth

foritsrapidexpectedgrowthin2016(+27.2%),butalso

foritsexcellentmediumandlong-termperformance

(2013-2016CAGRof15.9%,2005-2016CAGRof14.7%).

IncommonwithChina,furnitureisitsmostimportant

exportcommodity(1.2mtonnesin2015),accounting

foroveraquarterofitstotalvolume.ForJanuary-

August2016,growthof6.3%hasbeenrecorded.Since

2015,theUShasimposedimporttariffsonChinese

furniture,leadingmanyChinesemanufacturerstoinvest

inneighbouringVietnamwhichfacesnosuchduties.

Therearegrowingconcernsthatsuchmanoeuvring

couldputVietnamfirmlyontheradarofUSanti-dumping

investigators,thoughTPPnegotiationsobviously

complicatethematter.Futuregrowthwillobviouslybe

significantlyinfluencedbytheoutcomeofTPP.Other

importantsectorswhichhaveachievedmeaningful

growthintheyearsofarincludeapparel(+7.7%),

footwear(+24.2%),coffee(+41.7%),fish(+15.8%)and

electronics(+55.9%).Iron&steeltonnagehasrocketed

from33,000tonnesinJanuary-August2015tonearly

500,000tonnesinJanuary-August2016.Vietnam-EUis

expectedmoremoderategrowthof5.5%in2016,though

coffeetonnage(+10.5%)hasincreasedsignificantlywhile

liketotheUS,electronicstonnagehasgrownsharply

(+68.4%).

Othertradelaneswhichfitthemouldofstronggrowth

in2016andoverthelongrun(morethan5%forboth

measures)areUruguay-EU,Qatar-US,Turkey-US,UAE-

US,Algeria-EU,Nigeria-EUandBangladesh-EU.

TakingtheEUlanesfirst,forUruguay-EU,tonnagegrowth

of19.4%isexpectedfor2016.Likelastyear,exports

ofwoodpulp,soybeansandwood&woodarticles

willdrivetheincrease.ForAlgeria-EU,overallgrowth

of12.0%ismainlyonaccountoffertilisersgrowthof

18.2%forJanuary-August2016year-on-year.Nigeria’s

growthfigureof8.8%appearssomewhatdubious,as

itislargelythankstoyear-to-dategrowthof19.9%of

“otherproducts”.Itisnotclearwhatthisincludes.Lastly,

Bangladesh-EU’sexportsareunsurprisinglydominated

bythefashion&textilessector(alsothecasewithair

freight).Overthreequartersoftonnagein2015canbe

attributedtoapparelalone,withyear-to-datetonnageup

by6.8%year-on-year.

ForhighgrowthUSlanes,Qatar-USisforecastan

increaseinvolumeof18.3%in2016.Volumeonthis

laneisdominatedbyfertilisers,representingover90%

oftonnage,andforJanuary-August2016,tonnage

hasexpandedby12.6%.Thestoryofdependenceon

fertilisersissimilarfortheUAE,althoughnotquiteto

thesameextent(56.9%oftonnagein2015).Aluminium

&aluminiumarticlesarecomparativelymoreimportant

however,accountingforaround20%oftonnage.With

growthof74.1%fortheyear-to-date,thishasoffsetthe

fallinfertiliserstonnage(-8.6%)overthesameperiod.

Finally,Turkey-USfreightissimilarlydependentonbulk

goods,thoughofadifferentkind.Iron&steelandstone

articlesareitslargestexportgroups,butbothhave

experienceddoubledigitdeclinesfortheyear-to-date.

Offsettingthisisgrowthinsalt,sulphur,earths&stone,

whichhasmorethandoubledintheyear-to-date.



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72

The 2017 Agility Emerging Markets Logistics Index Survey

Toexaminethepotentialoftheworld’smostpromising

emerginglogisticsmarketsandtomeasuretheimpacts

ofthetrendsseenacrosstheglobaleconomyonthe

developmentandemergenceofthesemarkets,Transport

Intelligenceundertookasurveyoflogisticsindustry

professionalsbetweenAugustandNovember2016.

Participantsfromarangeoflogisticsmarketsandvertical

sectorstookpart,offeringinsightandopinionfromtheir

exposuretoemergingmarkets.Responsesfrom801

industryprofessionalsareusedinthis,theeighthannual

editionoftheAgilityEmergingMarketsLogisticsIndex

Survey.

Sev

en



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73

20%

15%

10%

5%

0%

China

India

Brazil

Vietna

m

Indon

esia

UAE

Russia

Mex

ico Iran

Mala

ysia

Saudi A

rabia

Turk

ey

Nigeria

Thail

and

South

Afri

ca

Kenya

Philip

pines

Bangla

desh

Kazak

hsta

nQat

ar

% o

f res

po

nden

ts

Country 2017 2016 Change

India 1 1 -

China 2 2 -

Brazil 3 3 -

Vietnam 4 5 up 1

Indonesia 5 4 down 1

UAE 6 7 up 1

Mexico 7 6 down 1

Russia 8 8 -

Iran 9 15 up 6

Turkey 10 11 up 1

Malaysia 11 10 down 1

South Africa 12 9 down 3

Nigeria 13 12 down 1

Saudi Arabia 14 13 down 1

Thailand 15 14 down 1

Philippines 16 17 up 1

Kenya 17 20 up 3

Bangladesh 18 18 -

Qatar 19 16 down 3

Kazakhstan 20 22 up 2

Perceived Major Logistics Markets of the Future

Which of the following countries do you believe have the most potential to grow as logistics markets in the next five years? Please rank.





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74

Surveyrespondentswereaskedtorankthefiveemerging

marketstheyviewedasthemostlikelytobecomemajor

logisticsmarketsoverthenextfiveyears.Ascorewas

calculatedinordertorankthemarkets–afirstpreference

wasawardedfivepoints,asecondpreferencefourpoints,

andsoondowntoasinglepointforthefifthpreference.

Usingthismethod,surveyrespondentsindicatedtheir

beliefthatIndiaremainstheemerginglogisticsmarket

withthemostpotentialforLSPs.

Therewascontinuityinthetopspotsbetween2016and

2017,withayearofstronggrowthandimprovements

toitsbusinessenvironmentthatunlockedopportunity

forLSPshelpingIndiaretainitsadvantageoverChina.

RespondentsappearedtoshowfaiththattheModi

administrationisdeliveringonitsreformspromise,while

indicatingthecontinuedturbulenceinChinahaseroded

someofthepotentialforlogisticsprovidersinthemarket.

OtherfactorscontributedtoChina’slesseningappeal,

suchasrisinglabourcostswhichmakeitalessattractive

lowcostmanufacturinglocation,buttheoverwhelming

suggestionfromsurveyrespondentsisthat,together,

IndiaandChinapresentbyfarthemostcompelling

opportunitiestoLSPs.

Brazilmanagedtoretainits3rdrankinginthelistof

emerginglogisticsmarketswiththemostpotential

despitealessthanfavourableeconomicsituationin

thecountry.Respondentscontinuetoshowfaithinthe

market’ssizeablemiddleclassanditswell-developed

agriculture,mining,manufacturingandservicesectors.It

mayalsobethecasethat,againstachallengingoverall

backdrop,specificopportunitiespresentthemselves,

includinginhighvaluemarketslikepharmaceuticals

whichhasshownsolidgrowthinSaoPaulo,for

example.Additionally,anoptimisticreadingoftheresult

suggeststhatsurveyrespondentshavefaithinthe

newadministrationofPresidentMichelTemertofixthe

country’sproblems.

Anumberofmovementstookplaceacrosstheranking

thisyear,withVietnamandTurkeyeachrisingone

position,whiletheUAEcontinueditsgradualupward

movementtoclaim6th.SouthAfricaandQatarwere

amongstthemajorlosers,witheachdroppingthree

positions.SouthAfrica’sfallinthedata-drivenIndexis

reflectedhereasfewerrespondentsshowedfaithinthe

marketasasourceoffuturegrowth,likelyasaresult

ofdomesticissuesthathavehitbusinessconfidencein

logistics-relatedsectorssuchasmining.Elsewherein

Africa,Kenyaperformedwelltobecomethe17thhighest

ratedfuturelogisticsmarket,reflectingitspositionasa

keyairfreightmarketfortheexportofcommoditieslike

flowersandvegetables.

Themostsignificantmoveintherankings,though,was

Iranwhichrosesixpositionstoclaim9th.Overthelast

twoeditionsoftheAgilityEmergingMarketsLogistics

IndexSurvey,Iranhasrisen21positionsinthisranking

thankstoitsstrengtheningtieswiththeglobaleconomy.

Iran’ssizeableeconomyandpopulation,whichhasa

relativelyhighamountofspendingpower,arealmost

certainlyapartofthis,asaretheopportunitiescreated

forLSPsinothersectorsofitseconomy,suchasoil&

gas,andthecountry’swideropennesstoFDI.



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75

40%

30%

20%

10%

0%

Econo

mic

Growth

Fore

ign D

irect

Inves

tmen

t

Growing

Trad

e

Volum

es

Geogr

aphic

Loca

tion

Growing

Popula

tion

Good B

usine

ss

Enviro

nmen

t

Poten

tial

Consu

mer

Spen

d

Cheap

Lab

our

Forc

e

Strong

Tran

spor

t

Infra

stru

ctur

e

Near-S

ourc

ing

Mar

ket

Lack

of

Corru

ption

Strong

Secur

ity

% o

f res

po

nden

ts

Factors behind the Potential Emergence of Markets

Please rank, in order of importance, the key drivers that make a country an important emerging market.



Factor 2017 2016 Y-o-Y Change

Economic growth 1 1 -

FDI 2 2 -

Growing Trade Volumes 3 3 -

Cheap Labour Force 4 5 up 1

Geographic Location 5 6 up 1

Good Business Environment 6 4 down 2

Strong Transport Infrastructure 7 7 -

Growing Population 8 9 up 1

Potential Consumer Spend 9 8 down 1

Near Sourcing Market 10 10 -

Lack of Corruption 11 11 -

Strong Security 12 12 -



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76

20%

15%

10%

5%

0%

Poor T

rans

port

Infra

stru

ctur

e

Corru

ption

Gover

nmen

t Poli

cies

Difficu

lt Cus

tom

s

Proce

dures

Secur

ity

Difficu

lty S

ettin

g Up/

Doing

Busine

ss

Human

Righ

ts

Issue

s

Difficu

lty in

Repat

riatin

g Pro

fits

Frau

d

Geogr

aphic

Loca

tion

Poor I

T Inf

rast

ruct

ure

% o

f res

po

nden

ts

Problems Associated with Doing Business in Emerging Markets

Please rank, in order of importance, the main problems associated with doing business in emerging markets.



Factor 2016 2015 Y-o-Y Change

Corruption 1 1 -

Poor Transport Infrastructure 2 2 -

Government Policies 3 3 -

Security 4 5 up 1

Difficult Customs Procedures 5 4 down 1

Difficulty in Setting Up and Doing Business 6 6 -

Fraud 7 8 up 1

Difficulty in Repatriating Profits 8 7 down 1

Geographic Location 9 10 up 1

Human Rights Issues 10 9 down 1

Poor IT Infrastructure 11 11 -



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77

Thetoptwodriversofgrowthinemerginglogistics

marketsremained‘economicgrowth’and‘FDI’in

2017.Giventhecorrelationbetweenwidereconomic

expansionandgrowingdemandforlogisticsservices,

thecontinuedemphasisplacedonthisasthetopfactor

isnotsurprising.Itisperhapslikelythiswillcontinue,too,

withgeneraleconomicgrowthplayinganimportantrolein

encouragingspendingwithinconsumermarkets,pulling

largeramountsofthepopulationintothemiddleclass

andincreasinglevelsofpublicspendingoninfrastructure

projectsandotherpublicservices.

Theriseof‘cheaplabourforce’and‘growingpopulation’

throughtherankingsseemstoimplytheneedtoachieve

efficiencyandscaleinemergingmarketoperations.

Thismaybeduetoincreasedlevelsofcompetitionin

emergingmarkets,makingcostreductionsavitalpart

ofmaintainingprofitability.Itmayalsobeanindication

thattraditionallylowcostlocationsarebecomingmore

expensiveaslivingstandardsrise,atrendseeninChina

overthecourseofitsrapiddevelopmentoverthelastfew

decades.Theincreasedemphasisplacedon‘growing

population’maybearesultofmanyLSPshavingtoshift

theirattentiontoconsumermarkets,ase-commerce

becomesmoresignificantacrossemergingmarkets,for

example,andasprogrammestodiversifyeconomies

awayfromtraditionalindustrialsectors,ashasbeenseen

intheMiddleEast’soilexporters,gatherpace.

Therewasmorechangebelowthetopspots,however.

‘Goodbusinessenvironment’felltwopositionsto6th,

thusreversingtheriseitrecordedlastyear.Thismay

reflecttwotrends–firstly,thattheprioritisationemerging

marketshavegiventoincreasingtheirattractiveness

toforeigninvestorshascreatedrobustbusiness

conditions,suchasintheUAE,withthosesurveyed

havingahigherdegreeofexpectationthatappropriate

conditionswill,bynow,befullyimplemented.Asecond,

morenegativeinterpretation,isthatLSPsarehaving

tofollowopportunitiesintolessthanoptimallocations

asgrowthissqueezedacrossemergingmarkets.

Suchaninterpretationmayalsoexplaintheseemingly

contradictoryresultswhichplacedecreasingvaluein

‘goodbusinessenvironment’butrankproblemssuchas

‘corruption’and‘governmentpolicies’highlyasinhibitors

ofgrowth.Morewidely,thecontinuityofproblems

year-on-yeargoessomewaytoimplyingthatemerging

marketsarenotdoingenoughtoaddressthem.

Overall,itappears‘economicgrowth’isconsidereda

pre-requisiteforemergenceasalogisticsmarket.With

therestofthedriversrankedclosely,however,they

takeonaddedimportance.Whereeconomicgrowthor

commercialopportunityissimilarbetweenmarkets,itwill

bethecombination,strengthandattractivenessofthe

otherdriversthatwillseesomemarketsfavouredover

othersininvestmentdecisions.Themoreevenspread

andtherelativelyhigherconcentrationsbehindanumber

ofinhibitorssuggeststhepresenceofperhapsjustoneor

tworiskfactorssignificantlydiminishesthepotentialofan

emerginglogisticsmarket.



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For each of the following regions, please outline which supply chain risk poses the most considerable threat to growth:

Latin America

Asia Pacific

Supply Chain Risk

9.2%

5.1%

3.3%

3.3%

3.0% 2.0%

12.1%

16.9%

19.5%

25.4%

Economic shocks

Natural disasters

Corruption

Poor infrastructure

Government instability

Other

Terrorism

Inventory levels

Piracy

Cyber attacks

3.0%3.2%

2.3%

1.8%

1.5%

1.5%

9.6%

17.9%

18.3%

41.0%

Corruption


Economic shocks

Poor infrastructure

Natural disasters

Other

Terrorism

Inventory levels

Cyber attacks

Piracy





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79

For each of the following regions, please outline which supply chain risk poses the most considerable threat to growth:

Sub-Saharan Africa


Supply Chain Risk

6.6%

5.4%

2.5%

2.1%

7.2%

8.4%

20.6%

45.1%

Terrorism


Economic shocks

Corruption

Poor infrastructure

Other

Inventory levels

Piracy

Natural disasters

Cyber attacks

0.6%

1.6%

3.0%

4.5%

3.0%

2.6%

1.1%

1.7%

11.2%

19.3%

20.4%

33.2%

Poor infrastructure


Corruption

Terrorism

Piracy

Natural disasters

Other

Economic shocks

Inventory levels

Cyber attacks





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80

Withsupplychainsanevermoreintegralpartof

manufacturingandretailingoperations,theneedto

understand,manageandmitigaterisksinthesupply

chainbecomesvitaliforganisationsaretomaintain

lowinventoryandjust-in-timeproductionschedules.

Surveyrespondentsindicatedthatwhilemacroeconomic

indicatorswereimportant,individualmarketsneededto

beproperlyassessedonamicrolevelifopportunities

andrisksweretobefullyunderstood.Somekeytrends

doemerge,however.Highlightingthevulnerabilityof

emergingmarketstowidereconomicuncertainty,survey

respondentscited‘economicshocks’asoneofthe

threemostsignificantsupplychainriskfactorsineach

ofthreeofthefourregionscoveredbytheIndex–Asia

Pacific,MiddleEast&NorthAfricaandLatinAmerica.

‘Governmentinstability’isalsoawidespreadrisk,and

citedbyrespondentsasaleadingriskfactorinallregions

exceptAsiaPacific.

Asia Pacific

Economicshocks,naturaldisasters,corruptionandpoor

infrastructurehavebeenratedasthemostsignificant

supplychainrisksacrossAsiaPacificforasecondyear.

Overall,thefourrisksaccountfor73.9%ofthetotal

responses.

AsiaPacificeconomieshadanotherchallengingyear

economicallyin2016astheturbulenceemanatingfrom

Chinabecameincreasinglyacuteoverthelatermonths

of2015andearlypartof2016.Morewidelyintheregion,

AsiaPacificeconomieshaveseenavarietyofheadwinds

overthelastyear,whichinsomecaseshasprompted

governmentintervention,suchasinIndonesiaand

Malaysiawherethestatewasrequiredtopropupthe

valueofdomesticcurrenciesfollowingthethreatofaUS

interestraterise.Itmayalsobethecasethatsluggish

growthindevelopedeconomiesbothgloballyandwithin

theregionarecreatingconcernsforrespondentswhosee

lowerdemandtranslatingintolowerexportvolumes.

Naturaldisastersremainthesecondmostsignificant

supplychainriskintheAsiaPacificregion.UNdata

showstheregionexperiencedastaggering1,600natural

disastersoverthedecadeto2015,some40%ofthe

globaltotal.Theeconomicimpactofoverthesame

periodtotals$500bn.

Latin America

Corruptionandgovernmentinstabilityremainedthetop

tworisksinLatinAmerica,followingayearwhichhas

seenintensecoverageofhighprofilecorruptionscandals

inBrazil.Togetherthetworiskfactorsaccounted

from59.3%ofthetotalresponses,suggestingsurvey

respondentsareclearintheirreasonstobecautious

whenitcomestoinvestingandoperatingintheregion.

TherecessionsunderwayinBrazilandVenezuela–with

negativeeconomicgrowthcompoundedbyhyperinflation

andcurrencyvolatilityinthelatter–combinedwith

generallowgrowthacrosstheregion,thedriverswhich

sawrespondentsrankeconomicshocksasthe3rdmost

significantLatinAmericanriskfactorarefairlyclear.

Middle East

Terrorismandgovernmentinstabilitywereonceagain

rankedasthemostsignificantsupplychainrisksforthe

MiddleEast&NorthAfrica,accountingfor65.7%ofthe

totalresponses,althoughbothfactorsaccountedfora

slightlylowerproportionofthetotalresponsethisyear.

Thedominanceofthetworiskfactors,however,does

underlinethewiderthreattostabilitythatconflictsacross

theregionposeasthepotentialforspilloversrises.

Theperceptionofpoorinfrastructureasasupplychain

risktogrowthinMiddleEast&NorthAfricahas,however,

declinedfrom8.1%to6.6%,resultinginthisfactor

droppingto5th.Thisislikelyaresultofvastinvestmentin

infrastructureacrosstheregion,suchasthedevelopment

ofKingAbdullahEconomicCityinSaudiArabiaas

wellastheundertakingofhugelogisticsinfrastructure

developmentthathasseenbothseaandairportsbuilt

andexpandedacrosstheregioninrecentdecades.



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81

Sub-Saharan Africa

Surveyrespondents’perceptionsofsupplychainrisksin

sub-SaharanAfricaisunchangedinthe2017survey,with

poorinfrastructure,governmentinstabilityandcorruption

againheadingtheranking.Together,theseriskfactors

accountfor72.9%ofthetotalresponses.

Themostsignificantchangeamongstthisgroupisthe

3.9ppriseintheproportionofrespondentsthatindicated

corruptionisthemajorriskfactor.A2015studyby

TransparencyInternationalfoundthatapproximately75m

peoplepaidbribesovertheyearinsub-SaharanAfrica,

while18ofthe28governmentsassessedweresaidtobe

failinginthefightagainstcorruption.Conductinglogistics

operationsinsuchanenvironmentishighlychallenging,

withsupplychainefficiencyandintegritypotentially

underminedintheabsenceofsuchpayments.



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Country 2017 2016 Y-o-Y Change

Syria 1 1 -

Libya 2 4 up 2

Iraq 3 2 down 1

Ethiopia 4 3 down 1

Bangladesh 5 6 up 1

Iran 6 5 down 1

Egypt 7 7 -

Algeria 8 8 -

Papua New Guinea 9 10 up 1

Cambodia 10 9 down 1

Venezuela 11 15 up 4

Bolivia 12 16 up 4

Ukraine 13 11 down 2

Belarus 14 14 -

Uganda 15 13 down 2

Pakistan 16 12 down 4

Brazil 17 17 -

Lebanon 18 19 up 1

Georgia 19 21 up 2

Kazakhstan 20 22 up 2

14%

12%

10%

8%

6%

4%

2%

0%

Syria

Libya Ira

q

Ethiop

ia

Bangla

desh

Iran

Egypt

Alger

ia

Papua

New

Guin

ea

Cambod

ia

Vene

zuela

Bolivia

Ukrain

e

Belaru

s

Ugand

a

Pakist

anBra

zil

Leban

on

Georg

ia

Kazak

hsta

n

% o

f res

po

nden

ts

Least Attractive Emerging Logistics Markets

Which of the following countries do you believe have the LEAST potential as emerging logistics markets? Please rank.





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83

Therankingofemergingmarketswiththeleastpotential

seesSyria,acountrybesetwithviolenceandinstability,

maintainitspositionattheheadofthelist,having

movedawayfromthepackasrespondentscollectively

addemphasistotheperceptionthisyear.Theongoing

insecurityacrossvastswathesofthecountryhasledto

conflictofsuchintensitythatdamagehasleftmajorareas

ofthecountryuninhabitable,letalonefunctionalenough

todemandcommerciallogisticsoperations.Twoother

countriesthathavesufferedheavilyasaresultofconflict

–LibyaandIraq–joinSyriaatthetopoftheranking

againthisyear,althoughLibyahasleapfroggedIraq

into2ndposition.Libya’srisereflectsalackofprogress

madebythevariousadministrationsempoweredtobring

embattledareasofthecountryundertheruleoflaw.

Overall,theMiddleEast&NorthAfricaregioncontributes

fourfurthercountriestothelist,withIran,Egyptand

Algeriaalsomakingthetop10.

Despitefallingoneposition,Ethiopiastillplacesan

undesirable4thinthisranking.Havingrisenthree

positionsinthedata-drivenIndex,andrecordingan

impressive10.8%GDPexpansiononaverageforeach

yearoverthelastdecade,recenteventsandlong-term

perceptionofthemarketseemtoundermineitspotential.

Uganda,downtwoto15th,istheonlyothersub-Saharan

Africamarkettofeatureinthislist.

LatinAmericaishometothreemarketsinthelist.While

Brazilremainedin17th,BoliviaandVenezuelabothrose

fourpositions–Venezuelahasexperiencedsignificant

levelsofdisruptionsincethecollapseoftheoilprice

underminedthemajorsectorofitseconomy.Brazil,

meanwhile,wasalsooneoffourmarketstoappearin

boththemostandleastattractiveemerginglogistics

marketsrankings,alongwithBangladesh,Iranand

Kazakhstan.



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20%

15%

10%

5%

0%

Intra-Asia Asia-Europe Asia-Africa Asia-SouthAmerica

Asia-NorthAmerica

Asia-Middle East

South America-North America

Africa-Europe

% o

f res

po

nden

ts

19.3%

18.6%

16.3% 16.0%

14.4%

13.0%13.6% 13.8%

12.4% 12.8%

9.0%

10.7%

8.4% 8.1%

6.6% 7.0%

2017 2016

Prospects for Emerging Trade Lanes

Which of the following trade lanes do you believe have the greatest potential for future growth?


Theintra-Asiatradelaneremainsthemostpromising

accordingtosurveyrespondents.ThisisdespiteChina’s

lowerdemandforcommoditiesandweakgrowthin

tradevolumes.Theregionis,though,increasingly

interconnectedwithmanymarketsinvolvedinvarious

stagesofproduction,withcomponentsacrossthevalue

chainmanufacturedinseveraldifferentmarketsbefore

beingshippedtoanassemblylocationforre-export.

Thelaneisalsoexpectedtoseeaboostinvolumesas

consumptionintheregionrises,withagreaterproportion

ofgoodsshippedtodestinationmarketsintheregion,

ratherthanbeingsentelsewhereintheworld.Asa

measureofthegrowthinconsumptionacrossAsia

Pacific,itsshareofworldconsumptionisexpectedto

increasefrom27%in2016to39%by2035,accordingto

IHSGlobalInsight.

Thetwootherlanesthatmakeupthetop3–Asia-Europe

andAsia-Africa–alsosawtheirshareofresponses

increaseyear-on-year.TheAsia-Europelaneimproved

marginally,perhapsreflectingfaiththatdemandfrom

EuropeforAsia’sexportswillimproveasitseconomic

situationimproves.ThatAsia-Africaisthethirdhighest

ratedtradelanecouldbereflectedbytheinvestments

madebyChinesebusinessandtheChinesestatewhich

hasimprovedandenhancedthescaleandefficiencyof

Asia-facinglogisticsinfrastructureinthesub-Saharan

Africaregion,suchasthedevelopmentsinTanzania.



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Which of the following vertical sectors do you believe have the greatest potential for future growth in emerging markets?

Latin America

Asia Pacific

Vertical Sectors

7.4%

4.8%

3.7%

2.9%

8.5%

15.5%

27.5%

28.6%

Retail/Consumer

Hi-Tech

Automotive

Pharmaceuticals/Medical Equipment

Agriculture

Chemical

Mining (metals, minerals, etc)

Oil & Gas

Humanitarian Aid

Other

0.3%

0.8%

8.3%

7.8%

6.1%

3.7%

13.4%

13.9%

15.5%

26.4%Agriculture


Automotive

Retail/Consumer


Oil & Gas

Hi-Tech

Chemical

Other

Humanitarian Aid

1.9%2.9%





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Which of the following vertical sectors do you believe have the greatest potential for future growth in emerging markets?

Sub-Saharan Africa


Vertical Sectors

6.8%

4.9%

3.6%

3.2%

8.6%

9.3%

10.1%

47.9%

Oil & Gas

Retail/Consumer

Humanitarian Aid



Agriculture

Hi-Tech

Other

Automotive

Chemical

2.8%2.9%

8.3%

8.0%

7.8%

9.5%

14.8%

17.7%

27.9%


Humanitarian Aid

Agriculture

Retail/Consumer

Other


Oil & Gas

Chemical

Automotive

Hi-Tech

0.7%2.0%

3.1%





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Asia Pacific

AsiaPacificsawretailandconsumer,hi-techand

automotiveremainatthetopoftherankingsasthe

verticalsectorsmostlikelytodrivegrowthinthelogistics

sectoracrosstheregion.Togetherthethreeverticals

accountedfor71.6%ofthetotalresponses,pointing

towardstheincreasedspendingpoweroftheregion’s

middleclass,aswellastheincreasinglysophisticated

andvaluableproductsAsiaPacific’smanufacturersare

producing,asdriversofgrowth.

Latin America

Arelativelybalancedpictureemergesfromtherankings

oftheverticalsectorsinLatinAmerica,indicatingthat

variousopportunitiesexistforlogisticsserviceproviders

acrosstheregionwithfourverticalsgainingatleast10%

ofthetotalresponseseach.Leadingthewayisagriculture

with26.4%,whilemining,automotiveandretail/consumer

areseparatedbyjust2.1pp.Thattwoofthesemarkets

areextractiveindustriesandtwoareconsumption-driven

goessomewaytosuggestingthevariationofopportunity

aswellasstagesofdevelopmentacrosstheregion.


Theoil&gassectoragainranksastheverticalsector

mostlikelytocreateopportunitiesforLSPsacross

theMiddleEast&NorthAfricaregion.Almosthalfof

respondents(47.9%)suggestedthesectorholdsthe

greatestcapacitytodrivefuturegrowthintheregion,a

dropof3.9ppyear-on-year,perhapsreflectingsurvey

respondents’beliefthattheopportunitiesmustbesought

elsewhereasoilpriceslooksettoremainlow.Retail

andconsumeralsosawitsshareoftotalresponsesfall,

down0.9ppyear-on-year,perhapsasaresultoffalling

confidenceinconsumerspendingassubsidiesare

replacedwithtaxesinsomeoilproducingmarkets.

Sub-Saharan Africa

At27.9%,morethanonequarterofsurveyrespondents

believetheminingsectorhasthegreatestpotential

todrivegrowthinsub-SaharanAfrica.Overall,the

unchangedtop3–mining,humanitarianaidand

agriculture–accountfor60.4%oftotalresponses.

Respondentsindicatedthepotentialoftheoil&gas

sectorinsub-SaharanAfricahaddeclined,with7.8%

ofrespondentsselectingthissectorin2017,compared

to11.3%lastyear.Withoilpricessettoremainlow,this

couldreflectalackofcommercialviabilityintheoperation

ofproductionfacilitiesinpartsoftheregion.



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India 1 2 up 1

China 2 1 down 1

Brazil 3 3 -

UAE 4 4 -

Vietnam 5 5 -

Russia 6 6 -

Indonesia 7 7 -

Iran 8 16 up 8

South Africa 9 8 down 1

Mexico 10 9 down 1

Saudi Arabia 11 11 -

Turkey 12 14 up 2

Malaysia 13 10 down 3

Qatar 14 13 down 1

Thailand 15 12 down 3

Nigeria 16 17 up 1

Chile 17 21 up 4

Philippines 18 15 down 3

Kenya 19 23 up 4

Poland 20 18 down 2

200

150

100

50

0

India

China

Brazil

Vietna

mUAE

Russia

Indon

esia

Mex

ico

Saudi A

rabia

Turk

ey

No.

of

pla

nned

inve

stm

ents

Iran

South

Afri

ca

Mala

ysia

Qatar

Thail

and

Nigeria

Chile

Philip

pines

Kenya

Poland

Markets for Potential Investment over the Next Five Years

Which of the following countries, if any, do you plan to expand into in the next 5 years?





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RespondentsindicatedthatIndiahasmovedaheadof

Chinaasthemarketwiththemostplannedinvestments

overthenextfiveyears.TheslowingofgrowthinChina,

incombinationwiththereformswhichunlockpotential

andincreaseefficienciesintheIndianmarketare

undoubtedlyapartofthisswitchinposition,asisthe

centralityofChinainexpansionplansatmanyLSPsover

muchofthelastdecade–LSPshavealreadyestablished

operationsinChina.Therewasgenerallyahighdegreeof

continuityinthetop10,overall,withBrazilretainingthird

positiondespiteachallengingfewyears,suggestingthe

underlyingpotentialofthemarketremainsattractiveto

logisticsproviders.Intotal,nineofthetop10remained

thesame,withonlyMalaysia,downthreepositionsto

13th,fallingout.

ItwasIranthatreplacedMalaysiainthetop10,gaining

16positionstorankasthemarketwiththe8thhighest

numberofplannedinvestments.Irantiestogetheritsrise

upboththedata-drivenIndexandtherankingofmarkets

withmostpotentialelsewhereinthesurveywithastrong

riseinthislist,toenterthetop10forthefirsttimeever.

AcrossallelementsoftheAgilityEmergingMarkets

LogisticsIndex2017,Iranhasperformedstrongly,

underliningitscurrentperformance,butperhapsmore

importantly,highlightingitsfuturepotentialintheeyesof

logisticsindustryprofessionals.Itsnewfoundopennessto

FDIwillalsohaveplayedasignificantrolehere.

Overall,theAsiaPacificregionstruggled.Ofitsseven

marketsamongstthetop20,fourfell,includingMalaysia,

ThailandandthePhilippines,indicatinglowerdemand

fromChinacontinuestoaffectthesemarkets,aswell

asthewiderregiongenerally.Moreworryingly,itmay

indicatethatthedomesticmarketsonoffertoLSPsare

perhapsnotdevelopedenoughtosustaininvestment

plansalone.



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Perceived Effect of China’s Economic Slowdown on the Transportation & Logistics Market

Strategies for China

How has China’s economic slowdown impacted the country’s transportation and logistics sector?

Which statement best reflects your plans for the Chinese market over the next 12 months?

37.4%

12.3%

4.8%

7.0%

21.4%

17.1%The transport and logistics sector has been significantly hindered by the slowdown

The impact has been moderate, some momentum has been lost

The transport and logistics sector has slowed in line with the overall economy

The transport and logistics sector has continued to grow despite what's happened in the wider economy

The economy and the transport and logistics sector are not closely tied in the Chinese market, there’s been no impact

Not sure

22.2%

5.6%

4.4%2.2%

31.7%

31.7%We’ll be continuing with entry/expansion plans, the situation in China has not affected our strategy

We won’t be making any changes to our current position in China

We’ll moderate our entry/expansion plans as a result of slower growth

We will rationalise our presence to focus on core Chinese markets

We will be reducing our overall presence in the market

We’ll be exiting China




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91

Itisbroadlyacceptedthattheoveralllogisticsmarket

movesinlinewithwidereconomicgrowthinmature

markets,andalittlemorethanonethirdofsurvey

respondentsindicatedthesameistrueofChinatoo.With

Chinarapidlytransitioningtowardsaneconomyfocussed

onservicesectorexpansion,itcouldbethatslowing

growthanddecliningvolumesinmanufacturingsectors

arebeingreplacedwithopportunitiesinotherpartsofthe

economy,mostnotablye-commerce.Theindicationhere

isthatLSPsonthewholehavemanagedtobuildagood

mixofbusinessintheirportfolios,andavoidedtherisks

ofoverexposingtheiroperationstodecliningsectorsof

themarket.

Indeed,whenlookingtothefuture,surveyrespondents

arerelativelybullishonthemarket’sabilitytocontinue

toprovideopportunities,withjust12.2%ofrespondents

indicatinganytypeofdownsizingintheirpresencein

themarket.At31.7%,nearlyonethirdofthosesurveyed

indicatedthestateoftheChineseeconomypresented

noreasontochangemarketentryorexpansionplans,

whileslightlymore,at33.9%,wouldcontinuewithcurrent

operations.Slightlymorethanonefifth(22.2%)either

havemadeadjustmentstostrategiesasaresultofthe

slowergrowthinChina,however.



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25%

20%

15%

10%

5%

0%

% o

f res

po

nden

ts

24.9%

20.2%21.2%

23.1%22.8%

19.5%

10.6%

12.7%

24.5%

20.4%

We do not operate in, or plan to operate in, sub-Saharan Africa.

We have established operations, and we’re looking at strategic

growth opportunities

We have identified the vertical sectors/

domestic markets we want to enter, and are in the planning stages

We have no immediate plans to establish operations

in the region.

We plan to establish operations in the

region, but need to assess which vertical sectors/geographies are best suited to our

business.2017 2016

Which of the following statements best reflects your strategy in sub-Saharan Africa?

Strategies for Sub-Saharan Africa


Nearlyonequarter(24.9%)ofthosesurveyedindicated

theydonot,anddonotplanto,operateinsub-Saharan

Africa,ariseof4.7ppyear-on-year.This,combinedwith

the24.5%ofthosethatstatedtheyhadnoimmediate

planstoentertheregion,putthetotalofsurvey

respondentsthatsuggestedtheregiondoesnotfitwith

theirfutureplansat49.4%.

Still,thatleavesmorethanhalfofallsurveyrespondents

witheitherestablishedoperationsintheregion,or

withtheintentiontobeginoperationsinthenear-term,

witharoundonefifthofthetotal(19.5%)lookingto

expand,suggesting,incontrasttootherrespondents,

opportunitiesarereadilyavailabletothosewithdirect

experienceofthemarket.

Overall,respondentsindicatedanearevensplitbetween

thosewhodonotseelogisticsmarketswithinsub-

SaharanAfrica’snationsasviableopportunitiesfor

theirparticularbusinessaspirations,andthosewho

haveeitherenteredorintendtoenterthemarket.This

isperhapsexplainedbythediversitywhichtheregion

exhibits–Africa’spopulationisgrowingrapidly,asisthe

spendingpowerofitsmiddleclass,andthescaleofthe

opportunitiesinindustriessuchasmining,consumer

goods&retail,agricultureandothersissignificant.Butso

tooarechallengeswithintheregion.Infrastructuregaps

remain,makingitnearimpossibletorunmodernlogistics

operationsinsomelocations,andalsoprecluding

sophisticatedmanufacturingtechniques,suchasjust-

in-time,markedlyincreasingcostinotherareassuch

asinventory.Moreover,simplylinkingmanufacturing

locationstoexportgatewayscanbeproblematicwith

roadssubjecttochroniccongestion.Sporadicelectricity

productioncancauseotherproblems,particularlyin

moreadvancedlogisticsoperations,suchascoldchain

operations.



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30%

25%

20%

15%

10%

5%

0%

% o

f res

po

nden

ts

South

Afric

a

Nigeria

Keny

aGha

na

Tanz

ania

Ivory

Coast

Ethiop

ia

Mozam

bique

Ango

la

DR Congo

Sub-Saharan Africa’s Most Promising Markets

Which of these African countries do you believe has the most potential as a logistics market over the next 5 years? Please rank.



South Africa 1 1 -

Nigeria 2 2 -

Kenya 3 3 -

Ghana 4 4 -

Tanzania 5 6 up 1

Ivory Coast 6 - new entry

Ethiopia 7 8 up 1

Mozambique 8 7 down 1

Angola 9 5 down 4

DR Congo 10 9 down 1


Thetopfourpositionsforsub-SaharanAfrica’smost

promisingmarketsremainedunchangedin2017,with

surveyrespondentsagainidentifyingtheregion’stwo

largesteconomiesashavingthemostpotential.

Despiteitslacklustreperformanceinthedata-driven

Index,SouthAfrica’sstatusasthemostpromising

logisticsmarketinsub-SaharanAfricawasundiminished.

Thecountryhasseenlowlevelsofgrowthinrecent

yearsandsocialissueswhichhaveaffectedkeylogistics

markets,suchasmining.ThesizeandwealthofSouth

Africa,however,remainsignificantonacontinentallevel

andsurveyrespondentsclearlyseeitsabilitytocreate

opportunitiesasmoreenduringthanrecentsetbacks.

Nigeria,meanwhile,maintainedsecondpositiondespitea

yearthatsawitenterrecession,anditsoilsectoraffected

bytheglobalfallinprices.Angola,anotherofAfrica’soil



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94

exportingnations,wasthemostsignificantcasualtyin

theopinionofsurveyrespondents,fallingfourranking

placesto9thinthelist.WorldBankfiguresputoil’sshare

ofAngola’stotalexportsat97%overthedecadeto

2015,andtheeconomyhasnotbeenabletowithstand

fallingpricesasgrowthhasslowedandinflationhit35%,

reducingthespendingpowerofAngola’spopulation.

Kenya,whichroundedoutthetop3alongsideSouth

AfricaandNigeria,matchedperformanceherewith

apositiveshowingelsewhereinthesurvey–itrose

fourplacesto19thintherankingoffutureinvestment

locations–aswellasanupwardmovementoftwo

positionstorank43rdinthedata-drivenIndex.Intotal,

58.0%ofrespondentscitedoneofthetop3assub-

SaharanAfrica’smostpromisinglogisticsmarket.



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30%

25%

20%

15%

10%

5%

0%

% o

f res

po

nden

ts

25.6%23.9%

22.6%

13.6%

11.5%

4.6%

24.4%

17.8%

23.8%

15.2%

9.0%

6.4%

Growing middle class and consumer

spending

New oil and gas discoveries

Mineral and resource demand

Rapid infrastructure development

Stronger agricultural demand

Increased FDI

2017 2016

40%

30%

20%

10%

0%

% o

f res

po

nden

ts

32.7% 32.5%31.0%

11.8%10.3%

2.1%

31.0%

12.2% 12.2%

11.1%10.9%

2.0%

Poor quality infrastructure

Corruption Poor connectivity/ linkages between economic centres

Uneven economic development

Lack of integration between economies

Size/scale of the continent

2017 2016

Drivers behind the Emergence of Sub-Saharan Africa’s Emerging Markets

What do you perceive to be the most significant driver of growth in the emergence of Africa’s logistics market?

What do you perceive to be the biggest challenge prohibiting the emergence of Africa’s logistics market?

Inhibitors of Growth in Sub-Saharan Africa





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96

Whilethetopdriverofsub-SaharanAfrica’slogistics

marketsremainedgrowthintheregion’smiddleclassand

consumerspending,newoil&gasdiscoveriesreplaced

mineralandresourcedemandasthe2ndmostimportant

driver.Intermsofthosefactorsinhibitingemergence,

however,therewasnochangeandtheconsensus

remainedclear–acombined63.7%ofthosesurveyed

citedpoorqualityinfrastructureandcorruptionasthe

mostsignificantfactorsholdinglogisticsgrowthinthe

regionback.

Combined,asmallerproportionofsurveyrespondents

indicatedthatextractiveindustriesweresignificant

driversofgrowthintheregion’slogisticsmarketin2017.

Across‘newoilandgasdiscoveries’and‘mineraland

resourcedemand,’42.2%ofthosesurveyedindicated

thesewouldbethemaindrivers,downfrom48.2%last

year.Itshouldbenoted,however,thatyear-on-year,only

‘mineralandresourcedemand’sawareducedshare

ofresponses,losingsome6.0pp,perhapsindicating

surveyrespondents’beliefthatpricesfortheregion’s

commoditiesaresettoremainlowoveranextended

period.

Asignificantdegreeofcontinuitywasseenyear-on-year

insurveyrespondents’perceptionofthefactorsinhibiting

growthinsub-SaharanAfrica’slogisticsmarket.This

wouldappeartosuggestthatnotenoughisbeingdone

toreducebarrierstoentry.Poorinfrastructureremains

themostsignificantinhibitorofdevelopmentinthe

region,whileinfrastructuredevelopmentrankedasonly

thefourthmostsignificantdriver.Notonlyislogistics

fundamentallylimitedbypoorinfrastructure,wider

economicdevelopmentishinderedbypoorconnectivity

andlinkagesbetweeneconomiccentresandgeneral

inequality.Thatjust2.0%ofrespondentsbelievedthe

sizeandscaleofthecontinenttobefundamentally

holdingbackgrowthsuggestsalackofcoordinated

actiontoovercomeinfrastructurechallenges.



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40%

30%

20%

10%

0%

% o

f res

po

nden

ts

Yes, we’ve started planning

entry/expansion

Yes, we have now initiated

investment

It’s a positive development, and

India is now a market we’d consider investing in

We’re no more or less likely to invest in India than before

We did not have plans to invest in India previously and this has not

changed

The reform has made it less likely that we’ll invest in

India

Strategies for India

Has the passing of reform, including the Goods & Services Tax, changed your plans to invest in India?


ThepassingoftheGSTandthereformsagenda

morewidelyhavebeencharacterisedasasignificant

opportunityforIndiatoovercomemanyofthebarriers

toenteringthemarketthathavepreviouslystymied

investment,particularlyfromoverseas.Thataroundone

thirdofrespondents(30.9%)saidtheywerenomoreor

lesslikelytoinvest,andthatnearlyonequarter(22.8%)

donotseethedevelopmentasareasontofactorthe

countryintotheirplans,meansacombined53.7%of

thosesurveyedhavebeenunmovedbythereformsmade

toimprovetheattractivenessoftheIndianmarket.An

implicationofthisoutcomeisthatIndia’srecenthigh

levelsofFDImaybeunsustainable,atleastasfaras

investmentinlogisticsisconcerned.Overall,FDIinIndia

hasbeenatrecordhighsover2014and2015,butfell

approximately21%inthefirstsixmonthsof2016against

thepreviousyear,accordingtoOECDfigures.

Surveyrespondentsprovideaninterestingcontrast

intheirsuggestionacrossthesurveythatIndiaisthe

emerginglogisticsmarketwiththemostpotential,

whilealsosuggestingthatflagshipreformprogrammes

designedtounlocksignificantvalueandefficiencyacross

theeconomy,includingwithinthelogisticssector,arenot

thecatalystmanyareseeking.ThatIndiaistheemerging

marketwiththehighestnumberofplannedinvestments,

suggestsincombinationwithresultsherethat,whilenot

allLSPshaveinterestinthemarket,thosethatdoare

movingquicklytoestablishalargescalefootprintacross

thecountry.



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50%

40%

30%

20%

10%

0%

Poor

gove

rnanc

e

Corrup

tion

Exce

ssive

gove

rnmen

t deb

t

High in

flatio

n

Trans

port

and l

ogist

ics

infra

struc

ture

Overde

pend

ence

on

expo

rts to

China

Low co

mmodity

price

s

46.0%

34.7%

21.1% 21.3%

11.8%

5.6%3.9% 4.3%

3.1%5.0%

2017 2016

8.1% 8.4%

17.1%

7.4%

Barriers to Growth in Brazil

What is Brazil’s biggest obstacle to returning to higher growth?


Whiletheorderinwhichsurveyrespondentsranked

themajorbarrierstoareturntogrowthinBrazilwas

unchangedyear-on-year,therewasamarkedincreasein

thenumberofrespondentsthatcited‘poorgovernance’

asthemostsignificantfactor.At46.0%,nearlyhalfof

thosesurveyedpointedtothelackofabilityamongstkey

stateinstitutionsatstateandcentrallevelstoproperly

governinBrazil,anincreaseof11.3ppcomparedwithlast

year.Thereisaclearsuggestiontoo,withtheyear-on-

yearincrease,thatnoshort-termsolutionisexpected,

althoughthereductionofrespondentsciting‘excessive

governmentdebt’asabarrierdoesperhapsshowan

indicationthatthenewadministrationofMichelTemer

mayhaveeasedsomeconcerns.

OtherresponsesinthesurveyhighlightthatBrazilretains

aconsiderableamountofattractivenessasalogistics

market–itrankedasthe3rdhighestmarketinterms

ofpotentialandforthehighestnumberofplanned

investments–likelydrivenbyitslargemiddleclassin

whatisstillavasteconomy,despiterecentrecession.

Brazilalsostilldisplaysanumberofinefficiencieswith

underdevelopedinfrastructureprimeamongstthecauses.

Inaworldofcompetingandhighlycompetitiveemerging

markets,sustainingthelevelofattractivenessBrazil

currentlydisplayswillbeasignificantchallengeasit

seekstosolveproblemswhich,giventheirhighlevelsof

complexity,haveveryfeweasyfixes.



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12%

10%

8%

6%

4%

2%

0%

% o

f res

po

nden

ts

The d

irecti

on of

China’s

econ

omy

Oil pric

es

The s

treng

th of

the US e

cono

my

Weak t

rade g

rowth

Outcom

e of th

e US

presid

entia

l elec

tion

The s

treng

th of

the

Europ

ean e

cono

my Brexit

Resist

ance

to

trade

agree

ments

(e.g.

TTIP an

d TPP

)

A rise

in pr

otecti

onism

in em

erging

mark

ets

(e.g.

Indon

esia)

Low co

mmodity

price

s

Most Significant Drivers in the Global Economy

Which of the following do you think will have the most significant impact on global economic and trade growth over the next 12 months?


ThedirectionofChina’seconomyisthevariablelikelyto

havethemostsignificanteffectonglobaleconomicand

tradegrowthoverthecourseof2017,accordingtosurvey

respondents.However,whileitwasthefactorthatgained

thelargestshareofrespondents’votes,at10.5%,thereal

indicationoftheresultshereisthatanumberoffactors

areweighingonthemindsofsupplychainprofessionals

astheylookattheyearahead.

EventsinChinaperhapsprevailduetoitsconnectedness

withthefortunesoftradingpartners,aswellasthe

increasingintegrationtheworld’ssecondlargest

economyhaswiththeglobaleconomyatasystemiclevel.

Oilpricesarerankedhighly,too,asfluctuationscanhave

largeimpactsonLSPs,particularlythoseinmarginal

businessessuchasseafreight.Oilpricesalsoclearly

impactonproducingnations,butwithpriceslooking

likelytoremainsuppressedfortheforeseeablefuture,

exportingnationshavebeenadaptingwitheconomic

diversificationplans.Thisprocesslookssettocontinue

overtheyearaheadatleast.



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21.1%

1.2%6.0%

47.6%

24.1%Generally unconcerned

Not at all concerned

Opinion unchanged by these events

Slightly concerned

Very concerned

The Future of Free Trade


Despitegainingattentioninthelatterstagesof2016as

BrexitandtheUSpresidentialelectionunfolded,the

movementtowardsalessopentradingenvironment

globallydoesnotfeaturesignificantlyhighlyonmany

participants’listofconcerns.

Intermsoftheperceivedthreatstothefutureofglobal

trade,almostahalfofrespondents(47.6%)reported

thattheyareslightlyconcernedregardingtheimpactof

developmentssuchasBrexitandresistancetoTTIPand

TPPontheglobalfreetrademovement.Combiningthose

respondentswithonlyaslightlevelofconcernwiththose

whoindicatedthedevelopmentswerenotsignificant,

nearly80%ofthosesurveyedindicatedtheirbeliefthat

theglobalfreetrademovementisrobustenoughto

continuedespitethechallenges.

2016 has seen a number of setbacks for the global free trade movement, including Brexit, resistance to TTIP and TPP as well as growing protectionism in some emerging markets, such as Indonesia. On the scale below, please indicate your level of concern that these developments are the start of a move away from free trade and towards the introduction of more barriers to international trade?



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4.8%

9.0% 5.4%

29.3%51.5%

Prices will see a strong recovery

Prices will improve but not significantly

Prices are unlikely to change much over the course of 2017

Prices will trend downwards slightly in the year ahead

Prices will be highly volatile in 2017

Commodity Price Development

How do you predict commodity prices (oil, gas, minerals) will fare in the year ahead?


Slightlymorethanahalfofrespondents(51.5%)predict

priceimprovementsintheyearahead,thoughthe

expectationisthatanyimprovementswillbemoderate,

withareturntopricesseenduringthecommodityboom

yearsofthe2000salongwayoff.Theimplicationhereis

that,muchlikeoilpricesspecifically,theadjustmenttoa

“newnormal”oflowerpriceshasnowtakentheplaceof

anyexpectationsofaquickrebound.Thisisreinforced

bythe29.3%ofthosesurveyedexpectthatpricesare

unlikelytochangemuchoverthecourseof2017.



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4.2%

42.8%

53.0%

About right

Too optimistic

Too pessimistic

Prospects for Emerging Market Growth

The IMF forecasts 2017 emerging market growth of 4.6%. In your opinion, is this:


Thatmorethanhalf(53.0%)agreewithaforecastthat

putsgrowthinemergingmarketsbelowtheaverageseen

formuchofthe2000ssuggeststhat,atbest,respondents

expectmanyofthechallengesfacedinrecentyearsto

remainoverthecourseof2017.

Arangeofthreatsandchallengestogrowthinboth

developedandemergingeconomieshavecaused

disruptionandturbulenceformuchofthelasttwo

yearsormore.China’sslowingeconomy,loweroil

prices,volatilecurrencies,risingprotectionisminmajor

economiesandloominghigherUSinterestratesall

influence,directlyorindirectly,afundamentaldriverof

thelogisticsindustry–globaltradevolumes.Thatsuch

headwindshaveenduredformuchofthelastfewyears

haslikelyledtosurveyrespondentsmoderatingtheir

expectationsforgrowthinemergingmarkets.Theuneven

impactofthesevariables,andtheuniquestrengths

andcircumstancesofvariousmarkets,willperhapssee

stronggrowthincertainsectorsorcertainmarkets,

however.Wherethisoccurs,logisticsserviceproviders

wouldbewelladvisedtoexpecttofindhighlycompetitive

environments.



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About Agility and Transport Intelligence

Agility – A leader in Emerging Markets

Agilitybringsefficiencytosupplychainsinsomeof

theglobe’smostchallengingenvironments,offering

unmatchedpersonalservice,aglobalfootprintand

customisedcapabilitiesindevelopedanddeveloping

economiesalike.Agilityisoneoftheworld’sleading

providersofintegratedlogistics.Itisapubliclytraded

companywithover$4.8bninrevenueandmorethan

20,000employeesin500officesacross100countries.

Agility’scorecommercialbusiness,GlobalIntegrated

Logistics(GIL),providessupplychainsolutionstomeet

traditionalandcomplexcustomerneeds.GILoffers

air,oceanandroadfreightforwarding,warehousing,

distribution,andspecializedservicesinprojectlogistics,

fairsandevents,andchemicals.Agility’sInfrastructure

groupofcompaniesmanagesindustrialrealestateand

offerslogistics-relatedservices,includinge-government

customsoptimizationandconsulting,wastemanagement

andrecycling,aviationandground-handlingservices,

supporttogovernmentsandministriesofdefense,remote

infrastructureandlifesupport.

Web: www.agility.com

Twitter: @Agility

LinkedIn: www.linkedin.com/company/agility

Eigh

t


http://www.agility.com

http://twitter.com/agility

http://www.linkedin.com/company/agility


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Transport Intelligence

Tiisoneoftheworld’sleadingprovidersofexpert

researchandanalysisdedicatedtothegloballogistics

industry.Utilisingtheexpertiseofprofessionalswith

manyyearsofexperienceinthemail,expressand

logisticsindustries,TransportIntelligencehasdeveloped

arangeofmarketleadingweb-basedproducts,reports,

profilesandservicesusedbymanyoftheworld’s

leadinglogisticssuppliers,consultancies,banksand

usersoflogisticsservices.

IfyouhaveanyfeedbackonAgilityEmergingMarkets

LogisticsIndex2017,pleasedonothesitatetogetin

touchwithusbyanyofthefollowingmeans:

Telephone:+44 (0)1666 519900

Email: [email protected]

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Twitter: @Ti_insight

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