Top 50 emerging markets Logistics 2019

Rolf Bax

Rolf Bax

March 22, 2019 - 15:51

Since 2009, Agility and Transport Intelligence researches the emerging logistic markets and takes an annual snapshot of the market sentiment. This results in an overview of the top 50 leading emerging markets by size, business conditions, infrastructure and transport connections.

The main results of our research are:

  • China still dominates the market with an overall 1st ranking
  • India is in second position, getting closer to China
  • Brazil has dropped due to the political and economic conditions
  • In the near future, the importance of ecommerce will continue to increase due to the higher internet penetration and technological progress
  • Small/medium-sized companies have more opportunities for growth than big companies
  • Trade wars, Brexit, sanctions and trade deals between countries play a major role in our research

We take a closer look at the research and provide a summary of the main points of the research. The research itself consists of three parts: Domestic logistics opportunities, international logistics opportunities and business fundamentals.

See the top 50 below.

 

 Ranking

Country

Domestic Logistics Opportunities

International Logistics Opportunities

Business Fundamentals

Overall

1

China

8.82

9.70

7.12

8.87

2

India

8.09

7.20

6.35

7.39

3

UAE

5.56

5.48

8.89

6.16

4

Indonesia

6.32

5.94

5.94

6.09

5

Malaysia

5.23

5.64

8.39

6.00

6

Saudi Arabia

5.27

5.23

7.67

5.71

7

Mexico

5.34

6.23

5.13

5.67

8

Qatar

5.38

4.85

7.84

5.62

9

Turkey

5.27

5.85

5.49

5.56

10

Vietnam

4.88

6.12

5.31

5.48

11

Thailand

4.95

5.79

5.84

5.47

12

Oman

4.98

4.84

7.73

5.44

13

Chile

4.79

5.18

7.26

5.42

14

Russia

5.15

5.55

5.60

5.40

15

Brazil

5.67

5.58

4.17

5.35

16

Bahrain

5.05

4.72

6.80

5.24

17

Morocco

4.65

4.92

6.61

5.13

18

Kuwait

5.09

4.62

6.19

5.10

19

Jordan

4.87

4.78

5.99

5.04

20

Philippines

5.03

5.15

4.40

4.96

21

Uruguay

4.78

4.54

6.10

4.93

22

Kazakhstan

4.78

4.70

5.63

4.91

23

Peru

4.71

5.11

4.71

4.88

24

South Africa

4.66

4.93

5.09

4.86

25

Colombia

4.72

5.01

4.57

4.81

26

Egypt

4.95

4.64

4.84

4.80

27

Ukraine

4.78

4.95

4.25

4.75

28

Pakistan

5.17

4.46

4.44

4.74

29

Lebanon

4.93

4.69

4.30

4.71

30

Argentina

5.01

4.74

3.94

4.70

31

Kenya

4.49

4.62

5.22

4.68

32

Ghana

4.62

4.40

5.31

4.86

33

Tunisia

4.54

4.50

5.16

4.64

34

Sri Lanka

4.54

4.71

4.51

4.61

35

Algeria

4.86

4.25

4.80

4.59

36

Ecuador

4.49

4.62

4.62

4.57

37

Iran

4.83

4.18

4.89

4.57

38

Tanzania

4.57

4.22

4.91

4.48

39

Bangladesh

4.97

4.44

3.47

4.47

40

Paraguay

4.33

4.60

4.27

4.43

41

Ethiopia

4.59

4.39

4.18

4.43

42

Cambodia

4.49

4.50

4.04

4.41

43

Nigeria

4.84

4.29

3.63

4.38

44

Bolivia

4.40

4.57

3.83

4.36

45

Uganda

4.44

4.49

3.77

4.34

46

Libya

4.45

4.41

1.65

3.90

47

Mozambique

4.31

4.50

1.65

3.89

48

Myanmar

4.38

4.52

1.41

3.88

49

Angola

4.43

4.29

0.80

3.68

50

Venezuela

4.52

4.09

0.72

3.62


Source: Agility.com 

We now take a closer look at the 5 most important countries, which are all in Asia.

China

In recent years China has shown strong growth in consumption; big companies such as Alibaba and JD experienced enormous growth, both domestically and globally. China has more than 150 cities with over 1 million inhabitants (15x as many as the USA). Its growth in logistics is enormous. However, growth has slowed down slightly, China is in the middle of a trade war with the US, and export is subject to US tariffs.

India

Growth in India is largely similar to growth in China. As the number 2 in the list, the country is growing particularly fast in the airfreight and international express markets. Ecommerce in India also shows strong growth and will more than double in size in the next 5 years.

 

UAE

The UAE scores particularly high in the area of business fundamentals. The country aims to improve its worldwide position in trade and tourism. Free-trade zones and regulations for foreign companies create an attractive climate to establish a business in the country. At the economic level the country acts as a hub for big ecommerce companies. The country is also working hard to improve the infrastructure to enable further growth of logistics inside and outside the country.

 

Indonesia

The domestic logistics markets dominate in Indonesia, and these markets are growing fast. The sea freight market plays an important role. A slackening of the regulatory burden for foreign companies will enable further growth here as well. A trade agreement with 4 European countries contributes to this. However, domestic consumption contributes immensely to the investments in ecommerce. Last-mile delivery is not easy in a country with 17,000 islands, and infrastructure makes the country expensive in terms of logistics costs.

 

Malaysia

Malaysia is also in the top 5 because of its high business fundamental score. The country is attractive for domestic and foreign companies to establish their business there. Import and export regulations and customs affairs are well organised. The logistics markets benefit from the presence of value-added manufacturing and the domestic oil and natural gas industry. Malaysia likes to present itself as the ASEAN logistics hub. To this end they want to have the best logistics infrastructure and the best labour force.

Looking to the future, technology and innovation will be enormously important in emerging logistics markets and will determine their growth. Internet is of fundamental importance to the emerging markets; since 2000 the numbers of internet users has grown tremendously and they continue to grow. Cloud computing and TMS systems resulted in lower costs for companies operating there. The internet is extremely important for the logistics industry.

Furthermore, the following expectations for the future are expressed in the research:

  • Most prominent is the stance of the U.S. as it seeks to redefine accepted global trade rules, particularly in its bilateral relationships with China and its North American neighbours. In another move away from multilateralism, the potential for a failure in negotiations between UK and European Union over the Brexit process creates further uncertainty in the world’s largest trading block and 7th largest economy
  • At its 19th National Party Congress in 2017, China’s Communist Party formally adopted the Belt and Road Initiative (BRI) under its Party Constitution. This ensures the continuation of a project that has seen China invest in or finance infrastructure development projects across Asia Pacific, the Middle East and Europe. While the headline ambition and financing seems almost unbelievably vast, an Asian Development Bank study assessing the need for infrastructure development in Asia alone concluded total investment of some $26tn was required over the 2016-2030 period to maintain 3-7% economic growth, eliminate poverty and respond to climate change.
  • Those who have spent time watching emerging markets over the past decade will have noticed their remarkable ability to innovate and implement new solutions at rapid speed, often leapfrogging past major development steps seen in more advanced markets (adoption of smartphones, Ecommerce)

Which countries in the emerging markets overview have the highest potential for growth in the area of logistics? In this respect India is ahead of China. 

top 20 logistics emerging markets with hight potential

What is striking is that Iran and the Philippines have both dropped considerably. In the case of Iran the economy and the sanctions imposed by the US play an important rol. One third of respondents believe that small and mediumsize companies (SMEs) will grow fastest in emerging markets over the next five years, as opposed to 21.3% who envisage faster growth in large multi-national companies. After a strong 2017, emerging market trade volume growth has slowed. From January to September 2018, measured monthly, year-on-year growth of emerging markets trade volumes has averaged 6.2% for imports and 3.3% for exports. On a regional basis, trade growth has been strongest in emerging Asia, with average import volume growth of 7.4% and export volume growth of 4.8%. Eastern Europe/CIS has seen import and export volume growth figures of 2.5% and 4.9% respectively. In Latin America, export volume growth has been slow, expanding by just 0.9%, although imports grew by 5.8%. Volume growth in the Middle East and Africa has been weak, with import and export expansions of 0.6% and 0.4% respectively.

Air freight volumes have returned to low single-digit growth after a bumper 2017. Growth in container freight volumes has largely held firm through 2018.

Considering all air and sea freight volumes (excluding oil for sea), trade between the emerging markets in this index and the EU and U.S. is down from 2017

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