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Agility Emerging Markets Logistics Index2015

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Agility Emerging Markets Logistics Index 2015

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Contents

Section 1: The Agility Emerging Markets Logistics Index 4

Section 2: Sources 6

Section 3: Methodology 7

Section 4: Key Findings 9

EmergingMarkets:HowExecutivesSeeThem 9

MarketsontheMove 11

TradeLanes 13

Section 5: Overview and Outlook 14

Section 6: The 2015 Agility Emerging Markets Logistics Index 17

TheTop10 17

The2015Index 19

TotalIndexScores 20

EmergingMarketsQuadrant 27

Section 7: Emerging Market Trade Lanes 28

TradebyAir 30

TradebySea 38

Section 8: The 2015 Agility Emerging Markets Logistics Survey 45

EmergingMarketswiththeMostPotential 46

FactorsBehindthePotentialEmergenceofLogisticsMarkets 48

SupplyChainRisks 51

EmergingMarketswiththeLeastPotential 54

TradeLanes 56

VerticalSectors 57

InvestmentPlans 60

ThePotentialoftheRussianMarket 62

Contents




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Contents

ProspectsforSub-SaharanAfrica 63

e-commerce 66

Near-SourcingandFreightMovements 67

GrowthintheBRICS 69

TradeandtheGlobalEconomy 70

EmergingMarketGrowth 71

USGrowthForecasts 72

EuropeanGrowthForecasts 73

Section 9: About Agility and Transport Intelligence 74




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Contents

The Agility Emerging Markets Logistics Index

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

Webegan2014withtalkofanemergingmarkets

meltdown.Stormcloudsgatheredinequityandcurrency

markets,givingrisetotalkofa“fragilefive”(SouthAfrica,

Brazil,India,TurkeyandIndonesia).Atthesametime,

politicalinstabilityandarmedconflictthreatenedNorth

AfricaandpartsoftheMiddleEast.What’schanged?

China’seconomyisslowing,commoditypricesarefalling,

andtheprospectofUSmonetarytighteninglooms.Yet,

there is no talk of an emerging markets meltdown.

Why?Emergingmarketshaveprovenmoreresilientthan

thought,inspiteofasluggishglobaleconomy.They

arelessvulnerabletodaytoshocksthatwouldhave

sentinvestorsracingforthedoorinthepast.Anumber

ofthesecountrieshavebuiltconfidencebytackling

stubbornproblems–labourandtaxrules,tradeand

land-useregulations,investorprotections,contractlaw,

propertyrights,capitalrestrictions–thathaveimpeded

John Manners-Bell, CEO, Transport Intelligence

Fiveyearsaftertheglobalrecessionof2008-9,prospects

foralltheworld’seconomies,developedandemerging,

arestillunclear.Whilethereisincreasingoptimism

insomeparts,mostnotablydemonstratedbythe

performanceoftheUSeconomy,othermarketsare

struggling.China’sgrowthhasweakened;Indiahasyet

toliberaliseitsbureaucraticandcorruptsystemsand

Russiahasseeminglychosenaself-destructivepathto

isolation.Aswellasthis,terrorisminWest,Northand

EastAfrica,theMiddleEastandCentralAsiaishaving

ahugelydetrimentalimpactineconomicandsocietal

terms.Economicpressureswillalsobebroughttobear

onoilproducingcountries,asthepriceofoilplunges.

Thiswillundoubtedlyreduceinvestmentininfrastructure

projectsrightacrosstheMiddleEastandelsewhere.

Despitethesechallenges,this,the6theditionofthe

AgilityEmergingMarketsLogisticsIndex,shows




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Contents

Essa Al-Saleh, Continued

growthandmadebusinessskittish.AtAgility,weknow

thechallengesthesemarketspresentforlogistics

customersbecauseourjobistohelpnavigateobstacles.

Butlikeourcustomers,wekeepoureyesonthehorizon.

There,weseethegreatpromiseofemergingmarkets:

growthinpopulation,expansionofthemiddleclass,

rapidurbanisationandincreasingconsumerspending

power,alongwithsteadyprogressinlifeexpectancy,

health,educationandpovertyreduction.Thetrajectory

ofemergingmarketsisupward.Therewillbebumps,but

thefutureisbright.

John Manners-Bell, Continued

thatinterestremainshighforthesevolatilemarkets.

Internationaltradeisstillexpanding(includingawelcome

returntostronggrowthinaircargo)anddespitepolitical,

economicandsecurityrisks,infrastructureinvestments

areongoingtosupportthisgrowth.Tradelanesare

shiftingandarefavouringthosecountrieswhichhave

integratedthemselvesintotheregionalandglobal

economies.Ayoungandincreasinglyaffluentmiddle

classinmanypartsoftheemergingworldcannotbe

ignoredbyglobalconsumergoodsmanufacturers.

Balancingtheneedtofocusondomesticneedswhile

expandinginternationaltradeisadelicateactandwill

surelycreatevolatilitywithintheglobalmarketplace.

HowevertheopportunitiesarethereandtheIMF

continuestoprojecta5%growthrateforthesemarkets.

Howmuchriskarebusinessesandlogisticsproviders

willingtotakewithinthesemarkets?Wherearethe

opportunities?Foroversixyears,theAgilityEmerging

MarketsLogisticsIndexhasattemptedtoanswerthese

questionsandmore.Bygatheringinsightfromexecutives

andthroughadditionalresearchandanalysisithas

nowbecometheleadingresearchpaperonemerging

markets.

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Contents

TheAgilityEmergingMarketsLogisticsIndexhasthree

maincomponents–theIndexcountryrankings,major

tradelanesbyvolumeandmodeoftransport,anda

surveyoftradeandlogisticsprofessionals.

DatafortheIndexcountryrankingscomesfromthe

InternationalMonetaryFund,OrganizationofEconomic

CooperationandDevelopment,WorldBank,government

statisticalagencies,UnitedNationsandUNagencies,

WorldEconomicForum,InternationalTradeCentreand

InternationalAirTransportAssociation.

TradelanedatacomesfromtheUnitedStatesCensus

BureauandEurostat.

Sources

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Contents

Definition of ‘Emerging Markets’

Theterm‘emergingmarkets’wasfirstcoinedbythe

WorldBank’sInternationalFinanceCorporation(IFC)in

1981.Accordingtoitsdefinition,anemergingmarketis

acountrymakinganefforttoimproveitseconomywith

theaimofreachingthesamelevelofsophisticationas

nationsdefinedas‘developed’.

AnemergingmarketisfurthercharacterisedbytheIFC

asmeetingatleastoneofthetwofollowingcriteria:

1.Itisalowormiddleincomeeconomyasdefinedbythe

WorldBank.

2.Itsinvestablemarketcapitalisation(IMC)islowrelative

toitsmostrecentGrossDomesticProduct(GDP).

The Agility Emerging Markets Logistics Index

TheAgilityEmergingMarketsLogisticsIndexusesthree

metricstoassessandrank45emergingmarkets.The

metricsmeasurethecountries’:

•Marketsizeandgrowthattractiveness(50%ofoverall

Indexscore)

•Marketcompatibility(25%ofscore)

•Marketconnectedness(25%ofscore).

Market size and growth attractiveness(MSGA)rates

acountry’seconomicoutput,itsprojectedgrowthrate,

financialstabilityandpopulationsize.

Market compatibilityratesemergingmarketsaccording

totheirmarketaccessibilityandbusinessregulation,

foreigndirectinvestment(FDI),marketriskandsecurity

threatsaswellastheleveloflikelydemandforlogistics

servicesbasedonthecountry’seconomicdevelopment.

Methodology

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Marketcompatibilityisablendof:

•Acountry’sdevelopmentthroughtheimportanceofits

servicesector–indicativeofthelevelofoutsourcingof

logisticsservices

•Urbanisationofpopulation–adriverofmanufacturers’

centraliseddistributionstrategiesandthelikely

consolidationofretailing

•Distributionofwealththroughoutthepopulation–

indicativeofthewidespreadneedforhighervalue

goodsoftenproducedbyinternationalmanufacturers,

asmeasuredbytheGiniIndex.

•ForeignDirectInvestment(FDI)–anindicatorofthe

penetrationofaneconomybyinternationalcompanies

•Marketaccessibility–howeasyitisforforeign

companiestoenterthemarketanddealwithexisting

bureaucracyandregulation

•Security–thismeasurestherisktocompanies’

operationsfromthreatssuchastheft,piracyand

terrorism.

Market connectednessassessesacountry’sdomestic

andinternationaltransportinfrastructureandhowwell

theyconnect.

Specifically,thisinvolves:

•Thefrequencyandrangeofdestinationsofitsliner

shippingconnections

•Thelevelofairportinfrastructurerelativetothe

market’ssize

•Aratingofitsoveralltransportinfrastructure

•Aratingoftheefficiencyofitscustomsandborder

controls.

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

GDPismeasuredincurrentUS$.GDPdatahasbeen

obtainedfromtheWorldBank.

Trade Lanes

Thetradelanesectionmeasuresthevolumeofgoods

shippedbyairandseabetweentheemergingmarkets

includedintheIndexandtheUS/EU.

Thetradelanesectionincludestwoparts:

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

Alistoftradelaneswiththehighestvolumesas

measuredbytons,splitbyairandseaandbyimport

andexport(fromemergingmarketstotheEU/USandto

emergingmarketsfromtheEU/US).

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

Forairandsea,byimportsandexports,thefastest25

growingtradelanesforeachcasehavebeenranked

bytheirgrowthin2014.Inaddition,anindexhasbeen

calculatedwithabaseyearof2005toofferalongterm

perspectiveoneachtradelane’sperformance.

2005-2013dataare‘actual’figures,whereas2014

dataareforecastfiguresbasedonactualmonthlydata

fromJanuary-August2014.Aforecastmodelwhich

accountsforseasonalityhasbeenappliedtoestimate

full-year2014figures.Forseafreight,tonnagerelating

toHS2productgroup27“mineralfuels,mineraloilsand

productsoftheirdistillation;bituminoussubstances;

mineralwaxes”hasbeensubtractedfromtotalfigures.

Noproductgroupsareexcludedfromairfreightfigures.

Toqualifyasoneofthe25fastestgrowingtradelanes,

acertainvolumemustbereached.Forseafreighttrade

lanes,thisthresholdis1milliontonnes.Forairfreight,

itis10,000tonnes.Thispreventsrelativelyinsignificant

tradelanesenteringtherankings.

CAGRshavebeenusedtomeasureeachtrade

lane’sperformance.CAGRstandsforCompound

AnnualGrowthRate.Itmeasurestheconstantannual

percentagegrowthrateofatimeseriesbetweena

particularstartandendpoint.WhileCAGRscanbea

quickandusefulwaytoanalysemediumandlong-run

performance,cautionshouldbetakenastheycanoften

disguisevolatility.Inspectionofeachyear’sindexvalue

overtimerevealsvolatility.

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•Roughly70%oflogisticsandsupplychain

professionalsexpectmodestgrowthinworldtrade

andtheglobaleconomyin2015.Morethan64%said

theWorldBank’s2015forecastforemergingmarkets

growthof5.4%was“aboutright.”Athirdviewed

theWorldBank’semergingmarketsoutlookastoo

optimistic.

•Russia’sgrowingeconomicisolationhasdramatically

diminisheditsappealtologisticsandsupplychain

professionals.Morethan75%ofrespondentsindicated

theywerepessimisticaboutRussia’sprospects.

Negativesentimentamongsurveyrespondentspushed

RussiadownthreespotstoNo.7inarankingof

countriesexpectedtobemajorlogisticsmarketsover

thenextfiveyears.

•TheRussian-backedrebellioninUkrainehasdamaged

bothcountriesintheeyesofindustryprofessionals.

Ukrainevaulted35spotstoNo.13amongcountries

thoughttohavethe“leastpotentialasemerging

logisticsmarkets.”Russiajumped17spotstoNo.19

amongmarketswiththeleastpotentialasemerging

logisticsmarkets.

•TherelativestabilitybroughtaboutbyEgypt’smilitary

governmenthaspromptedreconsiderationofEgypt’s

prospects.LogisticsindustrysentimenttowardEgypt,

negativeforthepastcoupleofyears,reboundedand

propelledEgyptfromNo.24toNo.20amongcountries

thoughttobeemergingasmajorlogisticsmarkets.

Sentimentisoutpacingthedatafornow:Egyptslipped

fourspotstoNo.32intheIndex,despiteimprovements

inmarketcompatibility,meaningbetteroverallbusiness

conditions.

•Logisticsandsupplychainprofessionalsareimpressed

byQatar’sopennesstobusinessanditsmassive

investmentininfrastructureinadvanceofthe2022

WorldCup.Qatarmovedupsixplaces(toNo.16)in

Key Findings

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Emerging Markets: How Executives See Them




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Contents

therankingofcountriesthoughttobemajorlogistics

marketsoverthenextfiveyears.

•Logisticsprofessionalscontinuetobelievesupply

chainrisksvarybyregion.InAsiaPacific,thetoprisks

identifiedwerenaturaldisastersandcorruption.InLatin

America,corruptionandgovernmentinstabilitywere

theleadingrisks.Terrorismandgovernmentinstability

areseenastheleadingconcernsintheMiddleEast&

NorthAfrica.InSub-SaharanAfrica,poorinfrastructure

andgovernmentinstabilitycontinuetobeseenasthe

greatestrisks.

•Ethiopia’semergenceasaleadingEastAfrican

exporter,airhubandinvestmentdestinationhas

yettogainnoticeamonglogisticsandsupplychain

professionals,whorateditasthecountrywiththeleast

potentialasanemerginglogisticsmarket–behindeven

Syria,Iraq,IranandLibya.

•Indiacontinuestodivideandconfusethelogistics

industry.IndiarankedastheNo.2choicetoemergeas

alogisticsmarketandasNo.17amongcountriesleast

likelytobeemerginglogisticsmarkets.IntheIndex

rankings,IndiawasleapfroggedbyBrazilandSaudi

Arabiaayearago,anditslippedagaininthe2015

Index,fallingpastIndonesiatoNo.5.India’smarket

compatibility,agaugeofbusinessandtradeconditions,

fellsharply.

•ThetradeflowsbetweenAsia’semergingmarketsand

otheremergingmarketsaretheonesthathavelogistics

professionalsmostupbeat.Surveyrespondents

showedincreasedoptimismabouttradegrowth

inIntra-Asia,Asia-SouthAmericaandAsia-Africa.

Sentimentaboutprospectsforgrowthintradelanes

linkingAsia-EuropeandAsia-NorthAmericaremained

strongbutslippedfromayearago.

•Mineralsandenergyresources,longtheoverriding

factorsseendrivinggrowthinSub-SaharanAfrica,

arenowbalancedbyotherdrivers.Surveyresponses

wereroughlysplitbetweenmineralsandenergyon

theonehand(51.6%),andotherfactorssuchas

Africa’sgrowingmiddleclass,consumerspending,

infrastructuredevelopment,agriculturaldemandand

FDI(48.4%).

•Infrastructureremains,byfar,thebiggestobstacleto

e-commercegrowthinemergingmarkets,industry

professionalsbelieve.Morethan35%ofrespondents

choseitasthemainhurdle,vs.19%whochoseInternet

connectivity.Infrastructureconcernsarelikelya

reflectionoftheextratime,capacityandcostrequired

todelivergoodsinemergingmarkets.

•Near-sourcingisclearlyreshapingsupplychainsin

theviewofindustryprofessionals,buttheyrankitwell

behindotherfactors(GDPgrowth,FDI,cheaplabour,

consumerspending,etc.)indeterminingwhethera

countrywillbecomeanimportantemergingmarket.

Roughly68%oflogisticsprofessionalssurveyedsay

theyareseeingmanufacturingshiftlocationscloserto

endmarkets.

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•SaudiArabia,No.9inthe2010AgilityEmerging

MarketsLogisticsIndex,hasrisentoNo.2inthe2015

Index,areflectionofthepaceatwhichitisbuilding

world-classinfrastructure,implementingreformsand

attemptingtodiversifybeyondoil,whichisstillhalf

oftheeconomy.Witha$750billioneconomyanda

populationof29million,SaudiArabiaranksbehindonly

ChinaintheIndex,whichhasa$9.3trillioneconomy

and1.4billionpeople.

•Despiteanerodingscoreforitsconnectionstoother

markets,RussiaheldsteadyatNo.7intheoverall

Index,likelybecausethedeteriorationinitseconomyis

yettobefullyreflectedinthedata.

•ThePhilippines’economyhasslowedinrecentmonths,

buttheturnaroundorchestratedbyPresidentBenigno

AquinoisreflectedinboththeIndexdataandindustry

sentimenttowardthecountry,whichhasemergedasa

standout.ThePhilippinesclimbedthreespots(toNo.

16)inthedata-drivenIndexandjumpedfivespots(to

No.15)inthesurvey.Inthe2014Index,thePhilippines

climbedninespots(toNo.19),thelargestimprovement

ofanycountrysincetheIndexwasfirstcompiledin2010.

•ImprovingbusinessconditionsinMalaysia(8),Mexico

(9),thePhilippines(16),Pakistan(25),Egypt(32)and

Algeria(34)droveuptheirmarketcompatibilityscores.

PakistanclimbedsevenspotstoNo.25,thebiggest

gainbyanycountryintheIndex,despitethe“long

march”proteststhatgrippedIslamabadinAugust.

GrowthinPakistan’smanufacturingandservice

sectors,boostedbyplentifulenergysuppliesandpost-

electionbusinessconfidence,madeupforstagnationin

theagriculturesector.

•Deterioratingconditionsledtofallingmarket

compatibilityscoresforIndia(5),Vietnam(19),Kuwait

(21),Ukraine(30)andLibya(40).

•ThesizeofChina’seconomyandpopulationcan

obscurethefactthat,relativetootheremerging

markets,itisverybusinessfriendly–Chinaranks

No.4amongthe45Indexcountriesformarket

compatibilityinthe2015Index.Likewise,itscores

highforconnectedness,rankingNo.3amongallIndex

countries.

•Amongallemergingmarkets,theGulfStatesofUAE

(6),Qatar(12)andOman(13)havecreatedthebest

businessconditionswithUruguay(20),SaudiArabia(2)

andMorocco(17)closebehind.UAE,Malaysia,China,

Oman,SaudiArabiaandChile(11)havedevelopedthe

bestinfrastructureandconnectedness.

•ColombiaclimbedfourspotstoNo.22andexperienced

hugegrowthinoceanfreightvolumeswiththeUnited

StatesandEuropeanUnion.Colombia’seconomyis

thefastest-growinginLatinAmerica.Reformshave

cutpayrolltaxesandcontributedto8%jobgrowth,

increasedFDIandheightenedproductivity.Ithas

embarkedonadrivetospend$25billiononroadsand

railwaysby2018.

•Despitereformsandprojected2015economicgrowth

of4.4%inColombia,businessconditionstherelag

evenallfivecountriesatthebottomoftheoverallIndex

(Nos.41-45Bolivia,Lebanon,Kenya,Cambodiaand

Uganda).Thegapbetweenbusinessconditions(as

expressedbymarketcompatibility)andColombia’s

marketsize,growthattractivenessandconnectedness

isstriking.(BusinessconditionsareworstinLibya,

whichisgrippedbyapoliticalcrisisandmilitiafighting.)

•Steadyeconomicgrowthandimprovingsocial

indicatorspushedBangladeshfromNo.31toNo.28.

Marketcompatibilityandconnectedness–measures

ofbusinessconditions,infrastructureandtradelinks

–bothimprovedforBangladesh,whichhasaveraged

6%growthforseveralyears.Thecountryisnowthe

second-largestgarmentexporterafterChina,and

itusedIndia’sexampletobuildanITandsoftware-

developmentindustry.

•TanzaniamovedupthreespotstoNo.39,whileSouth

AmericancountriesBoliviaandEcuadoreachmoved

uptwospots,to41and33,respectively.Boliviahas

beendisciplined,balancingthebudgetandgrowing

foreignreserves.Ecuadorhasaveraged4%economic

growthsince2007.Unemploymentthereisbelow5%,

andinfrastructureprojectsunderwayincludeQuito’s

newairportandhighway,aswellas95newbridges.

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Markets on the Move




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BIGGEST MOVERS1. Pakistan2. Colombia3. Algeria4. Bangladesh5. Philippines6. Tanzania7. Bolivia8. Ecuador9. Nigeria10. Vietnam

UPBIGGEST MOVERS1. Libya2. Jordan3. Egypt4. Cambodia5. Kuwait6. Ukraine7. Bahrain8. Kazakhstan9. Lebanon10. Argentina

DOWN

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Source: Transport Intelligence

Markets on the Move

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•Theworld’sbusiestairtradelanes,asmeasuredby

cargotonnage,arethoselinkingChinawiththeUnited

StatesandEuropeanUnion.EU-Chinaairfreight

wasup9.1%whileUS-Chinaairfreightrose7.1%.

OutboundtrafficalsopostedbiggainsasChina-US

volumegrew14.3%andChina-EUairfreightincreased

9.6%.Thosewerethesharpestgainsamongtoptrade

lanesthatlinktheUSandEUtoemergingmarkets.

•EUairshipmentstoIndia(-5.3%),Brazil(-5.7%)and

SouthAfrica(-7.2%)fellsharply.

•India’sairvolumetotheEU(4.5%)andUnitedStates

(6.5%)rose.ChileanairfreighttotheUnitedStatesfell

6.6%,butPeruincreasedairshipmentstotheUnited

States5.7%.Mexico-EUairshipmentsincreased8.1%.

•Althoughmanyoftheworld’sfastest-growingtrade

lanesshowlargevolumeincreasesfromrelatively

lowbases,thegainsaresignificantforemerging

economies.Thefastest-growingairtradelaneslinking

emergingmarketswiththeUS/EUare:

- US-Vietnam up 42.7%

- EU-Vietnam up 17.0%

- US-UAE up 15.9%

- EU-Qatar up 14.1%

- Cambodia-EU up 41.9%

- Peru-EU up 28.0%

- Philippines-US up 22.3%

- Philippines-EU up 20.6%

•Thefastest-growingoceanlaneslinkingtheEU/USand

emergingmarketswereEU-Egypt(up23.2%)andEU-

Morocco(up19.7%).EU-SaudiArabiaoceanshipments

fell10.8%.Tradeflowsfromemergingmarketstothe

USandEUshoweddramaticgrowthalongseveralkey

lanes:Ukraine-EU(up35.8%);Brazil-EU(up17.2%);

Russia-EU(up16.5%);andChina-EU(up12.1%).

•Anumberoflaneslinkingemergingmarketsand

theUS/EUshowedspectaculargrowth,albeitfrom

relativelysmallbasevolumes:Algeria-EU(up81.4%);

Peru-US(up59.3%);Qatar-EU(up59.3%);US-

Colombia(up68.6%);EU-Colombia(up46.3%);US-

Thailand(up42.2%).

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Trade Lanes




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Contents

Inthe2014Index,weaskedifemergingmarketshad

losttheirlustre.GrowthintheBRICS–Brazil,Russia,

India,ChinaandSouthAfrica–helpedcushiontheglobal

economyin2010andsetexpectationsthatemerging

marketswoulddriveglobalgrowthforyearstocome.

But2013and2014performancewasdisappointing.

Andheadinginto2015,theoutlookfortheBRICS,in

particular,ispoor.Brazilshowsfewsignsofgrowthamid

hightaxes,stiflingbureaucracy,relativelyexpensive

labourcosts,risinginflationandchroniclackof

infrastructure.Russiaconfrontstheeffectsofdamaging

sanctions,fallingoilandcommodityprices,andrecord-

lowsfortherouble.Indiahastakenstepstoencourage

foreigninvestmentanddismantleaburdensomelicensing

regime,butPrimeMinisterNarendraModihasyetto

unveilmuch-anticipatedeconomicinitiatives.China

continuestotrytomanageitswayoutofacreditbubble.

TheChineseeconomy,growingat10%ayearjusta

fewyearsago,isslowingandexpectedtogrowat6%

to7%ayear.LabourstrifedamagedtheSouthAfrican

economyin2014buthaslargelyended;output,though,

isexpectedtogrowatamodest2.5%.

Thebiggestchallengesin2015aretheslowdownin

China,continueddeclinesincommodityprices,and

potentialtighteningofUSmonetarypolicy.Arecent

reportbyCitiResearchsaystheseforces“willcontinue

topressureemergingeconomiestofinda‘newmodel’

forGDPgrowth.Thebiggestrewardswillbeforcountries

makingefforttointroducestructuralreforms(e.g.trade

arrangements,domesticfinancialfreedom,labourand

taxregimes,landuseandtheclarityofpropertyrights.)”

TheIMFhasidentifiedproductivityimprovementasthe

keytobroader,fastergrowthinemergingmarkets.Ithas

calledonthesecountriesto“removesupplybottlenecks,

boostproductivityandmoveupthevaluechain”inorder

tosustaingrowth.

Overview and Outlook

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TheIMFestimatesthataonepercentagepointslowdown

inemergingmarketsgrowthmeansaquarterofa

percentagepointslowdowninadvancedeconomies

astradeflowsarereduced.In2015,emergingmarkets

growthisgoingtohavetocomelargelyfromChinaand

non-BRICScountries:

•Indonesia,Pakistan,Nigeria,BangladeshandMexico,

allofwhicharemarketswithpopulationsover100

million.

•TheGulfStatesofSaudiArabia,UAE,Qatarand

Oman,whichhavesubstantialreservestowithstanda

prolongedperiodoflowenergypricesandwhichare

inthemidstofambitiouseconomicdiversificationand

modernisationplans.

•CountriesinSub-SaharanAfrica,whereforeign

investmentispouringinandgrowthisexpectedto

average5.7%inthecomingyear.

TheIMFexpectsemergingmarketstogrowatanaverage

rateof5%overthenextfewyears(2015-2019).It

forecastsgrowthinadvancedeconomiesat2.4%forthe

sametimeperiod.Insummary,whileemergingmarkets

willcontinuetofacechallengesin2015,manyarewell

positionedtoovercomethisadversity.

Asia Pacific

AsiancountriesdominatetheIndex.FourAsiannations

rankinthetop10emergingmarkets;sevenofthetop

20arefoundinAsia.ChinaranksNo.1asithasevery

yearsinceitwasaddedtotheIndexin2011.Less

obvioushasbeenthestellarperformanceofseveral

countriesinSoutheastAsia,includingIndonesia(No.4),

Malaysia(No.8)andThailand(No.14).ThePhilippines

(No.16)andVietnam(No.19)advancedthreeandtwo

spots,respectively,inthe2015Index.SoutheastAsia’s

economiesaretouniteasasinglemarketandformthe

ASEANeconomiccommunityin2015.Inpreparation,

theyhaveinvestedintransportandinfrastructure

connections,reducedintra-ASEANtradebarriersand

takenstepstoencouragefreermovementofgoods,

capitalandlabour.Multinationalcompanieshavebeen

buildingtheirpresenceintheregiontotakeadvantage

oftheopportunitiespresentedbyASEANeconomic

integration.

Latin America

BrazilandMexico,LatinAmerica’sdominanteconomies,

makethetop10again.BrazilslippedfromNo.2toNo.

3thisyear.BrazilianPresidentDilmaRousseff,re-

electedinarun-off,isfeelingpressuretore-energise

theeconomy,improveinfrastructureandusethe

2016OlympicSummerGamestoreversesomeofthe

impressionscreatedbyhiccupsduringthe2014World

Cup.Mexico,steadyatNo.9,continuestobenefitfrom

thestrongUSeconomyandthedesireofmanufacturers

toputproductionclosertoendmarkets.

Elsewhere,Uruguay(No.20)offerssomeofthebest

businessconditionsfoundinanyemergingmarket.

EconomicgrowthinNo.11rankedChiledroppedto

afive-yearlowlatein2014amiddeclinesindomestic

demandandinvestment.Chileistheworld’stopcopper

producerandhasbeenhitbyfallingdemand.Colombia

climbedfourspotstoNo.22,benefittingfroma2012free

tradeagreementwiththeUnitedStatesanditsproximity

tothebustlingPanamaCanal.Venezuelaremainsa

basketcaseandstandstobefurtherweakenedbyfalling

oilprices.

Middle East and North Africa

SaudiArabiaranksastheNo.2emergingmarketinthe

Index,anindicationthatitisgettingtractionwithefforts

toattractinvestment,addjobsandexpanditseconomy

beyondtheenergysector.LikeSaudiArabia,UAE(No.

6),Qatar(No.12)andOman(No.13)havespentheavily

oninfrastructurethathasturnedtheregionintoamajor

logisticshub.

ElsewhereintheGulf,KuwaitslippedthreespotstoNo.

21,andBahrainfelltwotoNo.24.Inordertoclosethe

gapwithGulfneighbourswhoareactivelytransforming

intofinancial,logisticsandvalue-addedservicescentres,

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Kuwaitneedstoacceleratethepaceofitsinfrastructure

investmentsandeconomicreformmeasures.Kuwait

hasabundantreservestooffsetfallingoilprices,butit

remainsdangerouslydependentonoil,whichaccounts

forhalfofGDPand95%ofgovernmentincome.Bahrain

grewatahealthy4.9%duringthefirsthalfof2014,but

thecountryremainsonedgeaftersectarianstrifethat

beganin2011andrelieson$1billionayearinfinancial

aidfromotherGulfCooperationCouncilstates.

TheJordanianeconomyhasbeenbadlystrainedas

millionsofSyrianrefugeeshavepouredovertheborder,

andJordan’slargesttradingpartner,Iraq,hasstruggled

withsectarianviolenceandbattledtocontainISIS.

Jordan,whichgetsrelativelyhighscoresforitsbusiness

climate(marketcompatibility)fellfivespotstoNo.29in

the2015Index.LebanonandTurkeyalsoarefeelingthe

impactofthewarinSyria.LebanonfelltwospotstoNo.

42intheIndex.Turkey,whichhasamuchlarger,more

diversifiedeconomy,wasmoreresilient,holdingsteadyat

No.10despitefightingonitsborderandconcernsabout

thefallingliraearlyintheyear.Turkeyhasbenefittedfrom

fallingenergyprices.

InNorthAfrica,relativelystableAlgerialeaptthree

spotstoNo.34,butAlgeriahasyettofeelthefullbrunt

offallingoilprices,whichhaveaddedurgencytocalls

foreconomicdiversification.Egypt’sslidecontinued.It

droppedfromNo.28toNo.32,despitesignsthatthe

militarygovernmenthashaltedthedeclinethatbegan

withthe2011oustingofHosniMubarak.Manyanalysts

forecastastrongrecoveryforEgyptin2015.Elsewhere,

Tunisia(No.35)showssignsofstabilisinginthewakeof

politicalupheavalbutisfeelingthespilloverofongoing

violenceinneighbouringLibya.Tornbyextremismand

militiafighting,Libyaexperiencedthebiggestslideofany

countryintheIndex,fallingsevenspotstoNo.40.

Sub-Saharan Africa

SouthAfrica(No.15)remainstheregion’smostadvanced

economy,althoughNigeriaisnowbelievedtohavelarger

GDP.Highunemployment,ashortageofskilledlabour

andstrikeshavehobbledSouthAfricasince2013.Nigeria

moveduptospotstwoNo.27.Thecountryisworkingto

improveinfrastructure,buttheeconomyhasbeenhurt

bydecliningoilpricesandextremistviolencebyBoko

Haramandothergroups.

Ethiopia’smarketcompatibility,ameasureofbusiness

conditions,ishighestamongthefiveIndexcountries

locatedinSub-SaharanAfrica.ConstructionoftheGreat

EthiopianRenaissanceDamontheNile,roughlyhalf-

waycomplete,couldmakeEthiopia(No.37)asupplier

ofhydro-powerforotherpartsofEastAfrica.Despitea

numberofambitiousinfrastructureprojects,effortsto

encourageITinnovationandrecentenergydiscoveries,

Tanzania(39),Kenya(42)andUganda(45)languishnear

oratthebottomoftheIndex.




17

Contents

Chinacontinuestobetheworld’sdominantemerging

marketandwasagainNo.1intheIndex.Evenso,its

rawIndexscorehasdecreasedsince2012,suggesting

thatotheremergingmarketsareclosingthegapwiththe

perennialfavourite.

OnesuchmarketisSaudiArabia,whichhasachieved

dramaticgainsoverthepastfiveyears.TheKingdom,

No.9inthe2010Index,isNo.2inthe2015Index.

Strategiceconomicplanning,combinedwithgrowing

domesticdemand,hasmadethedifference.SaudiArabia

hasalsobeenabletobuildlargeforeignreservesoverthe

pastyearsasaresultoffiscalpolicywhilealsoreducing

publicdebttonearlyzero.Decliningglobaloilpricesare

notexpectedtoadverselyaffectthecountry’seconomy

ordiminishitsattractivenesstologisticsproviders.

BrazilslippedtoNo.3.Itsslowingeconomyhasforced

ittospendoninitiativesaimedatrevivingdomestic

consumptionandoninvestmentsthatwillenableitto

meetfiscaltargetsin2015.Hometoalargemiddleclass

andayouthfulpopulation,Brazilcontinuestobeplagued

bypoorinfrastructureandbureaucracy.However,ashost

totheWorldCupin2014andtheSummerOlympicsin

2016,ithaslaunchedprojectstoimproveinfrastructure,

includingtheprivatisationofairports.

IndonesiamoveduponespottoNo.4.Ithasbeenin

thetop10since2010andisthelargesteconomyin

SoutheastAsia.Indonesia’scloutislikelytogrowas

theregion’sothereconomiesbecomemoreintegrated

aspartoftheASEANEconomicCommunity,formally

launchedin2015.However,foreigncompaniessay

poorinfrastructurehasdissuadedthemfromboosting

investmentinIndonesia.Infact,theWorldBankhas

warnedthatinfrastructureinvestmentinIndonesia

remainsatroughlyhalfthelevelseenbeforetheAsian

financialcrisisin1997and1998.Thecountry’snew

politicalleadershiphaspledgedtoincreaseGDPgrowth

The 2015 Agility Emerging Markets Logistics Index

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The Top 10




18

Contents

to7%by2018andhascommittedtoboostinfrastructure

byexpandingtherailwaynetworkandbuildingnew

roads,airportsandseaports.

Indiaslippeddowntheranking.AfterholdingatNo.2in

theIndexforthreeyears,thecountryhasslumpedtoNo.

5asitstruggleswithpoorinfrastructure,corruptionand

bureaucracy.

Therewasnochangeforthesecondhalfofthetop10.

However,itshouldbenotedthateachofthecountries

ranked5through10experiencedincreasesintheirIndex

scorescomparedwith2014,furthersuggestingthatthey

arenarrowingthegapwithChina.

UAE,No.6inthe2015Index,couldbepoisedtoleapfrog

Indiaasaresultofinvestmentsininfrastructureand

governmentencouragementofdomesticexpansion.

RussiahasbeenNo.7since2012.Butitssupportofa

separatistmovementinUkraineanditsmovetoseize

theCrimeanpeninsulatriggeredWesterneconomic

sanctionsthathaveyettobefullyreflectedinits

economicdata.Slidingoilpriceswillonlyexacerbate

Russia’splight;itislikelytotumbleinthe2016Index

rankings.

Malaysia,MexicoandTurkeyroundoutthetop10,

maintainingpositionstheyhaveoccupiedsince2013.

WhileMalaysiacontinuestoexpanduponinfrastructure

projectsforfreightandpassengers,MexicoandTurkey

aregrowinglocationsfornear-sourcingduetotheir

proximitytotheUSandEuroperespectively.

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Contents

Ranking Country 2015 Index 2014 Index Change in Ranking

1 China 8.09 8.11 -

2 Saudi Arabia 6.76 6.77 up 1

3 Brazil 6.71 6.80 down 1

4 Indonesia 6.70 6.59 up 1

5 India 6.66 6.75 down 1

6 UAE 6.63 6.50 -

7 Russia 6.57 6.45 -

8 Malaysia 6.36 6.14 -

9 Mexico 6.30 6.09 -

10 Turkey 6.06 6.01 -

11 Chile 5.93 5.92 -

12 Qatar 5.87 5.88 -

13 Oman 5.70 5.70 -

14 Thailand 5.58 5.46 -

15 South Africa 5.46 5.38 -

16 Philippines 5.15 4.91 up 3

17 Morocco 5.11 5.05 -

18 Kazakhstan 5.08 5.07 down 2

19 Vietnam 4.95 4.87 up 2

20 Uruguay 4.92 4.87 -

21 Kuwait 4.91 5.04 down 3

22 Colombia 4.86 4.71 up 4

23 Peru 4.84 4.83 -

24 Bahrain 4.78 4.86 down 2

25 Pakistan 4.77 4.45 up 7

26 Argentina 4.67 4.79 down 1

27 Nigeria 4.56 4.47 up 2

28 Bangladesh 4.56 4.45 up 3

29 Jordan 4.54 4.81 down 5

30 Ukraine 4.46 4.71 down 3

31 Sri Lanka 4.43 4.45 down 1

32 Egypt 4.38 4.54 down 4

33 Ecuador 4.14 4.10 up 2

34 Algeria 4.10 3.98 up 3

35 Tunisia 3.87 4.13 down 1

36 Venezuela 3.81 4.01 -

37 Ethiopia 3.76 3.84 up 1

38 Paraguay 3.74 3.73 up 1

39 Tanzania 3.60 3.67 up 3

40 Libya 3.58 4.33 down 7

41 Bolivia 3.58 3.53 up 2

42 Lebanon 3.56 3.70 down 2

43 Kenya 3.47 3.52 up 1

44 Cambodia 3.46 3.69 down 3

45 Uganda 3.31 3.42 -

The 2015 Index


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Total Index Scores

ChinaSaudi Arabia

BrazilIndonesia

IndiaUAE

RussiaMalaysia

MexicoTurkey

ChileQatarOman

ThailandSouth Africa

PhilippinesMorocco

KazakhstanVietnamUruguay

KuwaitColombia

PeruBahrain

PakistanArgentina

NigeriaBangladesh

JordanUkraine

Sri LankaEgypt

EcuadorAlgeriaTunisia

VenezuelaEthiopia

ParaguayTanzania

LibyaBolivia

LebanonKenya

CambodiaUganda

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


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Contents

Therearesignificantchangesinthisyear’sIndexfor

countrieswithGDPofmorethan$US300bn.Chinais

stillrankedNo.1despiteaslowingeconomy,whileBrazil

andIndiaeachslippedaspotasdomesticeconomic

strugglespersist.MovinguptoNo.2isSaudiArabia

whichhasworkedtodiversifyitseconomyawayfromoil

aswellasimplementsocialdomesticreforms.Moving

uptoNo.4isIndonesiawhich,undernewpolitical

leadership,isexperiencingincreasingdomesticdemand

andundertakinginfrastructureprojectstofuelforeign

directinvestment.Finally,Russiamanagedtomaintainits

No.7rankingforasecondyear,despiteongoingpolitical

andeconomicpressureduemostlytoitspartinthe

Ukrainecrisis.

Ranking Country Market size and growth sub-index

Market compatibility sub-index

Market connected-ness sub-index

Total Index

1 China 9.80 6.71 6.75 8.09

2 Saudi Arabia 7.21 6.65 6.29 6.76

3 Brazil 8.48 6.06 4.93 6.71

4 Indonesia 8.94 4.95 4.94 6.70

5 India 9.24 4.51 4.68 6.66

6 UAE 4.80 8.80 7.69 6.63

7 Russia 7.62 6.16 5.53 6.57

8 Malaysia 5.93 6.47 6.82 6.36

9 Mexico 7.89 4.63 5.28 6.30

10 Turkey 6.99 5.38 5.30 6.06

11 Thailand 6.39 4.58 5.15 5.58

12 South Africa 5.52 4.99 5.64 5.46

13 Colombia 5.77 2.54 5.00 4.86

14 Argentina 4.78 4.99 4.36 4.67

15 Nigeria 6.31 2.46 3.57 4.56

16 Venezuela 3.67 4.09 3.82 3.81

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


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Contents

Severalchangesoccurredinthisyear’srankingfor

countrieswithGDPlessthan$300bn.Mostnoticeably,

thePhilippinesjumpedfrom7thin2014to4thfollowing

strongeconomicgrowth.Vietnamalsoexperienced

agoodincrease,climbingtwospotsto7th,asstrong

growthinitsapparel&textilesandhightechgoods

sectorsspurredhigherexportsandFDI.Peruenteredthe

top10asitbenefitsfromeconomicprudence.



Market connected-ness sub-index

Total Index

1 Chile 5.39 6.50 6.28 5.93

2 Qatar 4.88 8.04 5.90 5.87

3 Oman 4.14 7.63 6.54 5.70

4 Philippines 6.00 5.13 4.14 5.15

5 Morocco 4.16 6.56 5.48 5.11

6 Kazakhstan 4.50 6.47 5.03 5.08

7 Vietnam 5.17 5.07 4.62 4.95

8 Uruguay 3.60 6.70 5.57 4.92

9 Kuwait 4.57 6.19 4.63 4.91

10 Peru 5.16 3.90 4.96 4.84

11 Bahrain 3.47 5.57 5.94 4.78

12 Pakistan 6.07 3.02 4.14 4.77

13 Bangladesh 5.32 4.66 3.59 4.56

14 Jordan 3.06 6.51 5.28 4.54

15 Ukraine 3.90 5.29 4.69 4.46

16 Sri Lanka 3.33 5.78 5.05 4.43

17 Egypt 4.92 2.35 4.82 4.38

18 Ecuador 2.86 4.20 5.65 4.14

19 Algeria 4.47 3.87 3.77 4.10

20 Tunisia 3.39 3.86 4.47 3.87

21 Ethiopia 3.41 5.24 3.38 3.76

22 Paraguay 2.90 4.71 4.23 3.74

23 Tanzania 3.29 4.51 3.48 3.60

24 Libya 2.91 1.69 5.41 3.58

25 Bolivia 2.99 3.80 4.16 3.58

26 Lebanon 2.75 4.11 4.24 3.56

27 Kenya 3.33 2.64 4.07 3.47

28 Cambodia 2.65 4.50 3.87 3.46

29 Uganda 3.09 3.31 3.57 3.31

Agility Emerging Markets Logistics Index for Countries with GDP less than $US300bn


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Contents

Agility Emerging Markets Logistics Index – Sub Indices



Market connectedness sub-index

Total Index

1 China 9.80 6.71 6.75 8.09

2 Saudi Arabia 7.21 6.65 6.29 6.76

3 Brazil 8.48 6.06 4.93 6.71

4 Indonesia 8.94 4.95 4.94 6.70

5 India 9.24 4.51 4.68 6.66

6 UAE 4.80 8.80 7.69 6.63

7 Russia 7.62 6.16 5.53 6.57

8 Malaysia 5.93 6.47 6.82 6.36

9 Mexico 7.89 4.63 5.28 6.30

10 Turkey 6.99 5.38 5.30 6.06

11 Chile 5.39 6.50 6.28 5.93

12 Qatar 4.88 8.04 5.90 5.87

13 Oman 4.14 7.63 6.54 5.70

14 Thailand 6.39 4.58 5.15 5.58

15 South Africa 5.52 4.99 5.64 5.46

16 Philippines 6.00 5.13 4.14 5.15

17 Morocco 4.16 6.56 5.48 5.11

18 Kazakhstan 4.50 6.47 5.03 5.08

19 Vietnam 5.17 5.07 4.62 4.95

20 Uruguay 3.60 6.70 5.57 4.92

21 Kuwait 4.57 6.19 4.63 4.91

22 Colombia 5.77 2.54 5.00 4.86

23 Peru 5.16 3.90 4.96 4.84

24 Bahrain 3.47 5.57 5.94 4.78

25 Pakistan 6.07 3.02 4.14 4.77

26 Argentina 4.78 4.99 4.36 4.67

27 Nigeria 6.31 2.46 3.57 4.56

28 Bangladesh 5.32 4.66 3.59 4.56

29 Jordan 3.06 6.51 5.28 4.54

30 Ukraine 3.90 5.29 4.69 4.46

31 Sri Lanka 3.33 5.78 5.05 4.43

32 Egypt 4.92 2.35 4.82 4.38

33 Ecuador 2.86 4.20 5.65 4.14

34 Algeria 4.47 3.87 3.77 4.10

35 Tunisia 3.39 3.86 4.47 3.87

36 Venezuela 3.67 4.09 3.82 3.81

37 Ethiopia 3.41 5.24 3.38 3.76

38 Paraguay 2.90 4.71 4.23 3.74

39 Tanzania 3.29 4.51 3.48 3.60

40 Libya 2.91 1.69 5.41 3.58

41 Bolivia 2.99 3.80 4.16 3.58

42 Lebanon 2.75 4.11 4.24 3.56

43 Kenya 3.33 2.64 4.07 3.47

44 Cambodia 2.65 4.50 3.87 3.46

45 Uganda 3.09 3.31 3.57 3.31


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Contents

Market Size and Growth Attractiveness Sub-Index

Thetopfourcountriesremainthesameasfromthe2014

Index.Despiteslowinginrecentyears,China’sGDP

growthrate,whichaveraged7.4%for2014,isstillenvied

bymanycountries.India’sGDPgrowthhasalsobeen

strongat5.0%for2014.

Inaddition,China,India,IndonesiaandBrazilhavelarge

populations.IndonesiaandBrazil,inparticular,benefit

fromayoungerpopulation–themedianageinIndonesia

isabout28years,whereas62%ofBrazil’spopulationis

aged29oryounger.Mexico,whichswappedplaceswith

RussiafortheNo.5ranking,alsohasayoungpopulation,

withone-thirdbetweentheagesof12and29.Thisbodes

wellfordomesticconsumption,andmoregenerally,

economicoutput.

Thebottomfourcountriesremainthesameasin2014.

Cambodia,rankedlast,hasseenimprovementsin

economicconditions.AccordingtotheWorldBank,

approximatelytwooutoftenCambodiansareinpoverty

in2014comparedtofiveoutoftenin2004.Still,social

conditionsrequireconsiderableimprovements.

ChinaIndia

IndonesiaBrazil

MexicoRussia

Saudi ArabiaTurkey

ThailandNigeria

PakistanPhilippines

MalaysiaColombia

South AfricaChile

BangladeshVietnam

PeruEgyptQatar

UAEArgentina

KuwaitKazakhstan

AlgeriaMorocco

OmanUkraine

VenezuelaUruguayBahrainEthiopiaTunisiaKenya

Sri LankaTanzania

UgandaJordanBolivia

LibyaParaguayEcuadorLebanon

Cambodia

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


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Contents

Market Compatibility Sub-Index

UAE,QatarandOmanholdthetopthreepositions

formarketcompatibility.QatarandUAEhaveflipped

positionssincethe2014IndexduetoUAE’sopenness

towardsFDIinitsinfrastructureprojectsandprogrammes

toencouragedomesticconsumption.Chinajumped

intherankingsfollowinginvestmentsininfrastructure,

includingitsrailnetwork,andtheopeningofindustries

suchashealthcareandautomobilemanufacturingfor

additionalFDI.TheChinesegovernmentalsoopenedthe

ShanghaiFreeTradeZonetofurtherinvestment.

Jordan,rankedNo.4in2014,slippedtoNo.8inthisyear’s

Index.Regionalissues,includinganinfluxofSyrian

refugees,aswellasanenergycrisisanddeclinesintrade

withIraq,havehinderedgrowthinthecountry.

LibyahasreplacedEgyptforlastplaceformarket

compatibility.Itsgovernmentcontinuestostrugglewith

securityandbuildingthecapacityofpublicinstitutions

toprovidebasicgoodsandservices.Inaddition,with

80%ofitsexportsmadeupofoil,therehas,according

totheWorldBank,beennoprogressinformulatinga

strategytostimulatethenon-oileconomy,norhasaplan

forsustainable,diversified,privatesector-ledeconomic

growthbeenputinplace.

UAEQatarOmanChina

UruguaySaudi Arabia

MoroccoJordan

ChileMalaysia

KazakhstanKuwaitRussiaBrazil

Sri LankaBahrainTurkey

UkraineEthiopia

PhilippinesVietnam

ArgentinaSouth Africa

IndonesiaParaguay

BangladeshMexico

ThailandIndia

TanzaniaCambodia

EcuadorLebanon

VenezuelaPeru

AlgeriaTunisiaBolivia

UgandaPakistan

KenyaColombia

NigeriaEgyptLibya

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


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Contents

Market Connectedness Sub-Index

Thetopsevencountriesremainedthesameasinthe

2014Index.Libyafellseveralspotsasitsgovernment

struggledtobuildmuchneededinfrastructureand

implementprogrammestogrowitseconomy.

Bangladeshmovedupafewnotchesfromlastplacein

the2014Index.Agrowinglocationformanufacturing,it

hasbecomeatopspotforretailerstosourceapparel.

Assuch,Bangladeshhasmadeinvestmentsinits

infrastructuretosupportthisgrowth.

EthiopiaandTanzaniaareinthebottomtwopositions.

BothcountriesareamongthepoorestinAfricaand

dependentonagriculturalexports.Whileinfrastructure

investmentsareincreasing,itisstillnotenoughtoboost

themhigherinthemarketconnectednesssub-index.

UAEMalaysia

ChinaOman

Saudi ArabiaChile

BahrainQatar

EcuadorSouth Africa

UruguayRussia

MoroccoLibya

TurkeyMexicoJordan

ThailandSri Lanka

KazakhstanColombia

PeruIndonesia

BrazilEgypt

UkraineIndia

KuwaitVietnamTunisia

ArgentinaLebanon

ParaguayBolivia

PhilippinesPakistan

KenyaCambodiaVenezuela

AlgeriaBangladesh

NigeriaUganda

TanzaniaEthiopia

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 10.00Source: Transport Intelligence

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Theemergingmarketsquadrantdisplaystherelative

positionsofthecountriesintheIndex.Thechartis

dividedintofourareasbasedonsizeandpotential

barrierstoentry(anaverageof“marketcompatibility”

and“marketconnectedness”).

Countriesinthetoprightquartilerepresentthebiggest

targetsforlogisticsinvestmentsaswellastheeasiest

marketstooperatein,suchasChina.

Inthetopleftquartilearethosecountriesthatrepresent

smalleropportunitiesbutareeasilypenetrated.UAEand

Qatarrepresentthesetypesofopportunities.

Thebottomhalfofthechartincludescountriesinwhich

therearesignificantbarrierstoentryanddifficultiesin

operating.Astheseeconomiesmatureandconnectmore

withglobalmarkets,theywilllikelymovetowardsthe

upperquartiles.NigeriaandParaguayareexamplesof

thesetypesofopportunities.

Emerging Markets Quadrant

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 10.00

Smaller markets but good prospects and easy market entry

Low potential except niche markets,Challenging market environment

High market potential with few barriers to market entry

Large markets but potential constrained by barrier to entry

Market Size and Growth

Oman

Mar

ket C

ompa

tibili

ty a

nd C

onne

cted

ness

ChileSaudi Arabia

Turkey

RussiaBrazil

India

JordanUruguay

Sri Lanka

PakistanLibya

Ecuador

CambodiaArgentina

China

Bolivia

Uganda

Paraguay

Morocco

UkraineSouth Africa

Tunisia

Egypt

Mexico

Indonesia

Kazakhstan

Kuwait

Qatar

UAE

Malaysia

Vietnam

Colombia

Nigeria

Peru PhilippinesThailand

BangladeshEthiopia

Kenya

VenezuelaTanzania

Lebanon

Bahrain

Algeria


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Contents

Whyisemergingmarkettradesoimportant?Theshort

answeristhatitpowersglobaleconomicgrowth:

“The rise of the developing world is the most significant

economic event of our time. Partly because of the shift to

more outward-looking economic policies, partly because

of the impact of new transport and communications

technologies, and partly because the world economy is

more open than ever before, emerging economies have

been able to harness globalization to achieve unheard-

of rates of economic growth – with 11 economies,

representing half the world’s population, growing

collectively at over 6 per cent a year since 2000.”

“Since 1980, the developing world’s share of global

trade has grown from a third to almost half. China, to

take the most obvious example, is now the world’s

largest exporter; thirty years ago it ranked 32nd. Most

developing countries have seen their economies grow

in tandem with their dramatically increasing shares of

world trade. China, with its 1.35 billion people, has seen

its economy grow at an average of 10 per cent per year

for the past three decades. India, with its 1.2 billion

people, grew at 7.5 per cent a year between 2000 and

2011, although progress has recently slowed. While

these emerging giants have captured the lion’s share of

attention, this remarkable story of trade-led development

includes countries of all sizes and regions – from

Indonesia, Ethiopia and Chile, to Cambodia, Ghana and

Qatar.”

-WorldTradeReport2014,WorldTradeOrganization

2014hasbeenanexcitingyearforworldtrade.In

December2013,aWTOtradefacilitationagreement(TFA)

wassecuredinBalifollowing13yearsofnegotiation

sincetheDoharoundoftalksbeganin2001.Essentially,

thedealcutsredtapeatcustomspostsacrosstheworld.

AccordingtooneestimatecitedinTheEconomist,the

dealwillcutthecostofshippinggoodsaroundtheworld

bymorethan10%,raisingglobaloutputbyover$400bn,

withbenefitsflowingdisproportionatelytopoorer

countries.OnJuly312014,justbeforetheagreement’s

ratification,Indiawithdrewitssupportpromptingthedeal

Emerging Market Trade Lanes

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Contents

tocollapse.Anopportunityforemergingmarkettradeto

moveaheadappearedtobelost.However,thedealwas

putbackontrackaftertalksbetweenPresidentObama

andPrimeMinisterModiproducedadealthatsawIndia

supporttheBalireformsontheconditionthattheWTO

didnotchallengeitsrighttoprotectits‘foodsecurity’.

ThedealistheWTO’sfirstglobaldealinits19-year

existence:amajorstepforward.

WiththeBalinegotiationstakingcentrestage,thestrong

tradeperformancesofcertaincountrieshavebeen

somewhatoverlooked.ThisisespeciallytrueforChina,

whoseimprovedexportperformancehasalsobeen

overshadowedbyitsslowingGDPgrowth.Atleastin

tonnageterms,Chineseairandseafreightexportshave

surgedin2014afteraperiodofstagnationfrom2011-

2013,accordingtoEurostatandUSCensusBureauData.

Notethatthisisnotduetobulkgoodssuchasoil,gasor

minerals.Forairfreight,machinery&machineryparts,

electronics,footwear,toys,furnitureandplasticsare

primarilybehindthestrongperformance.Forseafreight,

iron&steel,iron&steelarticles,fertilisers,machinery

&machineryparts,vehicles&vehicleparts,furniture,

plastics&plasticgoodsarethestrongestgrowers.In

otherwords,developmentsacrossavarietyoflogistics

intensivesectorshaverekindledChineseexportgrowth.

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Contents

350

300

250

200

150

100

50

0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014*

EU-China

2005

= 1

00

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

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

Air Freight EU/US to Emerging Market Top 5 Trade Lanes

Rank Origin Destination 2013 Tons 2014* Tons 13-14 Growth

1 EU China 554,708 605,334 9.1%

2 US China 264,094 282,909 7.1%

3 EU UAE 178,665 183,232 2.6%

4 EU India 141,803 134,286 -5.3%

5 US Brazil 122,695 122,627 -0.1%

6 EU Brazil 114,377 107,883 -5.7%

7 EU Saudi Arabia 91,184 89,816 -1.5%

8 EU Mexico 84,412 89,307 5.8%

9 EU Turkey 83,324 86,776 4.1%

10 EU South Africa 88,452 82,095 -7.2%


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Note: 2014* figures are forecasts




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Contents

Ofthe90tradelanesgoingfromtheEU/UStothe45

emergingmarkets,thetop10lanesareexpectedto

accountfor55.9%oftotalairtonnagein2014.EU-China

andUS-ChinarankNo.1andNo.2respectively.Asa

destination,Chinaaccountsfor29.6%oftheEU’sair

tonnagetothe45emergingmarkets,whilefortheUS

thecorrespondingfigureis24.6%.EU-Chinaairfreight

isbyfarthelargesttradelane,morethandoublethe

sizeofthatforUS-China.BothChinesetradelanesare

anticipatedtogrowmorethanallotherlanesinthetop10

in2014.

Lookingatspecificgoods,EurostatdatarevealsthatEU-

Chinaairfreightisdominatedbyjustafewcommodity

groups.Machinery&machineryparts(136,000tonnes),

electronics(90,000tonnes)andvehicles&vehicleparts

(67,000tonnes)accountedfor52.8%oftotalairfreightin

2013.ForJanuary-August2014,tonnageofelectronics

andmachinery&machinerypartshasgrownby6,300

and1,600tonnesrespectivelyoverthesameperiodlast

year.Conversely,tonnageofvehicles&vehiclepartsfell

by2,100tonnes,morethananyothercommoditygroup.

However,itappearstobemoreunusualcommodities

whichhavecausedEU-Chinaairfreighttoclimb.From

January-August2014,tonnageofpartsrelatedtothe

railwaysectorhasbeenthefastestgrowingcommodity,

increasingbyalmost10,000tonnesalonecompared

tothesameperiodlastyear(upfromabout2,000to

12,000tonnes).Chinesefishimportsbyairalsorose

substantially,upbyalmost5,600tonnesoverthesame

periodto12,700tonnes.

ForUS-China,machinery&machineryparts(53,000

tonnes),electronics(35,000tonnes)andoptic,photo,

medicandsurgicalinstruments(24,000tonnes)

accountedfor42.2%oftotalairfreightin2013.Vehicle

&vehiclepartstonnagewasjust9,000tonnes,far

lesssignificantcomparedtoEU-Chinaairfreight.Itis

perishables,suchasfruitsandnuts,plasticsandiron

&steelgoodswhicharemainlydrivingtonnagegrowth

in2014,accordingtoUSCensusBureaudata.Allof

thesecommoditygroupsareupbyabout2,000tonnes

forJanuary-August2014comparedtothesameperiod

in2013.Whilemanufacturingwillalwaysaccountfor

asubstantialamountofinboundairfreight,finished

consumergoodsarebecomingincreasinglyimportantas

Chinesedomesticpurchasingpowergrows.

Theonlyotheremergingmarkettoappeartwiceinthe

top10asadestinationisBrazil,placedatNo.5forUS

andNo.6forEU.IncontrasttoChina,bothBrazilianlanes

areexpectedtoexperiencedecliningvolumesin2014,

withtonnagefromtheEUfallingby5.7%.Itwashoped

thattheWorldCupwouldstimulateasurgeinaircargo

demand,thoughthisappearstohavenotmaterialised.

TheCEOofTAMCargo,partofLATAMAirlinesGroup,

affirmedthisnotioninaninterviewinJune2014.For

January-August2014,asimilarstorycanbetoldfor

US-BrazilandEU-Brazilairfreight.Machineryand

electronicstonnagewassignificantlydownonbothtrade

lanes,thoughmoreseverelyforEU-Brazil.Conversely,

pharmaceuticalsandmiscellaneouschemicalgoods

werethestrongestperformersonbothtradelanes,with

tonnageofeachcommodityupbyabout1,000tonnesfor

US-Braziland700tonnesforEU-Brazil.

ApartfromChina,theothermajorwinnersinthetop10

areEU-MexicoandEU-Turkey,whicharepredictedto

growby5.8%and4.1%respectivelyin2014.Electronics

andmachineryarethoughttobebehindMexican

growth,whileproductsrelatedtotheoil&gassector

areexpectedtorisebyabout4,000tonnesalonefrom

January-August2014tospurTurkishgrowth.Overall,

fiveofthetop10tradelanesareforecasttoexperience

decliningvolumesintheyear.

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

Rank Origin Destination 2013 Tons

2014* Tons

13-14 Growth

2011 Index

2012Index

2013Index

2014 Index*

2011-2014 CAGR

2005-2014 CAGR

1 US Vietnam 14,290 20,397 42.7% 294 280 341 486 18.3% 19.2%

2 EU Vietnam 24,982 29,237 17.0% 229 218 240 281 7.2% 12.2%

3 US UAE 63,076 73,079 15.9% 233 225 249 288 7.3% 12.5%

4 EU Qatar 44,610 50,890 14.1% 205 254 279 318 15.8% 13.7%

5 US Turkey 17,973 20,221 12.5% 155 147 146 164 1.9% 5.6%

6 US Philippines 18,855 20,953 11.1% 124 111 115 128 1.2% 2.8%

7 US Mexico 52,575 57,930 10.2% 100 98 96 105 1.7% 0.6%

8 US Saudi Arabia 44,224 48,584 9.9% 183 208 225 248 10.6% 10.6%

9 EU China 554,708 605,334 9.1% 304 265 277 303 -0.2% 13.1%

10 EU Colombia 17,829 19,366 8.6% 115 112 116 126 2.9% 2.6%

11 US Russia 23,983 26,037 8.6% 219 220 203 220 0.3% 9.2%

12 EU Philippines 15,809 17,111 8.2% 95 95 103 112 5.5% 1.2%

13 US China 264,094 282,909 7.1% 225 213 215 230 0.7% 9.7%

14 EU Tunisia 12,199 13,024 6.8% 98 88 68 73 -9.3% -3.5%

15 EU Egypt 31,730 33,687 6.2% 142 109 89 95 -12.5% -0.6%

16 EU Mexico 84,412 89,307 5.8% 138 128 120 127 -2.7% 2.7%

17 US India 53,415 56,143 5.1% 200 172 156 164 -6.4% 5.7%

18 EU Turkey 83,324 86,776 4.1% 146 137 137 142 -0.8% 4.0%

19 US Colombia 63,065 65,636 4.1% 129 123 119 123 -1.4% 2.4%

20 EU Chile 23,104 24,045 4.1% 133 123 125 130 -0.9% 2.9%

21 EU Lebanon 15,874 16,520 4.1% 163 125 130 135 -6.0% 3.4%

22 EU Peru 10,393 10,782 3.7% 174 175 187 194 3.6% 7.6%

23 US Kuwait 12,328 12,770 3.6% 162 133 135 139 -4.8% 3.8%

24 US Peru 22,532 23,230 3.1% 188 197 183 189 0.2% 7.3%

25 EU Malaysia 38,696 39,738 2.7% 158 149 144 148 -2.1% 4.5%

Source: Transport Intelligence2014* figures are forecasts

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33

Contents

Vietnamistheclearwinner,withimportsfromtheUSand

EUforecasttobethetwoleadingairtradelanesinterms

oftonnagegrowthin2014.Theattractionoflowerwages

comparedtoincreasinglyunfavourablelabourmarket

conditionsinChinahasseennumerousmultinationals

investheavilyinVietnam,particularlyintheairfreight

intensiveelectronicssector.Samsung,IntelandLGare

investingbillionsinnewfactories,withSamsungalone

importingandexporting$11.3bnand$12.5bnofgoodsin

andoutofVietnamin2012respectively.Itisworthnoting

thatVietnamesegrowthisalongtermtrend,withair

importsfromtheUSandEUgrowingatanaveragerate

of19.2%and12.2%peryearrespectivelyfrom2005-

2014.

ThreeMiddleEastcountriesfeatureamongthetop10

fastestgrowinglanesin2014,withUS-UAENo.3,EU-

QatarNo.4andUS-SaudiArabiaNo.8.Again,aswellas

ashorttermobservation,highgrowthisalongtermtrend

withaveragetonnagegrowthfrom2005-2014at12.5%,

13.7%and10.6%peryearrespectively.ForUS-UAEand

US-SaudiArabiain2014,itisperishablesthataredriving

tonnagegrowthbymorethananyothercommodity,

withelectronicssecond.ForEU-Qatar,machineryand

electronicstonnagegrewby2,500and1,000tonnes

respectivelyforJanuary-August2014comparedtothe

sameperiodlastyear.

Apartfromthetradelanesalreadymentioned,US-

Turkey,US-PhilippinesandUS-Mexicowillalsosee

tonnagegrowthinexcessof10%in2014.ForUS-Turkey,

chemicalproductsandaerospacepartsareresponsible

forthemosttonnagegrowth.ForUS-Philippines,itis

perishablesandelectronicswhileforUS-Mexicoitis

machinerypartsandelectronics.Thestronggrowth

anticipatedforallthreelanesin2014marksadeparture

fromrecentyears,withallthreelanesexperiencing

negativetonnagegrowthfrom2011to2013.TheUS-

Mexicoresultisparticularlystronggiventhatithad

struggledtorecovertopre-recessiontonnage,though

itwillfinallyachievethiswith2014tonnageexpectedto

exceedthepreviouspeakin2006.

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250

200

150

100

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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

China-US

2005

= 1

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

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

Air Freight Emerging Market to EU/US Top 5 Trade Lanes


1 China US 1,020,027 1,165,874 14.3%

2 China EU 938,495 1,028,983 9.6%

3 India EU 176,911 184,883 4.5%

4 Colombia US 166,667 167,300 0.4%

5 Kenya EU 147,489 153,193 3.9%

6 Chile US 157,365 146,944 -6.6%

7 India US 107,874 114,836 6.5%

8 Peru US 100,833 106,595 5.7%

9 Mexico EU 65,733 71,051 8.1%

10 Brazil EU 62,453 63,910 2.3%


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Contents

Ofthe90tradelanesgoingfromthe45emerging

marketstotheEU/US,thetop10lanesareforecastto

accountfor71.6%oftotalairtonnagein2014.China-US

andChina-EUrankNo.1andNo.2respectivelyinterms

oftotaltonnage,andasthetwolaneswiththehighest

growthratesinthetop10.Chinaaccountsfor53.2%of

all45emergingmarkets’airtonnagetotheUS,whilefor

theEUthecorrespondingfigureis45.0%.Thesefigures

clearlyunderlineChina’sscaleasanexporter.

ChineseairtonnagetotheUSisexpectedtogrowby

14.3%to1.17mtonnesin2014,beatingtheprevious

recordsetin2010.Thisisoverwhelminglydueto

highermachinerypartsandelectronicsexports,which

accountedfor28.4%and28.7%ofthelane’stonnage

in2013.ForJanuary-August2014,airexportsfor

thesecommoditieswereup68,430and18,274tonnes

comparedtothesameperiodin2013.Thenextlargest

increasewasdowntofootwear,withvolumesupby

3,080tons,clearlyillustratingthedominanceofChina’s

industrialandelectronicssectors.ForChina-EU,air

tonnagegrowthfor2014isforecastat9.6%.While

electronicsexportsarethoughttobethebiggestdriverof

growth,machinerypartsexportsarethoughttobefairly

staticincontrasttotheUS.Toys,furnitureandplastics

willstimulategrowthtoalesserextent.

IndiaistheonlyothercountrytohavebothUSand

EUtradelanesinthetop10.AirtonnagetotheEUis

predictedtogrowby4.5%andremainattheNo.3spot,

whiletonnagetotheUSwillgrowby6.5%andremain

theNo.7rankedlane.ForIndia-EU,growthwillbefairly

broad-based,withnostandoutcommodity.Itslargest

sectors–apparel,machinerypartsandpharmaceuticals

–willnotexperiencemuchchange,withmachineryparts

experiencingthemostgrowth.ForIndia-US,thestory

isquitedifferent.Pharmaceuticalsandmachineryparts

exportswilldrivethemajorityofgrowth.ForJanuary-

August2014,pharmaceuticalsexportsamountedto

16,705tonnes,upby20.8%comparedtoJanuary-

August2013.Thisaccountedfor21.5%oftotalexported

airtonnagetotheEU,India’slargestexportedcommodity

bytonnage.Incontrast,apparelexporttonnagewillfall

substantially.

Otherstandoutperformersinthetop10areKenya-

EU,Peru-USandMexico-EU.Allthesetradelanesare

forecastgrowthofmorethan5,000tonnes.Interestingly,

Kenya-EUandPeru-UStradearebothdominatedby

individualcommodities.ForKenya-EUtrade,63.9%of

tonnagewasdowntoexportsofflowersin2013.For

January-August2014,exportsofflowerstotheEUwere

upby3,133tonnes(5.1%)onthecorrespondingperiod

inthepreviousyear.ForPeru-US,freshvegetables

exportsbyairaccountedforalmost90%(89,791tonnes)

ofthelane’stonnagein2013.ForJanuary-August2014,

tonnagereached48,364tonnes,upby7.0%compared

tothesameperiodlastyear.Mexico-EUtradeextends

acrossamuchbroaderrangeofsectors,though2014

growthisbeingdrivenalmostexclusivelybyelectronics

exports,whichareupbyalmost3,000tonnes(46.1%)

fromJanuary-August2014comparedtothesameperiod

lastyear.

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


2014* Tons

13-14 Growth

2011 Index

2012Index

2013Index

2014 Index*

2011-2014 CAGR

2005-2014 CAGR

1 Cambodia EU 10,418 14,787 41.9% 82 216 300 425 73.4% 17.4%

2 Peru EU 32,866 42,067 28.0% 197 178 182 232 5.7% 9.8%

3 Philippines US 23,297 28,494 22.3% 57 58 63 77 10.6% -2.9%

4 Philippines EU 12,962 15,628 20.6% 76 67 62 75 -0.6% -3.2%

5 Sri Lanka EU 16,806 19,820 17.9% 95 103 112 132 11.6% 3.1%

6 Indonesia EU 24,208 27,750 14.6% 107 71 77 89 -6.0% -1.3%

7 Turkey US 17,884 20,483 14.5% 81 88 101 116 12.9% 1.7%

8 China US 1,020,027 1,165,874 14.3% 124 130 128 146 5.5% 4.3%

9 Chile EU 50,258 56,097 11.6% 387 313 262 293 -8.9% 12.7%

10 Ethiopia EU 42,822 47,656 11.3% 829 827 830 923 3.7% 28.0%

11 Ecuador EU 24,299 26,803 10.3% 317 309 304 335 1.9% 14.4%

12 China EU 938,495 1,028,983 9.6% 134 121 124 136 0.5% 3.5%

13 Colombia EU 22,253 24,291 9.2% 111 109 107 116 1.7% 1.7%

14 Turkey EU 52,162 56,526 8.4% 102 122 110 119 5.4% 2.0%

15 Mexico EU 65,733 71,051 8.1% 165 160 165 179 2.8% 6.7%

16 South Africa EU 35,757 38,503 7.7% 105 91 72 78 -9.5% -2.8%

17 Vietnam US 52,962 56,730 7.1% 137 150 192 205 14.4% 8.3%

18 India US 107,874 114,836 6.5% 124 113 111 118 -1.6% 1.9%

19 Peru US 100,833 106,595 5.7% 141 141 153 162 4.8% 5.5%

20 Vietnam EU 44,038 46,262 5.1% 141 166 201 211 14.4% 8.7%

21 UAE EU 14,349 15,069 5.0% 93 92 95 99 2.2% -0.1%

22 Brazil US 37,877 39,595 4.5% 66 56 41 43 -13.6% -9.0%

23 India EU 176,911 184,883 4.5% 144 122 127 133 -2.6% 3.2%

24 Kenya EU 147,489 153,193 3.9% 234 231 221 229 -0.7% 9.7%

25 Thailand EU 51,347 53,245 3.7% 86 79 75 78 -3.5% -2.8%

Source: Transport IntelligenceNote: 2014* figures are forecasts




37

Contents

Thereare11tradelaneswhichareanticipatedto

experiencedouble-digittonnagegrowthin2014.Fiveof

thesearesmallerAsiaPacificmarkets.Cambodia-EUis

expectedtocontinueonanexplosivegrowthtrajectory,

whichhasseenitsindexvaluerisefrom82in2011to

425in2014.However,itisworthemphasisingthatthis

isthesmallesttradelanebytonnageinthetop25,with

elevenotherlanesexperiencinghighergrowthinabsolute

terms.Apparelandfootwearexports,whichcomprised

morethan80%ofairexporttonnagetotheEUin2013,

areexpectedtocontinuegrowingstronglyin2014.The

PhilippineswastheonlycountrytohavebothUSand

EUtradelanesinthetop10,withgrowthof22.3%and

20.6%respectivelyin2014.Increasingelectronicsand

machinerypartsexportsarebehindtherisetotheUS,

whilefortheEU,growthwillbedowntoelectronics

alone.FishisSriLanka-EU’slargestairexport,

accountingforaround40%oftonnagein2013,andalong

withrubberandapparel,willdrivealmostallgrowthin

2014.ForIndonesia-EU,animalandvegetableoilexports

willexpandfromvirtuallynothingin2013toover2,000

tonnesin2014.

InSouthAmerica,Peru-EUairfreightisanticipatedto

growby28.0%year-on-year,withtonnageincreasing

morethaneveryothertradelaneapartfromChina-US

andChina-EU.Thisisexpectedtobealmostexclusively

downtohigherexportsoffruits.FromJanuary-August

2014,fruitsairexportstotheEUhavevirtuallydoubled

to10,292tonnescomparedtothesameperiodin2013.

AlthoughChile-EUisrankedNo.9withgrowthof11.6%,

itrankedNo.6intermsofabsolutegrowth(5,859tonnes).

Onceagain,increasedfruitexportsaremainlybehind

thestrongforecast.ForEcuador-EU,exportsofflowers

accountedfor93.5%oftonnagein2013.FromJanuary-

August2014,flowertonnagewasup1,756tonnesor

11.4%.

InAfrica,Ethiopia-EUairfreightisexpectedtoincrease

byalmost5,000tonnestoapproximately50,000tonnes.

LikeKenya,flowersdominateEthiopianexportairfreight,

accountingfor87.7%oftonnagein2013.FromJanuary-

August2014,flowersexporttonnageincreasedby3,734

tonnesor14.8%comparedtothecorrespondingperiod

in2013.Since2005,notradelaneinthetop25has

grownbymorethanEthiopia-EU,withits2014index

valueof923morethandoubleNo.2placedCambodia-

EUat425.

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


US-China EU-China EU-Turkey EU-Algeria EU-Egypt

350

300

250

200

150

100

50

0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014*

2005

= 1

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Sea Freight EU/US to Emerging Market Top 5 Trade Lanes


1 US China 82,070,410 83,483,130 1.7%

2 EU China 38,382,262 38,456,645 0.2%

3 EU Turkey 31,196,327 31,632,686 1.4%

4 EU Algeria 20,795,946 23,879,962 14.8%

5 EU Egypt 13,227,401 16,300,270 23.2%

6 US Mexico 13,919,943 14,830,472 6.5%

7 US Brazil 14,489,625 14,153,396 -2.3%

8 EU Saudi Arabia 15,434,053 13,766,917 -10.8%

9 EU Brazil 12,362,980 12,249,864 -0.9%

10 EU Morocco 9,825,682 11,765,480 19.7%

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39

Contents

Ofthe90tradelanesgoingfromtheEU/UStothe45

emergingmarkets,thetop10lanesareexpectedto

accountfor60.2%oftotalseatonnagein2014.US-

ChinaandEU-ChinarankNo.1andNo.2respectivelyin

termsoftotaltonnage,withUS-Chinatrademorethan

doublethetonnageofEU-Chinatrade.Chinaaccounts

forjust16.7%ofall45emergingmarkets’seatonnage

fromtheEU,whilefortheUS,thecorrespondingfigure

is41.3%.Clearly,Chinaisafarmoreimportantexport

destinationtotheUSthantheEUforseafreight.Thereis

expectedtobelittlemovementinoveralltonnageinboth

tradelanes.However,certainsectorshaveperformed

wellwhichhavebeenoffsetelsewhere.Forexample,

USagricultureexportshaveseenstrongincreases,with

soybeans,cerealsandfoodwasteexportsforJanuary-

August2014upbyover6mtonnesonthecorresponding

periodin2013toover19mtonnesoverall.

US-Mexicotradeisexpectedtodeveloppositively,with

tonnageforecasttoriseby6.5%in2014.Thiswasagain

downtohigherexportsmadebytheagriculturalsector,

withcerealsexportsupbymorethan860,000tonnes

aloneforJanuary-August2014comparedtoJanuary-

August2013.Conversely,organicchemicalsexports

weredownbyalmost330,000tonnesto2.7mtonnes.

Amongthetop10,EU-NorthAfricatradeappearstohave

developedthemost,withEU-Algeria,EU-EgyptandEU-

Moroccotradeallexperiencingdouble-digitgrowth.For

Algeria,thisisdowntohighercerealsimports,aswellas

greatersalt,sulphur,earths&stone,plasteringmaterials

&lime&cementimports.ForMorocco,itisalmost

exclusivelydowntohigherimportsofcereals.ForEgypt,

itislargelyagainduetoincreasedcerealsimports,but

alsohigherwoodimports.

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



2014* Tons

13-14 Growth

2011 Index

2012Index

2013Index

2014 Index*

2011-2014 CAGR

2005-2014 CAGR

1 US Colombia 5,534,962 9,332,628 68.6% 87 82 100 169 24.5% 6.0%

2 EU Colombia 1,703,910 2,493,503 46.3% 131 159 164 240 22.3% 10.2%

3 US Thailand 3,022,537 4,297,762 42.2% 133 134 111 158 5.8% 5.2%

4 US Saudi Arabia 2,986,929 4,171,126 39.6% 190 179 160 224 5.6% 9.4%

5 US Peru 3,169,992 4,403,945 38.9% 231 190 232 323 11.8% 13.9%

6 US Egypt 5,109,164 7,032,439 37.6% 120 70 80 110 -2.8% 1.1%

7 EU Philippines 1,267,666 1,646,529 29.9% 136 143 159 207 14.9% 8.4%

8 EU Egypt 13,227,401 16,300,270 23.2% 143 165 191 236 18.1% 10.0%

9 US Morocco 1,143,599 1,402,031 22.6% 159 103 91 112 -11.2% 1.2%

10 EU Qatar 2,070,062 2,497,502 20.6% 192 278 260 314 17.8% 13.6%

11 EU Morocco 9,825,682 11,765,480 19.7% 145 142 145 174 6.4% 6.4%

12 EU Jordan 1,981,917 2,339,437 18.0% 132 126 164 193 13.6% 7.6%

13 US Vietnam 3,678,455 4,277,335 16.3% 535 561 655 761 12.5% 25.3%

14 EU Algeria 20,795,946 23,879,962 14.8% 214 234 277 318 14.2% 13.7%

15 US Philippines 4,704,418 5,351,051 13.7% 140 141 143 162 5.0% 5.5%

16 US Indonesia 6,183,433 6,938,246 12.2% 173 171 177 198 4.7% 7.9%

17 EU Vietnam 2,069,447 2,319,957 12.1% 313 288 317 356 4.4% 15.1%

18 EU Kuwait 1,068,428 1,191,708 11.5% 90 99 110 123 11.1% 2.3%

19 EU Pakistan 2,073,621 2,305,902 11.2% 89 84 92 102 4.6% 0.2%

20 US Ecuador 1,720,774 1,880,463 9.3% 165 173 172 188 4.5% 7.3%

21 EU India 8,132,776 8,836,846 8.7% 150 150 116 126 -5.7% 2.6%

22 US Mexico 13,919,943 14,830,472 6.5% 117 126 114 121 1.3% 2.2%

23 EU UAE 6,985,764 7,133,564 2.1% 153 172 178 182 6.1% 6.9%

24 US India 5,997,554 6,109,534 1.9% 290 253 214 218 -9.0% 9.1%

25 US China 82,070,410 83,483,130 1.7% 214 232 244 248 5.0% 10.6%

Colombiaoccupiesthetwotopspotsfortonnagegrowth

in2014.US-Colombiatradewasupsolelyduetohigher

cerealsexports.ForJanuary-August2014,volumeswere

upbyabout2.8mtonnesonthesameperiodin2013.

ForEU-Colombiatrade,itwassalt,sulphur,earthsand

stone,plasteringmaterialsandlimeandcementtonnage

whichsparkedtheincrease.Volumeswereupbyover

400,000tonnesforJanuary-August2014.

Fortheotherfivetradelanesinthetop10withUSorigin,

increaseswereagainmainlydowntogreateragriculture

imports(specificallycereals).Bumperharvestsinthe

UShaveseenagriculturalcommoditypricestumble

encouragingfarstrongerexportsin2014.

FortheremainingEUorigintradelanesinthetop10,

EU-Philippinesseafreightgrowthisbeingspurredby

cereals,meat,foodwasteandfertilisersexportsfrom

theEU.EU-Qatartonnagewillincreasethankstogreater

orestrade.




41

Contents


1 China US 56,169,478 61,555,453 9.6%

2 China EU 42,513,932 47,653,616 12.1%

3 Russia EU 24,183,918 28,181,659 16.5%

4 Brazil EU 23,254,231 27,243,359 17.2%

5 Ukraine EU 18,262,548 24,798,282 35.8%

6 Mexico US 15,641,625 17,469,010 11.7%

7 Brazil US 15,898,558 17,193,697 8.1%

8 Turkey EU 16,181,240 17,044,793 5.3%

9 Argentina EU 12,504,485 11,740,375 -6.1%

10 South Africa EU 12,067,318 11,557,233 -4.2%

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



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Sea Freight Emerging Market to EU/US Top 5 Trade Lanes

250

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China-EU Russia-EU Brazil-EU Ukraine-EU





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Ofthe90tradelanesgoingfromthe45emerging

marketstotheEU/US,thetop10lanesareexpectedto

accountfor62.7%oftotalseatonnagein2014.China-US

andChina-EUrankNo.1andNo.2respectivelyinterms

oftotaltonnage,withChina-UStradealmost30%larger

thanChina-EUtrade.Chinaaccountsforjust19.0%of

all45emergingmarkets’seatonnagetotheEU,whilefor

theUS,thecorrespondingfigureis36.0%.Aswiththe

tradelanesinreverse,China-USseafreightisnotonly

greaterinabsolutetermscomparedtoChina-EUsea

freight,italsoaccountsforafarhigherproportionoftotal

USseafreightimportsfromemergingmarkets.

WhileEU/UStoemergingmarketseafreightisalmost

alwaysdominatedbyagriculturalgoods,thisiscertainly

notthecasewhenexaminingthetradelanesinreverse,

whichtendtobefarmorediversified.

Forinstance,thetop10commoditygroupsbytonnage

forChina-USseafreightin2013werefurniture(6.1m),

machinery(5.2m),electronics(4.5m),plastics&plastic

goods(3.3m),articlesofiron&steel(3.3m),toys(2.5m),

ceramics(2.3m),vehicles&vehicleparts(2.2m),wood

&woodproducts(2.0m)andsalt,sulphur,earthsand

stone,plasteringmaterials&lime&cement(1.7m).In

total,China-USseafreightweighedover1mtonnesfor18

differentcommoditygroupsin2013.China-USexports

arepredictedtoriseby9.6%in2014,afarsuperiorfigure

tothe3.5%tonnagegrowthin2013.Growthwillcome

fromavastrangeofgoods.ForJanuary-August2014,

totaltonnagewasupby9.9%andvolumeswereupby

over100,000tonnesonthesameperiodlastyearfor

13differentcommoditygroups.Leadingthewaywere

iron&steelandsalt,sulphur,earths&stone,plastering

materials&lime&cementexports,whichwereupby

approximately700,000tonneseach.Exportsoffertilisers

werenext,upbyabout500,000tonnes,probablydriven

bytheaforementionedbumperUSharvests.Machinery

andvehicle&vehiclepartsexportsincreasedbyaround

300,000tonneseach.

China-EUseafreightisanticipatedtodevelopeven

morefavourably,withtonnageforecasttoriseby12.1%

in2014.However,growthwillbelessevenlyspread

comparedtotradewiththeUS.ForJanuary-August

2014,onlyeightcommoditygroupshavegrownbymore

than100,000tonnesonthecorrespondingperiodin

2013,comparedto13fortheUS.ForJanuary-August

2014,iron&steeltonnagerosebyover800,000tonnes

alone.Secondandthirdweremachineryandarticlesof

iron&steelexports,whichwereupbyabout350,000

tonnesand260,000tonnesrespectively.Furnitureand

plastics&plasticgoodsexportswerealsoupbyover

200,000tonnes.

ForCIScountriesandEasternEurope,Russia-EU

growthisexpectedtobefairlybroad-based,witheight

commoditygroupsexperiencinggrowthofover100,000

tonnesforJanuary-August2014.However,allarebulk

commoditiesandthreearerelatedtoagriculture.Cereals

(800,000),fertilisers(320,000)andfoodwaste(280,000

tonnes)allgrewstrongly.Iron&steelandaluminium

tonnagegrewby450,000tonnesand330,000tonnes.

Chemicalsexportsalsoincreasedsubstantially,with

inorganicchemicalsandorganicchemicalstonnageup

by160,000and110,000tonnesrespectively.Meanwhile,

Ukraine-EU’sforecastof35.8%growthisdrivenmainly

byhigheragriculturalexports,withcerealstonnageupby

2.9mtonnesaloneforJanuary-August2014.

MovingtotheAmericas,Brazil-EUseafreightgrowthwill

alsostemfrombulkcommodities.ForJanuary-August

2014,oilseedsandoleaginousfruitsexportsgrewby

780,000tonnes,pulpofwood&paperorpaperboard

by470,000tonnesandiron&steelby220,000tonnes

(comparedtoJanuary-August2013).Finally,Mexico-

USseafreightgrowthisbeingspurredlargelybyhigher

volumesofsalt,sulphur,earths&stone,plastering

materials&lime&cement.ForJanuary-August2014,

tonnageofthiscommoditygrouprosebyover1.3m

tonnescomparedtothesameperiodin2013.Inaddition,

Mexicanmanufacturingwillcontributetoseafreight

growth,withiron&steel(150,000),vehicles&vehicle

parts(130,000)andarticlesofiron&steel(110,000)all

experiencingsubstantialtonnagegrowthforJanuary-

August2014.

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43

Contents

Rank Origin Destination 2013Tons

2014* Tons

13-14 Growth

2011 Index

2012Index

2013Index

2014 Index*

2011-2014 CAGR

2005-2014 CAGR

1 Algeria EU 1,571,390 2,851,171 81.4% 53 54 47 86 17.4% -1.7%

2 Peru US 2,152,132 3,428,882 59.3% 112 91 85 136 6.9% 3.5%

3 Qatar EU 817,499 1,301,933 59.3% 153 211 291 464 44.6% 18.6%

4 Russia US 7,059,303 10,975,535 55.5% 109 112 114 177 17.7% 6.6%

5 Chile US 7,143,912 10,803,237 51.2% 101 84 90 136 10.4% 3.5%

6 Mexico EU 2,442,372 3,424,054 40.2% 143 127 122 171 6.2% 6.1%

7 Ukraine EU 18,262,548 24,798,282 35.8% 137 162 165 223 17.6% 9.3%

8 UAE US 833,400 1,124,032 34.9% 78 81 124 168 29.0% 5.9%

9 Qatar US 1,176,089 1,585,252 34.8% 68 75 148 200 43.2% 8.0%

10 Egypt US 870,474 1,132,343 30.1% 95 76 55 72 -9.0% -3.6%

11 Turkey US 2,940,100 3,728,972 26.8% 56 82 81 103 22.1% 0.3%

12 Oman US 878,251 1,102,228 25.5% 1,020 2,545 1,829 2,295 31.0% 41.6%

13 Vietnam EU 2,738,455 3,326,238 21.5% 152 157 155 188 7.5% 7.3%

14 India US 5,324,123 6,363,595 19.5% 106 114 109 130 7.0% 2.9%

15 South Africa US 2,693,543 3,200,589 18.8% 99 101 95 113 4.6% 1.4%

16 Brazil EU 23,254,231 27,243,359 17.2% 96 89 71 83 -4.9% -2.1%

17 Russia EU 24,183,918 28,181,659 16.5% 98 91 87 101 0.9% 0.1%

18 China EU 42,513,932 47,653,616 12.1% 139 121 120 134 -1.1% 3.3%

19 UAE EU 1,287,268 1,440,762 11.9% 268 250 260 291 2.7% 12.6%

20 Mexico US 15,641,625 17,469,010 11.7% 80 78 102 114 12.2% 1.4%

21 Saudi Arabia US 1,193,337 1,330,054 11.5% 100 94 90 101 0.4% 0.1%

22 China US 56,169,478 61,555,453 9.6% 99 99 103 112 4.4% 1.3%

24 Colombia US 1,385,954 1,515,709 9.4% 41 40 37 41 -0.3% -9.5%

25 India EU 9,626,727 10,526,033 9.3% 113 105 106 116 0.9% 1.6%

25 US China 82,070,410 83,483,130 1.7% 214 232 244 248 5.0% 10.6%

Sea Freight Top 10 Trade Lanes – Emerging Market to EU/US (Index of Tons, 2005=100)


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44

Contents

Algeria-EUispredictedtobethefastestgrowing

emergingmarkettoEU/USseafreighttradelanein2014,

withgrowthof81.4%.Interestingly,theincreasewillbe

mainlybedrivenbyfertiliserexports,whichamounted

toalmost440,000tonnesforJanuary-August2014,

andwerevirtuallynothinginthesameperiodlastyear.

However,Algeria-EUtonnagein2014remainslowerthan

2005levelsandstruggledfrom2011-2013.

InLatinAmerica,bothPeru-USandChile-UStonnage

willriseprimarilyduetoincreasedsalt,sulphur,earths

&stone,plasteringmaterials&lime&cementexports,

whichwereupbyalmost520,000tonnesand2.8m

tonnesrespectivelyforJanuary-August2014.Whileit

isfreshvegetablesdrivingincreasedairfreighttonnage

fromPeru-US,freshfruitisanimportantsecondary

causeofhigherseafreightvolumes(upabout90,000

tonnesforJanuary-August2014).However,bothPeru-

USandChile-USvolumesin2014areexpectedtobe

just36%higherthanin2005.Mexico-EUtonnageis

expectedtorecoverfromtwoyearsofdeclinewith

growthof40.2%in2014.Cereals,organicchemicals,

sugars&sugarconfectioneryandplasticsvolumeswillall

risesubstantially.

MiddleEasternandnearbycountries’seafreighttothe

UnitedStatesoccupiedspots8-12onthelistoffastest

growingcountries.ForJanuary-August2014,UAEand

Qatargrowthhasbeensparkedbyfertilisers(220,000

and360,000tonnesrespectively),probablydueto

boomingUScropyields.Whilebothtradelaneshave

beenonsimilarupwardtrajectoriessince2011,itiseasy

toseethesefiguresdroppingbackifUSagriculturehas

apooryearinthefuture.ForEgypt,salt,sulphur,earths

andstone,plasteringmaterials&lime&cementexports

wereupby280,000tonnesfromJanuary-August2014,

whileTurkey’stonnagewillrisemainlythankstoironand

steelexports(upby380,000tonnes).

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45

Contents

The 2015 Agility Emerging Markets Logistics Survey

Sec

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Toinvestigatethepotentialoftheworld’semerging

economiesasfuturelogisticsmarkets,Transport

Intelligenceundertookasurveyoflogisticsindustry

professionalsbetweenAugustandOctober2014.

Participantsfromarangeoflogisticsmarketsand

verticalsectorstookpartinthesurvey,offeringopinion

andinsightfromtheirexperienceinthesemarkets.

Responsesfrom972industryprofessionalsareused

inthis,thesixthannualeditionoftheAgilityEmerging

MarketsSurvey.




46

Contents

Emerging Markets with the Most Potential

Which of the following countries do you believe will emerge as major logistics markets in the next five years?

Perceived Major Logistics Markets for the Future

20%

18%

16%

14%

12%

10%

8%

6%

4%

2%

0%

China

India

Brazil

Indon

esia

Vietna

m

Mex

ico

Russia UAE

South

Afri

ca

Turk

ey

Thail

and

Mala

ysia

Saudi A

rabia

Nigeria

Philip

pines

Qatar

Poland

Bangla

desh

Argen

tina

Egypt

% o

f res

po

nden

ts


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Country 2015 2014 Y-o-Y Change

China 1 1 -

India 2 2 -

Brazil 3 3 -

Indonesia 4 5 up 1

Vietnam 5 7 up 2

Mexico 6 6 -

Russia 7 4 down 3

UAE 8 9 up 1

South Africa 9 10 up 1

Turkey 10 8 down 2

Thailand 11 13 up 2

Malaysia 12 14 up 2

Saudi Arabia 13 11 down 2

Nigeria 14 12 down 2

Philippines 15 20 up 5

Qatar 16 22 up 6

Poland 17 15 down 2

Bangladesh 18 17 down 1

Argentina 19 18 down 1

Egypt 20 24 up 4





47

Contents

Surveyrespondentswereaskedtorankthefiveemerging

marketstheyviewedasthemostlikelytobecome

majorlogisticsmarketsoverthenextfiveyears.Ascore

wascalculatedinordertorankthemarkets–afirst

preferencewasawardedfivepoints,asecondpreference

fourpoints,andsoondowntoasinglepointforthefifth

preference.

Usingthismethod,surveyparticipantsrevealedthat

Chinaisagainviewedasthemostlikelytobecomea

majorlogisticsmarketofthefuture.Alsounchangedin

2015weretheNo.2andNo.3rankedmarkets–India

andBrazil.Whiletheorderofthetopthreemarkets

hasremainedconsistentforthelastthreeyears,belief

inthefourthBRICeconomyfalteredin2015.Russia

slippedfromtheNo.4spotithadoccupiedsince2012

toNo.7followingayearofuncertaintybroughtaboutby

thecountry’sforeignpolicystance.GainingatRussia’s

expensewereIndonesiaandVietnam,whileMexicoheld

ontoitsNo.6ranking.

Itwasfurtherthroughtherankings,though,thatthereal

dynamismofemerginglogisticsmarketswasrevealed.

Aftergaining14placesin2014,thePhilippinesrose

afurtherfivespotsthisyeartoreachNo.15.Resilient

domesticdemandinthecountryhascombinedwith

growthinthecountry’smajorexportindustries–inUS$

terms,electronicsexportvalueshaverisen71.0%over

thepasttwoyears,whilemachineryexportvaluesare

up31.0%overthesameperiod.Indeed,thePhilippines

isamajorproducerofsemiconductors,andsawexports

valuesrise34.5%between2011and2013.Several

barriersremainforthecountry’slogisticsmarket,

however–publicspendingoninfrastructureisneeded,

andManila,thecountry’scapitalandmainlogisticshub,

imposesrestrictionsonthemovementoftruckswhich,

insomecases,canaddasmuchasthreedaystolead

times.

Anothermarkettogaininthe2015surveywas

Egyptwhichreturnedtothetop20mostattractive

marketranking.Therisemaybearesultofincreased

investments.AccordingtotheWorldBank,overallforeign

directinvestmentinEgyptincreased98.5%between

2012and2013,andreturnedtoalevelclosetothatseen

beforetheArabSpring.Majorinternationalorganisations

arecommittingtothecountrytoo–PepsiCoandAlmarai,

aSaudidairycompany,willinvest$345moverthenext

fiveyearsintoanEgyptianjointventure,forexample.

Withinvestmentreturning,logisticsserviceproviders

appeartosenserenewedoptimisminthecountry,

althougheconomicreformsthateaseaccesstocapital

forSMEsandemphasiseproductiveactivityoutsideof

Cairoarealsoneeded.

Surveyrespondentsindicatedlessbeliefinthepotential

ofSaudiArabiaasafuturelogisticsmarketthanwas

suggestedbytheEmergingMarketsIndex.Thecountry’s

economicmixisdevelopingbeyondtraditionaloil&

gasmarketsandinvestmentprogrammestobuildand

expandairports,roads,ports,industrialcomplexes

andotherkeylogisticsinfrastructureareunderway.

Infrastructureinvestmentis,however,acommonpractice

throughouttheregion,andthemismatchbetween

Indexdataandindustryperceptioncouldbeviewedas

hesitancyamongstindustryprofessionalstocommitto

SaudiArabiawhenrivallocations,includingUAE,Qatar

andOman,presentfiercecompetition.

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48

Contents

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Factors Behind the Potential Emergence of Logistics Markets

Please rank, in order of importance, the key reasons why you think the main market in question 1 above will become an important emerging market

Factors behind the potential emergence of markets

35%

30%

25%

20%

15%

10%

5%

0%

Econo

mic

Growth

Fore

ign D

irect

Inves

tmen

t

Growing

Trad

e

Volum

es

Cheap

Lab

our

Forc

e

Poten

tial

Consu

mer

Spen

d

Geogr

aphic

Loca

tion

Growing

Popula

tion

Good B

usine

ss

Enviro

nmen

t

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


Factor 2015 2014 Y-o-Y Change

Economic growth 1 1 -

Foreign Direct Investment 2 3 up 1

Growing trade volumes 3 2 down 1

Cheap labour force 4 4 -

Potential consumer spend 5 5 -

Geographic location 6 6 -

Growing population 7 7 -

Good business environment 8 10 up 2

Strong transport infrastructure 9 9 -

Near-sourcing market 10 8 down 2

Lack of corruption 11 12 up 1

Strong security 12 11 down 1





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Contents

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

20%

18%

16%

14%

12%

10%

8%

6%

4%

2%

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

Poor I

T Inf

rast

ruct

ure

Difficu

lty in

Repat

riatin

g Pro

fits

Frau

d

Geogr

aphic

Loca

tion

Human

Righ

ts

Issue

s

% o

f res

po

nden

ts


Factor 2015 2014 Y-o-Y Change

Poor transport infrastructure 1 1 -

Corruption 2 2 -

Government policies 3 4 up 1

Difficult customs procedures 4 3 down 1

Security 5 6 up 1

Difficulty in setting up and doing business 6 5 down 1

Poor IT infrastructure 7 8 up 1

Difficulty in repatriating profits 8 7 down 1

Fraud 9 9 -

Geographic location 10 11 up 1

Human rights issues 11 10 down 1

Strong security 12 11 down 1


Problems associated with doing business in emerging markets




50

Contents

Theimportanceofgeneraleconomicgrowthmaintained

averyclearleadastheprimarydriverbehindthe

emergenceoffuturelogisticsmarkets.Thisisperhaps

notsurprisinggiventhestronglinkbetweenincreasing

economicactivityandhigherdemandforlogistics

services,butpartofthisassessmenttoowillbethe

indirectroleeconomicgrowthplaysinexpanding

amarket’smiddleclass,improvingitsbusiness

environmentandencouragingthedevelopmentof

infrastructure.

Gainingintherankingsthisyearwastheperceptionthat

foreigndirectinvestmenthasasignificantpositiveeffect

upontheemergenceoflogisticsmarkets.Domestic

logisticsproviderswithinemergingmarketscanstruggle

togainaccesstothecapitalrequiredtogrow,andthe

increasedemphasisplacedonFDImaybeareflection

ofitscapacitytoovercomesuchfundingshortages,

especiallyinlocationsorverticalsectorswhere

demandisgrowingandtheneedforlogisticsservices

isimmediate.Itmayalsobeanindicationthatthelarger

internationalplayersareincreasinglywillingtolookat

jointventuresorpartnershipswithdomesticproviders.

Themovementof‘goodbusinessenvironment’,uptwo

placesintheranking,islikelyrelated,asithelpsinvestors

mitigatesomeoftherisksassociatedwithinvestingin

neworexpandedoperationsorpartnerships.

Onthewhole,however,wheretherewaschangeinthe

rankingitwasslight.Year-to-yearcontinuityofthissort

shouldperhapsnotbetoosurprising,especiallyas

logisticsserviceprovidersbecomeevermoreexposed

toemergingmarkets,gainingreal-worldoperational

experienceofthesuccessfactorsneeded.Thefactors

thatcaninhibittheemergenceoflogisticsmarkets

aremuchmorecloselyrankedbysurveyrespondents,

however.Just0.4ppseparatesthetoptwoinhibitors

–poortransportinfrastructureandcorruption–while

atotalofsixfactorseachgainedatleast10%ofthe

rankingspoints.Despitethiscloseness,changesin

positionfollowedasimilarpatternofsmalladjustments

toagainsuggestthatlogisticsserviceproviders

areemployingconsistentframeworkstojudgehow

significantlyfactorswillweighonsuccess.

Whencomparingtheperceptionofsimilarfactorsas

bothadriverandinhibitorofamarket’semergence,it

canbeseenthatinmanycasesverydifferentlevelsof

importanceareattributed.Forexample,strongtransport

infrastructureranksonlyNo.9asadriver,butpoor

infrastructureranksasthemostsignificantinhibitor.

Similarly,alackofcorruptionranksinNo.11asadriver,

butisperceivedastheNo.2mostsignificantinhibitor.

Thisperhapssuggeststhatlogisticsserviceproviders

arelookingeitheronlyforamarkettomatchorbeata

baselevelthatwillmakeoperationsviable,orforthe

presenceofdriversandabsenceofinhibitorsinonlythe

geographicareasorverticalsectorsinwhichtheyintend

tooperate.

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51

Contents

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

Latin America

Asia

Supply Chain Risks

10.9%

3.7%

3.4%

2.7%

2.7% 1.8%

17.3%

17.8%

19.0%

20.5%Natural disasters

Corruption

Economic shocks

Poor infrastructure

Government instability

Piracy

Other

Terrorism

Inventory levels

Cyber attacks

2.8%2.8%

2.0%

1.6%

0.7%

1.6%

14.4%

17.7%

18.5%

38.5%

Corruption


Poor infrastructure

Economic shocks

Natural disasters

Other

Terrorism

Piracy

Inventory levels

Cyber attacks



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52

Contents

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

Sub-Saharan Africa

Middle East & North Africa

6.6%

3.6%

3.2%

2.1%

7.2%

8.1%

27.0%

40.2%

Terrorism


Poor infrastructure

Corruption

Economic shocks

Other

Piracy

Inventory levels

Natural disasters

Cyber attacks

0.8%

1.2%

3.0%

7.1%

2.9%

2.9%

0.7%

1.5%

8.6%

16.4%

21.5%

35.3%

Poor infrastructure


Corruption

Terrorism

Piracy

Economic shocks

Natural disasters

Other

Inventory levels

Cyber attacks



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53

Contents

Withsupplychainsanevermoreintegralpartof

manufacturingandretailingoperations,theneedto

understand,manageandmitigaterisksinthesupply

chainbecomesvitaliforganisationsaretomaintain

lowinventoryandjust-in-timeproductionschedules.

Surveyrespondentsindicatedthatwhilemacroeconomic

indicatorswereimportant,individualmarketsneededto

beproperlyassessedonamicrolevelifopportunities

andrisksweretobefullyunderstood.Onerespondent

characterisedsuchassessmentsastheneedto“balance

thelogicalbusinessmetricswiththatoftheopportunity

forgrowth…nodifferenttothedecisionsyoumakeina

maturemarket.”

Asia

Naturaldisastersarethemostprominentthreattosupply

chainsinAsia,accordingtosurveyrespondents.In2013

alone,thePhilippinesdealtwiththeBoholearthquake

andTyphoonHaiyan,theeffectsofwhichwerealsofelt

inChinaandVietnam.Elsewhereintheregion,Indiaand

NepalwerebothhitbyfloodingandPakistanwasstruck

byanearthquakeofitsown.

Overall,thetopfourriskfactorsaccountedfor74.6%of

allresponses.Therelativeparityaffordedtoeachofthe

foursuggestssurveyrespondentshavetoaccountfora

numberofequallypressingriskfactorswhendesigning

supplychains.

Latin America

Surveyrespondentssuggestedthatcorruptionwasthe

mostprominentriskinLatinAmerica.At38.5%,the

responseratewasmorethandoublethe18.5%that

citedgovernmentinstabilityastheNo.2mostsignificant

risk.Thetopfourrisksaccountedforsome89.1%ofthe

responses,andwereunchangedfromthe2014survey.


Justtworiskfactors–terrorismandgovernment

instability–accountedfor67.2%oftheresponsesinthe

MENAregion.Eventsthathavetakenplaceintheregion

overthelastfewyearssuggestthatrespondents’fears

arefoundedinreality–governmentshavecollapsedas

partoftheArabSpring,orderhasagainbeenchallenged

bythespreadofterrorismacrossIraq,andSyria’scivil

warhasentereditsfourthyear,forexample,combiningto

createaclimateofuncertaintyandanuninvitingbusiness

environmentacrosspartsoftheregion.

Sub-Saharan Africa

Threerisksdominateinsub-SaharanAfrica.Poor

infrastructuretopsthelist,withmorethanonethird

(35.3%)ofrespondentscitingtheregion’slackof

physicalconnectednessasthebiggestrisktosupply

chains.Insuchavastanddiverseregionassub-Saharan

Africa,poorinfrastructureisapervasiveproblem.That

attemptstoimprovethesituation,suchasthetrans-

Africanhighway,haveonlybeenpartiallyrealisedhas

resultedinhighertransportationcostsandadragon

productivityintheworstaffectedareasofasmuchas

40%.Governmentinstabilityalsorankshighlyasarisk

insub-SaharanAfrica,withhighprofileandongoing

issuesinSomalia,Sudan,theDemocraticRepublicof

CongoandtheCentralAfricanRepubliclikelyforemostin

respondents’minds.Intotal,thetopthreerisksidentified

intheregionaccountedfor73.2%oftheresponses.

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54

Contents

Emerging Markets with the Least Potential

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


8%

7%

6%

5%

4%

3%

2%

1%

0%

Ethiop

iaSyr

iaIra

qIra

nLib

ya

Egypt

Bangla

desh

Papua

New

Guin

ea

Pakist

an

Alger

ia

Cambod

ia

Ugand

a

Ukrain

e

Leban

on

Belaru

s

Vene

zuela

Kenya

India

Russia

China

% o

f res

po

nden

ts

Country 2015 2014 Y-o-Y Change

Ethiopia 1 3 up 2

Syria 2 1 down 1

Iraq 3 4 up 1

Iran 4 2 down 2

Libya 5 5 -

Egypt 6 7 up 1

Bangladesh 7 8 up 1

Papua New Guinea 8 6 down 2

Pakistan 9 10 up 1

Algeria 10 12 up 2

Cambodia 11 13 up 2

Uganda 12 11 down 1

Ukraine 13 48 up 35

Lebanon 14 9 down 5

Belarus 15 14 down 1

Venezuela 16 15 down 1

Kenya 17 19 up 2

India 18 25 up 7

Russia 19 36 up 17

China 20 24 up 4

Source: Transport Intelligence (*Forecast)

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Least attractive emerging logistics markets




55

Contents

Surveyparticipantsratedthemarketswiththeleast

potentialclosely–Ethiopialedtherankingatjust

7.5%,whilethetopthreewereseparatedbyjust0.2pp.

Overallthetop5marketsremainedthesameasin2014,

althoughsomechangetotheorderhasoccurred.Iran

becameslightlymoreattractivefollowingachangein

leadershipandincreasedinvestmentsfromestablished

internationalpartners,particularlyChina.Morepotential

waserodedfromtheIraqimarket,however,whichroseto

No.3intherankingassecurityinthecountrydeteriorated

overthecourseof2014.Onaregionalbasis,eightof

thetop20leastattractivemarketsweredrawnfromthe

MiddleEast&NorthAfrica.AsiaPacificcontributedsixto

thetop20,whilesub-SaharanAfricahadthreeinthelist.

LatinAmericafaredbestregionally,withjustonemarket,

Venezuela,makingtheranking.

Despiteareturntothetop20mostattractiveemerging

marketsranking,Egyptmaintaineditspositionasthe

sixthleastattractivemarket.Whilesurveyrespondents

seepotentialreturningtothemarket,theyclearly

demonstratetheneedforcaution.Egyptisinfactone

offivemarketstoappearinboththemostandleast

attractiverankings,alongwithBangladesh,China,India

andRussia.China’sappearanceintheleastattractive

marketlistisperhapsbasedonperceivedlimitations

ofitsabilitytocontinueprovidingsignificantreturnson

investmentagainstabackdropofhighercosts,growing

wagesandslowingeconomicgrowth.WithGDPfigures

havingshownanaveragegrowthrateofaround10%

sincethe1980s,recentdecelerationintheeconomy’s

expansionmaybepromptingindustryprofessionalsto

questionwhethersuchgrowthisruleor(longlasting)

exception.TheappearanceofIndia–rankedbysurvey

respondentsastheNo.2mostattractiveemergingmarket

in2015–withinthetop20leastattractiverankingis

perhapsmoresurprising,butitcouldbethatrespondents

seereasontotempertheiroptimismfollowingIndia’s

unilateralholdoutfromtheBaliTradeDeal.

Themostsignificantrisersintheranking,however,were

twocountrieswhosefortunesoverthenear-termseem

inextricablylinked–RussiaandUkraine.Recentevents

wereenoughtoseeRussiabecometheNo.19least

attractivemarket,equatingtoa17positionrise.Itwas

Ukrainewhichsufferedmoresignificantly,however,rising

35positionstobecometheNo.13leastattractivemarket

in2015.

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Which of the following trade lanes do you believe have the greatest potential for future growth? (We have specified a few but please add your own in the ‘Others’ box)

Prospects for emerging trade lanes

Trade Lanes

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SurveyrespondentsagainrankedIntra-Asiaasthetrade

lanewiththemostgrowthpotentialoverthecomingyear,

althoughaslightlysmallerproportionofthosesurveyed

confirmedthis,asthelane’sshareoftheresponsesfell

2.2pp.

Withconfidenceingrowingvolumesonaparticulartrade

lanecomesatacitacknowledgementthatdemandwill

growinthedestinationregion.BothAsia-Europe(No.2)

andAsia-NorthAmerica(No.3,risingtwopositions)had

anincreasedresponseratecomparedwith2014.This

showsbelieffromsurveyrespondentsthateconomic

recoveryinthesemarketswillcontinue.Thereverse

wastrueoftheAsia-Africatradelanewhichslippedtwo

positionsdowntheranking,withSouthAmerica-North

Americatheonlyotherlanetoslipintherankings.

25%

20%

15%

10%

5%

0%

Intra-Asia Asia-Europe Asia-NorthAmerica

Asia-SouthAmerica

Asia-Africa Asia-Middle East

South America-North America

Africa-Europe

2014 2013

% o

f res

po

nden

ts

20.4%22.6%

16.0%14.5%

13.1%11.1%

12.2%12.8%

11.8%

14.3%

11.7%

9.2%8.1%

9.3%

6.7% 6.2%





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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

6.8%

4.4%

4.4%

2.4%

7.4%

14.6%

26.8%

32.0%

Retail/Consumer

Hi-Tech

Automotive

Pharmaceuticals/Medical Equipment

Agriculture

Mining

Oil & Gas

Chemical

Other

Humanitarian Aid

0.4%

0.9%

10.6%

7.4%

4.7%

3.5%

13.6%

16.6%

18.1%

20.9%Agriculture

Mining

Automotive

Retail/Consumer

Oil & Gas


Hi-Tech

Chemical

Other

Humanitarian Aid

1.6%3.0%



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Vertical Sectors




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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


5.2%

5.1%

4.2%

4.2%

5.5%

6.9%

10.3%

54.3%

Oil & Gas

Retail/Consumer

Mining

Hi-Tech


Humanitarian Aid

Agriculture

Chemical

Automotive

Other

2.1%2.1%

8.1%

7.5%

7.2%

11.5%

12.5%16.9%

32.4%

Mining

Humanitarian Aid

Oil & Gas

Agriculture

Retail/Consumer

Other


Chemical

Automotive

Hi-Tech

1.0%1.4%

1.5%



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Asia

InAsia,threeverticals–retail/consumer,hi-tech

andautomotive–accountedfor73.4%ofsurvey

responsesandpointedtoatransitiontowardsdomestic

consumption,asdemandemanatesfromagrowing

middleclass.Retail/consumermarketsrankedNo.1

with32.0%,whiletheautomotivesectorrankedNo.3

with14.6%.Chinahasseenthenumberofglobal

componentsuppliersoperatinginthecountrygrow

asvehiclemanufacturershaveintroducedworldclass

productionsystemsandconstructednewsupplierparks.

Asvehiclesareoftenproducedinornearthemarkets

wheretheywillbesold,thisspeakstobothChina’s

growingdomesticdemandandtoitsdevelopmentasa

manufacturerofhighervaluegoods.Theverticalperhaps

mostassociatedwithmanufacturingintheregion,

hi-tech,cameinNo.2,suggestingthebeliefthatitwill

remainapowerhouseinthissector,whiletherankingof

pharmaceuticals/medicalequipmentatNo.4suggests

thelikelihoodthatmoresophisticatedlogisticsservices

willincreasinglybeindemandinthefuture.

Latin America

OpiniononthemostpromisingverticalsectorsinLatin

Americawasfairlyevenlyspread,withfivereceivingat

least10.0%oftheresponseseach.Ofthetop5sectors,

three–agriculture,miningandoil&gas–accountfor

49.6%oftheresponses,andhighlightthefocuslogistics

providersplaceontheregionasaproducerofresources

forconsumptionaroundtheworld,whetheritbeBrazil,

thelargestproducerofsoybeansin2013,orChile,

theworld’slargestcopperproducer.Theregionalso

performsstronglyasavenueforautomotiveproduction,

withtwomarkets–BrazilandMexico–bothnear-

sourcinglocations,particularlyfortheUS,andmarkets

thatholddomesticdemand.


Oil&GasdominatedresponsesfortheMENAregion.

Indeed,morethanhalf(54.3%)ofthosesurveyedsawit

asthesectormostlikelytodrivefuturelogisticsgrowth.

Inmanycases,thephysicalandmarketinfrastructureis

alreadyestablished,butindustryprofessionalsclearly

displayanexpectationthatthemarketwillcontinueto

grow,drivingupdemandforlogisticsservices.

Perhapsasstrikingasthedominanceoftheoil&gas

sectoristhelackofaclearalternativeasagrowth

market.At10.3%,retail/consumermarketsplacedNo.2

inthemindsofsurveyrespondents,whilenoothersector

gainedmorethan10.0%oftheresponses.

Sub-Saharan Africa

Miningplacedatthetopoftherankingsinsub-Saharan

Africawith32.4%,closetodoublethe16.9%thatvoted

humanitarianaidastheNo.2biggestgrowthsector.

Togetherthetwosectorsaccountedforaroundhalf

(49.3%)oftheresponsessuggestingthatparticipants

struggledtoseeadiverserangeofopportunitiesinthe

region.

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60

Contents

300

250

200

150

100

50

0

China

India

Brazil

Vietna

mUAE

Russia

Indon

esia

Mex

ico

No.

of

pla

nned

inve

stm

ents

South

Afri

ca

Thail

and

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

Markets for potential investment over the next five years

Investment Plans

Trade Lane 2015 2014 YoY Change

China 1 2 up 1

India 2 3 up 1

Brazil 3 1 down 2

Vietnam 4 4 -

UAE 5 10 up 5

Russia 6 5 down 1

Indonesia 7 6 down 1

Mexico 8 7 down 1

South Africa 9 9 -

Thailand 10 11 up 1



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Contents

Despiteachangeinorder,thetopthreecountriesfor

plannedinvestmentswereunchangedin2015.Brazil

fellfromNo.1toNo.3,withbothChinaandIndiamoving

ahead.Therewassimilarcontinuityacrossthetop10,

withnineofthemarketsremainingthesameas2014

–onlyTurkeyslippedoutofthegroup,replacedby

Thailand.Atotalof1,548investmentsareplannedin

thesetop10markets,upfrom1,192in2014.Acrossthe

full55countriesinwhichsurveyrespondentsindicated

plannedinvestments,2015againsawahigheroverall

number–some3,140comparedwith2,296in2014.As

ameasureofthisoverallgrowth,whenBraziltoppedthe

chartin2014,ithadatotalof198plannedinvestments.

Suchanumberwouldhavesecuredamarketonly

theNo.4positionthisyear;ittookChina254planned

investmentstotopthe2015chart.

Withthecountriesrankedasthetopinvestment

destinationmatchingcloselywiththoserankedas

themostattractivemarkets,itappearsthatsurvey

respondentsarefollowingopinionswithaction.The

top10mostattractivemarketshave1,544planned

investments–49.2%ofthetotal.The10markets

rankedashavingtheleastpotentialaccountfor263

plannedinvestments–just8.4%ofthetotal.Gaining

themostwereIndiaandUAEwhichbothsawincreases

of59plannedinvestments,followedcloselybyChina

whichadded58.MalaysiaandthePhilippinesadded

47and45moreplannedinvestmentsrespectively.

Qatar(+39),Thailand(+36),Vietnam(+35),Indonesia

andSaudiArabia(both+32)andMexico(+30)were

theothermarketstoaddatleast30additionalplanned

investments.Attheotherendofthescale,fourmarkets

sawadropinplannedinvestments–Ugandahad

oneless,LibyahadtwolessandbothEthiopiaand

Kazakhstanhadthreefewerplannedinvestmentswhen

comparedwith2014.

Asiaisthemostpopularregionwithatotalof1,357

plannedinvestments,ofwhichmorethanathird(36.6%)

areinChinaandIndia.MiddleEast&NorthAfricahas

thesecondhighesttotalnumberofplannedinvestments

with770plannedacross18marketsintheregion.UAE

leadswith132ofthese,whileTurkeyandSaudiArabia

followwith92and85respectively.InLatinAmerica,

213ofthe602plannedinvestmentswilltakeplacein

Brazil.MexicoranksNo.2fortheregionwith108planned

investments,aheadofArgentinaatNo.3with66.Atotal

of225investmentsareplannedinsub-SaharanAfrica,

withSouthAfricaaccountingfor98.Surveyrespondents’

leastattractivemarket,Ethiopia,has24planned

investments.Outsideofthefourmajorregions,Poland

leadsthewaywith53plannedinvestments.

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To what extent have Russia’s recent actions affected its potential as an emerging logistics market?

The Potential of the Russian market

The Potential of the Russian Market

9.4%

24.4%

27.1%

39.1%

Russia's potential is diminished over the next 1-2 years

Russia's potential is diminished over the forseeable future

The recent events have had no effect on Russia's potential

Russia is no longer a market with potential


Aclearmajorityofthosesurveyedviewedrecentevents

ashavingdiminishedRussia’spotentialasanemerging

logisticsmarket–acombined66.2%indicatedtheyhad

downgradedRussia’spotentialforatleastthenextyear.

Inaddition,9.4%suggestedthatthemarkethadlost

allpotential,meaningmorethanthreequarters(75.6%)

aresomewhatpessimisticaboutRussia’sprospects.As

demonstratedelsewhereinthesurvey,however,opinions

onRussia’sfuturearesomewhatsplit,andtheresults

herecanbejustasinconclusive.Some24.4%ofsurvey

respondentsdidnotseeanyreasontobelievethat

Russia’sprospectswerediminished.Whencombined

withthosesuggestingtheissueswouldberesolvedinthe

near-term,63.5%ofrespondentsindicatedthatRussia

wouldsufferashort-liveddimmingofprospectsatworst,

withhesitation,ratherthansea-change,theorderofthe

day.

Thelongevityofthesituationthereforeseemslikelyto

playakeyrole.Onesurveyrespondentnotedthattheir

operationsinthecountryhadyettoseeanyfalloutfrom

therecentevents.Anotheragreed,butstressedthat

whilelittlehadchangedcurrently,theeffectswould

increaseovertime;

“The barriers to entry have always been high in Russia

and corruption has always been a deterrent to enter

the market. Full blown sanctions will affect supply and

demand and therefore logistics. The currency is already

hitting all-time lows and the pressure is just beginning.”

Thispointstotwoimportanttensionpointsforlogistics

providers.Certainlogisticsmarkets–roadfreight,in

particular–arecloselytiedtooveralleconomicgrowth.

ShouldthesanctionsimposedagainstRussiaremain

inplaceforanextendedperiodandbegintobiteover

themedium-term,widereconomicgrowthislikelyto

suffer,curtailinggrowthinkeylogisticsmarkets.In

addition,investorsarelikelytobecomeincreasingly

warythelongerthesanctionsremaininplace.Logistics

providersbenefitwhenverticalsectorsgrow,butaccess

tofinancingisneededtofundthatverticalsectorgrowth.

Indeed,suchlimitationsonaccesstofundingmayhave

alreadybegun–noRussiancompaniesreceivedany

loanswhatsoeverinUSdollars,Swissfrancsoreuros

duringJuly2014.




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Contents

Which of the following statements do you agree with regarding sub-Saharan Africa?

Prospects for Sub-Saharan Africa

Prospects for Sub-Saharan Africa

Nearlyhalf(48.2%)ofthosesurveyedsuggested

thatsub-SaharanAfricaisreadytoabsorbmoderate

investmentandreturnmoderategrowthratesasaresult.

Whenthisiscombinedwiththosedisplayingmore

optimismaboutthecapacityoftheregiontoabsorb

investmentandreturngrowth,some65.1%ofthose

surveyedindicatedthattheregioniswellpositionedto

grow,averyslightincreaseof0.6ppover2014.

60%

50%

40%

30%

20%

10%

0%

2015 2014

% o

f res

po

nden

ts

16.9%19.3%

The region is readyto absorb significant

investment andgrow rapidly

48.2%45.2%

The region is ready to absorb modest

investment and produce moderate growth

33.9% 34.4%

The region is not ready for much investment

and therefore unable to produce returns

1.0% 1.1%

None of the above


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

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

Drivers behind the emergence of Sub-Saharan Africa

4.5%

12.1%

17.8%

14.0%

22.7%

28.9%

Mineral and resource demand

New oil and gas discoveries

Growing middle class and consumer spending

Rapid infrastructure development

Stronger agricultural demand

Increased FDI


Inhibitors of growth in sub-Saharan Africa

2.3%8.4%

13.0%

12.1%

31.2%

33.0%

Poor quality infrastructure

Corruption

Poor connectivity/linkages between economic centres

Uneven economic development

Lack of integration between economies

Size/scale of the continent





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Whenaskedtoratethedriversofgrowthinsub-Saharan

Africa,surveyrespondentsratedthosedriversrelatedto

extractiveindustrieshighly.Morethanhalf(51.6%)saw

twosuchdrivers–mineralandresourcedemand,and

newoil&gasdiscoveries–askeytotheregion’sfuture

development.

Interestingly,surveyrespondentssawpoorinfrastructure

asthemostsignificantinhibitorofdevelopmentinthe

region,yetrankedinfrastructuredevelopmentasonlythe

No.4mostsignificantdriver.Logisticsisfundamentally

limitedbypoorinfrastructure,andsub-standard

infrastructurepresentslimitationselsewheretoo;other

factorsinhibitinggrowthsuchaspoorconnectivityand

linkagesbetweeneconomiccentres,uneveneconomic

developmentandlackofintegrationbetweeneconomies

areexacerbatedbypoorinfrastructure.Thatjust2.3%of

respondentsbelievedthesizeandscaleofthecontinent

tobefundamentallyholdingbackgrowthsuggestsa

lackofcoordinatedactiontoovercomeinfrastructure

challengesisbehindtheproblem.

Alackofviableinfrastructuremayalsofeatureinthe

mindsofsomesurveyrespondentswhoseetheprospect

ofaresourceboomwithoutasustainableeconomic

developmentplanintheregion’sfuture.Without

infrastructuretoconnectcommunitiesandeconomic

centres,there’sariskthatresourcesareextracted

andremovedwithouteconomicdevelopmentthat

createslong-termopportunities,forlocalcommunities

orlogisticsserviceproviders.Some17.8%ofthose

surveyedsawgrowingmiddleclassandconsumer

spendingasthebiggestdriver,butmeasures–physical

andeconomic–tointegratesub-SaharanAfricaarealso

neededinordertoachievewidereconomicdevelopment.

Whilesurveyrespondentswereclearthatboth

opportunitiesandchallengeswereabundantinsub-

SaharanAfrica,anumberalsopointedoutthatlogistics

providers’beststrategyforsuccessintheregion’s

marketswouldbetoenterthemarketsearly,position

theiroperationstorideoutinitialvolatility,andencourage

andassisttheirclientstopursuemarketshare.




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Factors inhibiting e-commerce growth in emerging markets

e-commerce

Which of the following issues do you believe is most likely to prohibit growth of e-commerce in emerging markets?

Infrastructurerankedastheprimaryfactorinhibiting

thedevelopmentofe-commerceinemergingmarkets,

accountingfor35.3%ofresponses.Infrastructureiskey

toalllogisticsservices,butofferstensionpointsthatcan

haveasignificantimpactone-commerce.Firstly,goods

mustbetransportedthroughnetworks,sometimes

internationally,tothelocalareainwhichtheorderhas

beenmade.Indevelopedmarkets,thisgenerallyoccurs

throughanexpressproviderwhichoffersextensive

geographiccoverage.However,indevelopingmarkets

suchcoveragecanbelessextensiveandpopulation

centreslessconnectedbyviableinfrastructure.Theextra

timeandcapacityrequiredtoovercomeinfrastructure

gapsincreasescostsandputsextrapressureonmargins

formanufacturersandretailersaswellaslogistics

serviceproviders.Inaddition,lastmilenetworkscan

sufferfrominfrastructure-relatedimpedimentsincluding

congestion,furtherincreasingcostsandmargin

pressure.

Surveyrespondentsalsosuggestedthatlogistics

providersthemselveshaveroomtodevelop,with18.3%

pointingoutthatsupplysideofferingsareimpedingthe

growthofe-commerce.Thisisperhapsnotsurprising

giventhecomplexityandcostofe-fulfilmentoperations,

aswellastheexceptionallevelsofdemandwhich

threatentooutstriplogisticscapacity.

Rankedinlastpositionisculture–anelementofthe

e-commerceprocessoverwhichretailers,manufacturers

andlogisticsserviceprovidershavetheleastinfluence,

directlyorindirectly.Thereareseveralculturalchallenges

thatneedtobeaddressedinorderfore-commerce

marketstofullydevelopinsomeemergingmarkets,

suchasapreferenceforcash-on-deliverypayment

acrossmuchoftheMiddleEast.Thoseseekingto

takeadvantageofthepotentialgrowthinthemarket

arelikelytofacealengthyprocessbeforesuchsocial

normsareadaptedinsomeregions.Itwassuggestedby

severalsurveyrespondentsthatconsumerbehaviours

arebeginningtochange,however,withtheexponential

growthofe-commerceinChinavariouslycitedas

evidence.

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%

2015 2014

% o

f res

po

nden

ts

35.3%

39.7%

Infrastructure

19.0% 18.9%

Internet connectivity

18.3%

13.7%

Logistics service offerings

15.3% 15.4%

Payment systems

12.2%10.9%

Culture


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Near-Sourcing and Freight Movements

Changing freight movements

Of the following statements, which most closely matches your organisation’s experience of near-sourcing?

Compared with three years ago, are your freight movements: more global, more inter-regional, more intra-regional, more domestic or unchanged?

The effect of near-sourcing on supply chains

32.1%

20.5%

47.3%

Near-sourcing is becoming more common and we have seen supply chains develop a more regional orientation as a result

We are starting to see some evidence of near-sourcing

We have not experienced such a shift

11.8%

14.8%

6.8%

18.1%

48.6%

More global

More inter-regional

More intra-regional

More domestic

Unchanged



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Surveyrespondentsindicatedthatnear-sourcinghashad

arealandtangibleimpactonthedesignoftheirsupply

chains,with47.3%suggestingtheshiftofmanufacturing

tolocationsclosertoend-marketsisalreadyan

establishedtrend.Differentverticalsectorswillplace

differentdemandsonapotentialnear-sourcingmarket,

withattractivenessacombinationofwhatcanbeoffered

bythemarket–skillsinthelabourforce,costadvantage,

proximitytoanend-marketorpotentialasahublocation

justafewsuchvariables.

Still,approximatelyonethird(32.1%)ofthosesurveyed

haveyettowitnessanysuchshift.Thisislikelydueto

thevaryingneedsofverticalsectors.Forexample,near-

sourcingpracticesdonotofferuniversalbenefits,and

notallverticalsareequallyexposedtologisticscosts.

Thisisreinforcedbythe48.6%ofsurveyrespondents

thatareseeingmorefreightmovementsonaglobal

scale,againsuggestingthatdifferentverticalsectors

arereactingtodifferentpressuresandseekingdifferent

advantages.

That20.5%ofrespondentsarebeginningtoseetheshift,

though,couldbeviewedasevidencethatthebenefits

ofnear-sourcingarebothspreadingthroughoutsupply

chainsaswellasintonewverticals.Moreover,itcould

alsosuggestthatnear-sourcingmaybeamoreattractive

optionincertainstagesofproduction–perhapsinthe

finalstageswherelogisticsproviderscanoffervalue-

addedservicesinlesscostlymarkets.Riskshould

alsonotbeoverlookedasadriverofnear-sourcing.

Shiftingproductionlocationcanreduceexposureto

potentialrisk,makingtransportationmorepredictable

asmanufacturers,retailersandlogisticsprovidersseek

tomitigatevariousthreatswhichcanimpactuponthe

supplychain.

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60

50

40

30

20

10

0

Growth will bevery positive

Growth will bepositive

Growth will beflat

Growth will benegative

Growth will bevery negative

Brazil

% o

f res

pon

den

ts

Russia India China South Africa

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Growth in the BRICS

What do you expect will happen to economic growth in each of the BRICS countries in 2015?

Growth expectations in the BRICS

Overall,surveyrespondentsdemonstratedan

expectationthatperformancewouldbepositiveinmany

oftheBRICSeconomies.Indeed,opinionthat‘positive’

performancewouldberecordedacrossfourofthe

markets–Brazil,India,ChinaandSouthAfrica–was

almostuniformasallwereseparatedbyjust2.1pp.

Whenthosesurveyrespondentsexpectingeitherpositive

orverypositiveperformancefromeachmarketare

combined,astrikinglyclearpictureofhoweachmarket’s

potentialisviewedrevealsitself.Leadingthegroupinthis

measureisIndia,amarketwhichsome83.8%ofthose

surveyedexpectedtoreturngrowth,followedcloselyby

China,where80.4%expectedpositiveorverypositive

performance.

Brazilwasratedmorelowly,although67.1%stillexpected

positiveorverypositiveperformance,seeminglyavote

ofconfidencethatitwouldemergefromthemid-2014

recessionandovercomechronicinfrastructureproblems

inamorepoliticallystablecontext.Thefinalmarketto

seemorethanhalf(60.3%)ofrespondentsexpectitto

returngrowthwasSouthAfrica.Growthhasbeenslowin

Africa’smostadvancedeconomywhereindustrialaction

intheminingsectorhasreducedoutputandproductivity

–indeedaplatinumstrikeinthefirstquarterof2014

wascitedastheprimaryreasonfora0.6%economic

contractionduringtheperiod.Itwasperhapsthefearof

theminingsector’sstrikesturningintowiderindustrial

actionthatplayedonthemindsofsurveyrespondents

whoweremeasuredintheirbeliefinthemarket.

ItiscurrenteventsinRussia,though,whichappears

tocausemostconcernforsurveyrespondents–just

28.8%expecttheeconomytoshowanysignsofgrowth

intheyearahead,while32.6%ratedgrowthaslikelyto

benegativeorverynegativeoverthenext12months.

Overall,however,expectationsoftheRussianeconomy

werebalanced.Responsesweresplitfairlyevenly

betweenthoseexpectingpositiveandnegativegrowth,

while38.6%expectflatperformance.Thissuggests

thatreasonscanstillbefoundtohavesomefaithin

themarket–stronglinkswithChinaandsignificant

hydrocarbonresourceschiefamongstthem–orbelief

thataresolutionwithUkrainecanbefound.




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Trade and the Global Economy

Prospects for the global economy and trade volumes

In 2015, the global economy and trade are likely to:

69.9%

3.5%

22.1%

4.5%

Shrink

Remain flat

Grow modestly

Show robust growth


Some69.9%ofthosesurveyedexpectedmodestgrowth

inworldtradeandtheglobaleconomyin2015.This

couldbeviewedasatriumphofresilienceandofthe

capacitytofindnewwaystocreatevaluegiventhatjust

afewshortyearsagotheworldwasraptbythemost

significantrecessionindecadeswhichthreatenedto

collapsetheglobaleconomy.Whiledifferencescertainly

existbetweenthevariousregionsandeconomicplayers

intheworld,thatjust4.5%ofrespondentsindicated

shrinkagesuggeststhatfearsrelatedtothe2008

recessionarenowallbutvanished.




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Emerging Market Growth

Prospects for emerging market growth

The World Bank forecasts 2015 emerging market growth of 5.4%. In your opinion, is this: too optimistic, about right or too pessimistic?

64.4%

2.1%

33.4%Too optimistic

About right

Too pessimistic


Nearlytwothirds(64.4%)ofthosesurveyedagreed

thatemergingmarketswerelikelytoseegrowthof

around5.4%in2015.Thatthosewhothoughttherate

wastoooptimistic(33.4%)significantlyoutweighed

thoseexpectingevengreatergrowth(2.1%),however,

demonstratesthat5.4%isviewedasanupperlimit.

Certainlytherearereasonstobecautious:2014saw

Brazilenterarecession,Russiabecomeincreasingly

isolatedandChina’seconomicgrowthslow.Howeverit

isquestionablewhetherthesehighprofileexamplesof

economicstrifeinemergingmarketsareforbearingof

somethingmoresinister.Rather,itappearsthatsurvey

respondentsarebeginningtoexpectemergingmarket

growthtoreturntothemean–theinferencebeingthat

theexplosivegrowthseeninthelastdecade,andthe

positiontowhichemergingmarketswereelevated

followingthe2008recession,aredrawingtoaclose.

Indeedanumberofsurveyrespondentssawthe

reductioningrowthforecastsasanindicationthat

emergingmarketsareenteringaneweraofdevelopment.

Manycitedatransitionfromexportledgrowthto

increasingdomesticdemandasasignthat,while

emergingmarketswillremainkeyproductionlocations

andintegratedwithglobalsupplychains,economic

growthwouldbecomemoresustainableatlowerrates,

asbillionsofpeopleenterthemiddleclassandnew

logisticsmarketsemerge.Otherrespondentssawthe

temperingofgrowthexpectationsasthedriverneeded

tobringrationalitytoemergingmarketoperations.

Severalrespondentsarguedthatmorerealisticgrowth

expectationswouldheightentheneedforbetterIT

systems,reducedcostsandincreasedefficiency.




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US Growth Forecasts

Prospects for US growth

The World Bank forecasts 2015 US market growth of 3.0%. In your opinion, is this: too optimistic, about right or too pessimistic?

6.7%

61.5%

31.8%Too optimistic

About right

Too pessimistic


Similartothepotentialseenforgrowthinemerging

markets,surveyrespondentsappearedtosuggestthat

growthof3.0%wasaboutasmuchascouldrealistically

beexpectedoftheUSeconomyin2015.Significantly

though,nearlyonethird(31.8%)suggestedthateven

thiswastoooptimisticfortheyearahead.Itistrueto

saythattheUShasemergedmorestronglyfrom2008’s

teststhanotherdevelopedeconomies,butmanystillsee

reasonstobecautiousaboutthenear-termfutureofthe

world’slargesteconomy.




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European Growth Forecasts

Prospects for Euro area growth

17.9%

60.8%

21.3%

Too optimistic

About right

Too pessimistic


TheEuroAreacontinuestofeeltheeffectsof2008more

thanmostdevelopedeconomies,havingtobalancethe

prospectsofitsstrongereconomicperformerswiththose

thatstillhavelingeringstructuralwoes,suchasItaly

andSpain.Asaresult,thereisfarlessconfidenceinthe

Area’sabilitytoreturntoprosperitythanisplacedinthe

US–morethanonefifth(21.3%)notedthatpredicted

economicgrowthof1.8%wastoooptimisticforthe

18-stronggroupofcountries.

Mostsurveyrespondents(60.8%)didindicatethata

growthrateof1.8%wasrealistic,however.Whetheror

notthisprovestobethecasewillagainrelyonafew

strongperformers,Germanyinparticular.Thiscreates

atoughenvironmentfortheregion’sownemerging

economies,likePoland,whichneedsstrongsurrounding

markets.Itwillalsobeinterestingtowatchtheeffects

oftheRussia-Ukraineconflict,playingoutintheArea’s

neighbourhood.

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The World Bank forecasts 2015 Euro Area market growth of 1.8%. In your opinion, is this: too optimistic, about right or too pessimistic?




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Contents

About Agility and Transport Intelligence

Sec

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Agility – A Leader in Emerging Markets

Agilitybringsefficiencytosupplychainsinsomeof

theglobe’smostchallengingenvironments,offering

unmatchedpersonalservice,aglobalfootprintand

customisedcapabilitiesindevelopedanddeveloping

economiesalike.Agilityisoneoftheworld’sleading

providersofintegratedlogistics.Itisapubliclytraded

companywithover$4.8bninrevenueandmorethan

20,000employeesin500officesacross100countries.

Transport Intelligence – Expert Research and Analysis

Tiisoneoftheworld’sleadingprovidersofexpert

researchandanalysisdedicatedtothegloballogistics

industry.Utilisingtheexpertiseofprofessionalswith

manyyears’experienceinthemail,expressandlogistics

industry,TransportIntelligencehasdevelopedarange

ofmarketleadingweb-basedproducts,reports,profiles

andservicesusedbyalltheworld’sleadinglogistics

suppliers,consultanciesandbanksaswellasmanyusers

oflogisticsservices.




75

Contents

Agility - Continued

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,

remoteinfrastructureandlifesupport.

Web: www.agility.com

Twitter: @Agility

LinkedIn: www.linkedin.com/company/agility

Transport Intelligence - Continued

IfyouhaveanyfeedbackonthisIndexpleasedonot

hesitatetogetintouchwithusbyanyofthefollowing

means:

Telephone:+44 (0)1666 519900

Email: [email protected]

Web: www.transportintelligence.com

Twitter: @transportintell

Linkedin: The Transport Intelligence Forum

Sec

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http://www.agility.com

https://twitter.com/agility

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

mailto:ssmith%40transportintelligence.com?subject=Enquiry


https://twitter.com/transportintell

https://www.linkedin.com/groups/Transport-Intelligence-Forum-2187569

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