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Logistics industry braces for a global slowdown

The majority of logistics executives surveyed in Agility’s 2020 Emerging Markets Index expect a recession in the next 12 months, amid concerns about downward pressure on global trade volumes.

Uncertain growth prospects and ongoing friction between the USA and China are seemingly playing on the minds of the supply chain executives surveyed, with 64 percent of the 780 respondents saying a recession is likely in the next 12 months.

At the same time, Agility noted that most logistics executives said their companies would ride out any turbulence in trade relations between the world’s two largest economies. 70 percent of those with operations and investments in China said they will stay put and that their plans are unchanged despite the US-China trade battle.

“The fears of a recession are not to be taken lightly, especially because of uncertainty about the impact of the coronavirus outbreak,” said Essa Al-Saleh, ceo of Agility Global Logistics. “A positive sign, however, is that a large number of emerging markets’ economies were able to weather an array of issues – political and social unrest, structural problems, even international sanctions for some – without losing much ground in the past year.”

The index ranks 50 countries by factors that make them attractive to logistics providers, freight forwarders, shipping lines, air cargo carriers and distributors. In 2020, the top ten emerging markets are: China, India, UAE, Indonesia, Malaysia, Saudi Arabia, Qatar, Mexico, Thailand and Turkey.

China, India and Indonesia rank highest for domestic logistics; China, India and Mexico are top for international logistics; and the UAE, Malaysia and Saudi Arabia have the best business fundamentals, according to this year’s report.

The strongest clusters of emerging markets are in the Middle East Gulf and Southeast Asia. Agility said that this is because of business-friendly conditions and core strengths – the Gulf’s energy wealth and Southeast Asian manufacturing power – that attract logistics activity.

According to the survey, the countries with the least potential as logistics markets in 2020 are Syria, Iran, Venezuela, Iraq and Libya.

Despite the belief a recession is likely, emerging markets still grew an estimated 3.7 percent in 2019 and are projected by the International Monetary Fund (IMF) to grow 4.4 percent in 2020.

www.agility.com

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