Disruption, congestion and sky-high rates cause pain for emerging logistics markets, but a digital future promises post-pandemic growth.
The 2022 Agility Emerging Markets Logistics Index finds that emerging markets preparing for a post-pandemic future driven by connectivity, digital technologies and sustainable business practices are set for future growth. The findings, part of new research from Transport Intelligence and Agility, comes as the Covid-19 pandemic continues to distort supply chains. A year of extreme supply chain dysfunction in 2021 saw capacity constraints, bottlenecks, sky-high freight rates and supply shortages globally. The forces driving the dysfunction remain in place and look set to only unwind later in 2022. Beyond the short-term supply chain challenges, many emerging markets will also have to grapple with high inflation, rising costs, lower consumer confidence and the rollout of vaccination programmes.
The industry professionals surveyed for the 2022 edition of the Agility Emerging Markets Logistics Index offered a broadly positive outlook for the year ahead, despite the challenges. Around two-thirds of respondents expect record freight rates to return closer to historical levels during 2022, while 80% see supply chain congestion unwinding. Uncertainty over the strength of the global recovery remains, with more than one-third of respondents saying a global recession in 2022 is ‘likely’ or ‘certain’, while the Middle East & North Africa, Central Asia, South America and Sub-Saharan Africa regions are all unlikely to see growth in 2022. In sum, survey respondents predict an uncertain and challenging year for many emerging markets.
“Over the past two years, Covid-19 has brutally exposed the systemic vulnerability of global supply chains. As was the case during the Great Recession of 2008, emerging markets have felt the full force of the breakdown in global trading systems. Whilst globalization had promised so much to small and medium-sized entrepreneurs in developing countries, once more the rug has been pulled from beneath their nascent businesses” said John Manners-Bell, CEO of Transport Intelligence. “As our survey finds, governments and logistics companies will need to work together to address costs and develop sustainable transport and logistics services. This theme of public/private sector collaboration runs through this year’s report. Governments and intergovernmental organizations have the responsibility to reduce barriers to trade that are preventing emerging market exporters from exploiting global markets – digitization will be critical. Recovery in the short-term is by no means inevitable and unless there is a coordinated effort by all supply chain stakeholders, the gulf between emerging and developed countries will only continue to grow.”
In the data-driven Index ranking, eight of the top 10 ranking positions in the 2022 Agility Emerging Markets Logistics Index are occupied by emerging markets from Asia Pacific and the Gulf states. Asia Pacific’s emerging markets offer the strongest Domestic and International Logistics Opportunities, although results in the 2022 Index see the region’s domestic logistics markets leadership erode. The Gulf states have built dynamic and robust business environments which not only lead emerging markets but increasingly chase global best practices. Online retail, the adoption of technology digital business practices and investment in sustainable energy resources see both regions’ emerging markets share Digital Readiness leadership.
Nick Bailey, Head of Research at Ti, said “The upheaval caused by the Covid-19 pandemic as well as the acceleration in the pace of change it continues to drive have altered the course of emerging market development. The result is that emerging market potential, in logistics and beyond, relies more than ever on the role of technology, innovation, skills and sustainability in both unlocking a country’s potential and in its integration into global value chains. Leaders in the new Digital Readiness ranking combine a connected population, a digitally skilled workforce, globally compatible and future-orientated business ecosystems and a culture of entrepreneurial risk. The Digital Readiness rankings, like those for business fundamentals, are an area where smaller economies lacking in scale can attain competitive advantage and integrate more deeply into the global economy without having to make the heavy investment required for world-class logistics infrastructure.”
Other Agility Emerging Markets Index 2022 Results:
Source: Transport Intelligence, 08 February 2022
Author: Transport Intelligence
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