Agility EmergingMarkets LogisticsIndex 2011A detailed ranking and analysis of the world’s major developing logistics marketsJanuary 2011
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Agility Emerging Markets Logistics Index 2011
Contents ......................................................................................................................... 2
1.0 Introduction ...................................................................................................... 3
�.0 Agility Emerging Markets Logistics Index �011 ............................................... 4
3.0 Analysis and results of the index ...................................................................... 5
3.1 Sub-Indices ranking ......................................................................................... 12
3.1.1 Market size and growth attractiveness sub-index ............................................ 12
3.1.2 Market compatibility sub-index ....................................................................... 13
3.1.3 Connectedness sub-index ............................................................................... 14
3.2 Emerging Markets Quadrant ........................................................................... 15
4.0 Emerging Market Survey ................................................................................. 16
4.1 Question 1 – With the exception of China, which markets will emerge
as major logistics hubs? ................................................................................... 17
4.2 Question 2 - Why are these countries considered to be important
emerging markets? .......................................................................................... 20
4.3 Question 3 - Which markets will offer the least opportunities for logistics
companies in the next 5 years? ....................................................................... 22
4.4 Question 4 – What factors do you believe prevent these markets from
emerging as major logistics hubs of the future? ............................................... 23
4.5 Question 5 - Which markets have you expanded into in the past 5 years? ...... 24
4.6 Question 6 - Which markets do you expect to expand into in the next
5 years? .......................................................................................................... 25
4.7 Question 7 - Which regions will emerge as the next major low cost
manufacturing locations in the next 15 to 20 years? ....................................... 26
About Agility and Transport Intelligence ....................................................................... 27
Contents
3
Agility Emerging Markets Logistics Index 2011
Many analysts believe that global economic growth
in 2011 will be driven by the developing world and
for companies thinking of investing in emerging
markets it is more important than ever to understand
which markets offer the best opportunities.
Increasingly, Western investors are starting to look
beyond China due to continued worries about
its economic prospects. Although growth in both
domestic demand and export activity is still very
high, the signs of over-heating continue to emerge.
The money supply is growing fast, driven in part by
the effects of quantitative easing in the US, whilst
the economy still seems hugely over-balanced in
favour of investment rather than consumption.
Wage rates are rising and the viability of the property
market is in question. There is the probability that
an unstable China will result in an acceleration of
the shift of manufacturing export production away
from Southern China. This in turn could also lead
eventually to a realignment of trade patterns with
many other low cost markets benefiting.
In fact 2011 could well be the year when many
emerging markets come of age. Although many
of these, such as Brazil, are influenced by Chinese
investment and demand, they are also experiencing
growth in domestic consumption as GDP per head
rises. Consequently opportunities for domestic-
orientated logistics provision in these markets look
good. Indeed, whilst top-line growth numbers may
be weaker, the attractions of markets in say Turkey or
Brazil may be greater due to stable and transparent
markets. This aspect may counter-balance possible
instabilities in exports from these countries, such as
agricultural products and mineral raw materials.
The likelihood of higher oil prices in 2011 will bring
about many challenges for emerging markets. Some
manufacturers will be encouraged to repatriate
manufacturing operations to markets closer to end-
consumers in the West. This may well bring benefits
to some economies, such as Mexico or Turkey for
instance, but will have a detrimental effect on remote
manufacturing locations in the Asia Pacific region.
For many, Africa has appeared on the horizon (albeit
distant) as a potential alternative to the Asia Pacific
region although many infrastructure, security and
business compliance challenges will need to be
overcome. Certainly the Chinese think Africa offers
opportunities and there has been massive investment
by the Chinese government in infrastructure and
energy projects throughout the continent.
1.01.0 Introduction
4
Agility Emerging Markets Logistics Index 2011
The Agility Emerging Markets Logistics Index 2011
compares the major emerging markets on a number
of different metrics, identifying the key attributes
which will make the market attractive from the point
of view of logistics, air cargo, shipping lines and
freight forwarders.
The overall index has been built up through
three sub-indices: ‘The Market Size and Growth
Attractiveness’; ‘Market compatibility’; and
‘Connectedness’.
The Market Size and Growth Attractiveness sub-
index rates a country’s economic output, its projected
growth rate and population size.
The Market Compatibility sub-index identifies how
compatible a market is with the services which global
logistics companies provide. For instance it measures:
• A country’s development in terms of the
importance of its service sector (indicative of the
level of out-sourcing of logistics requirements);
• Urbanisation of population (a driver of
manufacturers’ centralised distribution strategies
and the likely consolidation of retailing);
• Distribution of wealth throughout the population
(indicative of the widespread need for higher
value goods often produced by international
manufacturers);
• Foreign Direct Investment (FDI) (this is an
indicator for the penetration of an economy by
international companies);
• Market accessibility (the regulatory regime
facilitating – or otherwise – the entrance of
foreign companies to the market. This includes
factors such as bureaucracy, regulations etc).
• Security (measuring the risk to companies’
operations from threats such as piracy and
terrorism)
The ‘Connectedness’ sub-index rates a country’s
international and domestic transport infrastructure
links as well as the level of service it receives. It
involves:
• The frequency and range of destinations of its
liner shipping connections
• The level of airport infrastructure relative to the
market’s size
• A rating of its overall transport infrastructure
• A rating of the efficiency of its customs and
border controls.
From these three sub-indices a weighted, total rating
and ranking has been developed using established
statistical techniques.
The index has been set out firstly in its full version,
showing each of the three sub-indices for the 38
countries surveyed, and the total index score, on
which the countries have been sorted. Following
that table, the countries have been split into two
sections based on size of GDP. This makes it possible
to compare the performance of the large emerging
markets (GDP over $300 billion) and the smaller
emerging markets (GDP under $300 billion) more
meaningfully.
This year Ti has undertaken a global electronic
survey to complement the Index, providing insight
on which emerging markets hold the greatest levels
of potential and why. The results of this survey are
contained in Section 4.
2.0 Agility Emerging Markets Logistics Index 2011
2.0
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Agility Emerging Markets Logistics Index 2011
3.0 Analysis and results of the index
China, the largest economy in the survey, retained
its number one position as the most attractive
investment market for logistics companies. The
country remains top for market size and growth
attractiveness and retains second place for market
connectedness. China’s connectivity to global
shipping networks is among the best in the world,
offering access to a global system of high capacity
and frequency ocean freight and thus enabling trade.
Its market compatibility score however fell, moving
China down to ninth position in this respect. This
decline explains the fall seen in the country’s total
index score overall.
India, Brazil and Indonesia also remain in the top five
investment markets for logistics companies with no
changes among their rankings. India’s score showed
a small improvement as a result of an increase in its
size and growth prospects. Its market compatibility
and market connectedness scores, already below
average, declined leading to an increase in India’s
inconsistency between the sub-indices.
Brazil’s overall score remained stable although it
experienced some changes among the sub indices. Its
‘market size and growth attractiveness’ and ‘market
compatibility’ scores saw an improvement whilst its
‘connectedness’ declined. Poor infrastructure remains
a problem for investors in the country. Indonesia
recorded an increase in its overall score as a result
of improvements in its market size and growth
prospects. The country saw a small improvement
in its ‘connectedness’ although it still scores
below average in this respect. However its market
compatibility sub-index fell, this was driven mainly
by a decline in its security.
Russia’s total index score also increased moving it up
one position to join the other ‘BRIC’ nations in the
top five. This increase was driven by improvements
in the country’s GDP forecast growth, foreign direct
investment (FDI) and reductions in security threats.
The biggest mover up in the total index rankings was
Saudi Arabia which climbed four places and saw the
greatest increase in its overall score. The country saw
significant improvements in its market compatibility
index mainly due to increases in the foreign direct
investment index. The majority of countries included
in the index saw declines in FDI during the global
economic crisis although Saudi Arabia was virtually
unaffected. Its energy, industrial, financial and real
estate sectors still offered considerable scope for
investors.
Oman also moved up four places recording increases
in its market compatibility and market connectedness
index. The improvement in the country’s
‘connectedness’ was driven by developments in
its airport infrastructure. The country is currently
undertaking major improvements to its airport
network including the proposed expansion of Muscat
International airport, to include a new air cargo
terminal, as well as developing new airports in Sohar
and Duqm. Market compatibility increased as a result
of improvement in security.
Despite its overall score experiencing a slight decline,
Chile climbed to tenth position overtaking Thailand
and Malaysia in the total rankings. The country
recorded small increases in its already strong market
compatibility and connectedness sub-indices while its
market size and growth attractiveness index declined.
Chile saw improvements in its already strong market
access. The country benefits from a high number of
trade agreements enabling access to foreign markets
for its exporters.
3.0
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Agility Emerging Markets Logistics Index 2011
Egypt was the biggest mover down the index falling
four places and out of the top ten most attractive
markets for logistics companies. The country saw a
significant decline in its market compatibility score
to below average due to increases in its business
costs of crime and violence and terrorism. This
significant fall in market compatibility has reduced
the consistency of Egypt’s scores.
Another significant mover down in the index was
Qatar which fell three places as a result of a decline
in its market size and growth prospects score. Qatar
has experienced rapid economic growth over the
past fifteen years led by the energy sector. After
reaching its peak in 2011 the oil and gas sector is
expected to slow as no new investments into gas
export projects are planned, consequently Qatar’s
GDP growth forecast for 2015 has fallen. Qatar is,
however, currently undergoing major infrastructure
and tourism developments in an attempt to replace
energy revenues in coming years and is, therefore,
likely to improve its position in the future.
At the bottom of the index Kenya’s overall score has
improved while Paraguay’s overall score declined.
Paraguay saw declines in both the The Market Size
and Growth Attractiveness and market compatibility
sub indices. The country scores particularly poorly
in The Market Size and Growth Attractiveness sub
indices due to its limited economy based largely
on agriculture. Its economy contracted as a result
of reduced global demand and commodity prices
causing exports to fall and reducing its GDP.
Kenya saw an increase in its ‘market compatibility’
driven by small improvements in the country’s
security. Despite this security threats such as crime
and violence and terrorism still remain exceptionally
high. It is expected that reforms of the new
constitutional order may help improve these areas
further in the future.
3.0 Analysis and results of the index cont.
3.0
7
Agility Emerging Markets Logistics Index 2011
Table 1: Agility Emerging Markets Logistics Index
Agility Emerging Markets Logistics Index
2011Total Index
2010Total Index
Change in ranking from previous year
China 8.32 8.46 -India 7.00 6.94 -Brazil 6.74 6.74 -
Indonesia 6.73 6.56 -Russia 6.22 6.04 up 1
Saudi Arabia 6.01 5.45 up 4Mexico 5.98 6.05 down 2Turkey 5.80 5.79 down 1
UAE 5.59 5.55 down 1Chile 5.29 5.30 up 3
Malaysia 5.28 5.36 -Thailand 5.25 5.30 -
Egypt 5.16 5.47 down 4Oman 5.12 4.94 up 4
Argentina 5.08 4.98 -South Africa 5.07 5.02 down 2
Pakistan 5.02 4.95 -Ukraine 4.97 4.90 up 1Qatar 4.86 4.96 down 3
Bahrain 4.77 4.80 -Tunisia 4.77 4.65 up 2Jordan 4.70 4.72 down 1
Uruguay 4.59 4.64 up 1Philippines 4.58 4.68 down 2
Vietnam 4.55 4.59 -Bangladesh 4.55 4.56 -
Nigeria 4.49 4.49 -Morocco 4.47 4.39 -
Peru 4.43 4.36 -Kazakhstan 4.33 4.30 up 1
Ecuador 4.29 4.34 down 1Ethiopia 4.19 4.24 -
Colombia 4.17 4.24 -Venezuela 4.10 4.16 -
Algeria 4.07 4.08 -Tanzania 3.84 3.99 -
Kenya 3.64 3.57 up 2Bolivia 3.64 3.78 down 1
Paraguay 3.53 3.66 down 1Source: Transport Intelligence
3.0
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Agility Emerging Markets Logistics Index 2011
MOVEMENT KEY:
UP
NONE
DOWN
BRAZIL
RUSSIA
CHINA
INDIA
UKRAINE
TURKEY
SAUDI ARABIA
EGYPT
SOUTH AFRICACHILE
MEXICO
ARGENTINA
Figure 1: Agility Emerging Markets Logistics Index – Top Movers
3.0
Source: Transport Intelligence
9
Agility Emerging Markets Logistics Index 2011
Table 2: Agility Emerging Markets Logistics Index Sub-IndicesMkt size &
growth attractiveness
sub-index
Market compatibility
sub-index
Connectedness sub-index
Total Index
Change in ranking from previous year
China 10.00 6.06 7.46 8.32 -India 9.56 4.80 4.54 7.00 -Brazil 8.32 5.49 5.12 6.74 -
Indonesia 9.06 4.77 4.44 6.73 -Russia 7.66 5.23 4.60 6.22 up 1
Saudi Arabia 5.29 6.59 6.75 6.01 up 4Mexico 7.33 4.49 5.02 5.98 down 2Turkey 6.62 4.75 5.34 5.80 down 1
UAE 3.61 6.51 8.21 5.59 up 3Chile 3.95 5.99 7.01 5.29 up3
Malaysia 4.62 4.98 6.72 5.28 -Thailand 5.58 4.25 5.59 5.25 -
Egypt 5.68 4.10 5.22 5.16 down 4Oman 3.22 6.94 6.77 5.12 up 4
Argentina 5.00 5.48 4.83 5.08 -South Africa 5.19 4.20 5.66 5.07 down 2
Pakistan 6.53 3.00 4.25 5.02 -Ukraine 4.36 6.19 4.91 4.97 up 1Qatar 3.31 6.45 6.09 4.86 down 3
Bahrain 3.05 5.78 6.84 4.77 -Tunisia 3.38 6.71 5.38 4.77 up 2Jordan 3.13 6.44 5.84 4.70 down 1
Uruguay 3.12 6.57 5.32 4.59 up 1Philippines 5.08 4.25 3.98 4.58 down 2
Vietnam 4.99 4.57 3.76 4.55 -Bangladesh 5.56 4.20 3.08 4.55 -
Nigeria 5.83 3.49 3.07 4.49 -Morocco 3.79 5.17 5.01 4.47 -
Peru 4.21 4.65 4.62 4.43 -Kazakhstan 3.84 5.52 4.09 4.33 up 1
Ecuador 3.38 4.78 5.42 4.29 down 1Ethiopia 4.20 4.97 3.45 4.19 -
Colombia 4.78 2.51 4.66 4.17 -Venezuela 4.12 4.05 4.12 4.10 -
Algeria 4.10 4.10 3.98 4.07 -Tanzania 3.62 5.03 3.13 3.84 -
Kenya 3.61 3.84 3.49 3.64 up 2Bolivia 3.20 4.35 3.73 3.64 down 1
Paraguay 3.10 4.40 3.47 3.53 down 1Source: Transport Intelligence
Table 2: Agility Emerging Markets Logistics Index Sub-Indices
3.0
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Agility Emerging Markets Logistics Index 2011
3.0Of the larger economies included in the index (GDP
in excess of $300bn) Saudi Arabia’s score for market
compatibility signifi cantly improved bringing its score
for this sub-index above that of Brazil and China.
Colombia’s market compatibility remained low- in
particular the country faces extremely challenging
concerns over security. While the country saw a small
decline in terms of business costs of terrorism, its
business costs of crime and violence increased posing
increased risks to logistics companies with operations
in Colombia. Nigeria, which also performs poorly
in terms of market compatibility due to security
threats, saw improvements in business costs of both
crime and violence and terrorism. It also saw an
improvement in market access.
Of the larger markets, Nigeria remains the worst for
‘connectedness’ and saw a decline in its scores for
infrastructure and border administration. The country
does, however, have some strengths. Its score for
its market size and compatibility is above average
and the country takes a mid-rank position among
the larger economies in this respect. Saudi Arabia
stands out as having increased its score for transport
connectivity overtaking Malaysia in the sub indices
through improvements in infrastructure, air and
border administration.
Market size and growth
attractiveness sub-index
Market compatibility
sub-indexConnectedness
sub-index Total Index
Change in
ranking from
previous year
China 10 6.06 7.46 8.32 -India 9.56 4.8 4.54 7 -Brazil 8.32 5.49 5.12 6.74 -
Indonesia 9.06 4.77 4.44 6.73 -Russia 7.66 5.23 4.6 6.22 up 1
Saudi Arabia 5.29 6.59 6.75 6.01 up 3Mexico 7.33 4.49 5.02 5.98 down 2Turkey 6.62 4.75 5.34 5.8 down 1
Malaysia 4.62 4.98 6.72 5.28 up 1Thailand 5.58 4.25 5.59 5.25 up 1
Egypt 5.68 4.1 5.22 5.16 down 3Argentina 5 5.48 4.83 5.08 up 1
South Africa 5.19 4.2 5.66 5.07 down 1Pakistan 6.53 3 4.25 5.02 -
Philippines 5.08 4.25 3.98 4.58 -Nigeria 5.83 3.49 3.07 4.49 -
Colombia 4.78 2.51 4.66 4.17 -Venezuela 4.12 4.05 4.12 4.1 -
Source: Transport Intelligence
Table 3: Agility Emerging Markets Logistics Index for Countries with GDP of more than US$300bn
11
Agility Emerging Markets Logistics Index 2011
Of the smaller economies, UAE remains at the top,
offering the greatest exploitable opportunities. Its
transport connectedness sub-index score increased,
further enhancing its attractiveness to logistics
companies as a strong market for logistics operations
of all kinds. UAE’s border administration, which was
already extremely effi cient, saw an improvement
making the entry and exit of goods even easier.
The country’s liner shipping connectivity also saw
signifi cant improvements.
Tunisia climbed two places up to sixth position as a
result of increases in its market compatibility index.
From 2008 the country’s association agreement with
the EU created a free trade area between Europe and
Tunisia. This has led to a signifi cant increase in its
market accessibility. However, Tunisia also simplifi ed
its tariff structure abolishing tariff peaks and specifi c
tariffs which led to a more complex customs
procedure and consequently decreased its score for
border administration.
Market size and growth
attractiveness sub-index
Market compatibility
sub-indexConnectedness
sub-index Total Index
Change in ranking
from previous
yearUAE 3.61 6.51 8.21 5.59 -Chile 3.95 5.99 7.01 5.29 -Oman 3.22 6.94 6.77 5.12 up 1
Ukraine 4.36 6.19 4.91 4.97 up 1Qatar 3.31 6.45 6.09 4.86 down 2
Tunisia 3.38 6.71 5.38 4.77 up 2Bahrain 3.05 5.78 6.84 4.77 down 1Jordan 3.13 6.44 5.84 4.7 down 1
Uruguay 3.12 6.57 5.32 4.59 -Vietnam 4.99 4.57 3.76 4.55 -
Bangladesh 5.56 4.2 3.08 4.55 -Morocco 3.79 5.17 5.01 4.47 -
Peru 4.21 4.65 4.62 4.43 -Kazakhstan 3.84 5.52 4.09 4.33 up 1
Ecuador 3.38 4.78 5.42 4.29 down 1Ethiopia 4.2 4.97 3.45 4.19 -Algeria 4.1 4.1 3.98 4.07 -
Tanzania 3.62 5.03 3.13 3.84 -Kenya 3.61 3.84 3.49 3.64 up 2Bolivia 3.2 4.35 3.73 3.64 down 1
Paraguay 3.1 4.4 3.47 3.53 down 1
Source: Transport Intelligence
Table 4: Agility Emerging Markets Logistics Index for Countries with GDP of less than US$300bn
3.0
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Agility Emerging Markets Logistics Index 2011
3.1The following fi gures examine the ranking of all
the emerging markets covered in the index in
each of the three sub-indices: ‘Market size and
growth attractiveness’; ‘Market compatibility’ and
‘Connectedness’. The performance of each country
is measured by the number of standard deviations
from the average score of the entire group which is
denoted by 0 on the scale.
3.1.1 Market size and growth attractiveness sub-index
In terms of scale and growth prospects it
is of little surprise that the most attractive
markets are China and India. Indonesia,
Brazil, Russia and Mexico also stand out as
offering the largest opportunities. At the
other end of the scale Bahrain, Paraguay
and Uruguay are the smallest markets
offering the least potential for investors.
3.1 Sub-Indices ranking
Ch
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2.00
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1.00
0.50
–
-0.50
-1.00
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Figure 3: Market Size and Growth Attractiveness Sub-Index Scores
Source: Transport Intelligence
13
Agility Emerging Markets Logistics Index 2011
3.13.1.2 Market compatibility sub-index From the perspective of market
compatibility, Oman scores well against
a range of criteria including low business
costs from crime and terrorism; high levels
of foreign direct investment; good market
access; high degree of service sector
development and urbanization.
Pakistan, Colombia and Nigeria score the lowest
against this criteria suffering not least from high
degrees of corruption and crime.
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1.50
1.00
0.50
–
-0.50
-1.00
-1.50
Figure 4: Market Compatibility Sub-Index Scores
Source: Transport Intelligence
14
Agility Emerging Markets Logistics Index 2011
3.1.3 Connectedness sub-index In the ‘Connectedness’ sub-index, which
is made up of components including liner
shipping connectivity; airport density;
customs effi ciency and infrastructure
strength, the United Arab Emirates scores
highest, followed by China and more
surprisingly by Chile.
A range of Middle Eastern also countries
score well.
At the other end of the spectrum Nigeria,
Bangladesh and Tanzania suffer from very
poor connectivity.
160
140
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UA
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Tan
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Cam
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Slov
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Oth
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Figure 5: Connectedness Sub-Index Scores
Source: Transport Intelligence
3.1
1�
Agility Emerging Markets Logistics Index 2011
Figure 6 provides another way of displaying the
relative positions of the countries in the survey. The
chart is divided into four quadrants and countries
are plotted on axes of ‘Market Compatibility and
Connectedness’ (an average of their scores in both
these sub-indices) and ‘Market Size and Growth’,
with the size of the bubble denoting the size of the
opportunity.
Countries in the top right quartile are those
which represent the biggest targets for logistics
investment as well as the easiest markets in which to
operate; they already have good compatibility and
connections.
In the top left quartile are those countries which
represent smaller market opportunities, but are also
easily penetrated, such as the UAE.
The bottom half of the chart includes countries in
which there are signifi cant barriers to market entry
and diffi culties in operating. As these economies
become more mature, de-regulated and better
connected with the global markets, they will move
towards the upper quartiles.
China’s dominance as the most important emerging
market is obvious from the chart. Its size and growth
potential are massive, but it still has potential for
improvements in terms of ‘Market Compatibility and
Connectedness’. Clustered in the quadrant denoting
smaller markets, but with good prospects for market
penetration are several Middle Eastern countries
led, as can be seen, by the UAE. Larger markets, but
compromised by barriers to entry, include Pakistan
and Nigeria. Those with much less potential (except
on a niche basis) include Colombia and Kenya.
3.2 Emerging Markets Quadrant
Figure 6: Emerging Market Potential Quadrant
3.2
Source: Transport Intelligence
1�
Agility Emerging Markets Logistics Index 2011
4.0In December 2010, Ti undertook an electronic survey
to ascertain the prevailing views on likely future
logistics hotspots. 338 respondents took part in
the survey, representing a range of industries and
markets right across the world.
The following information supplements the Agility
Emerging Markets Logistics Index 2011, providing
additional evidence on logisticians’ perceptions
of which countries globally are more attractive
propositions as logistics markets.
Due to its sheer size and the level of developments
that have taken place, and are continuing to do so,
China has been left out of this study as the inclusion
of this leading market would skew any results.
4.0 Emerging Market Survey
17
Agility Emerging Markets Logistics Index 2011
4.1 Question 1 – With the exception of China, which markets will emerge as major logistics hubs?
The sample audience was asked to rate, from a list of
potential emerging markets, those they considered
would emerge as major logistics hubs in the future.
As can be seen below, the BRIC economies, which
have long been regarded as offering the most
potential to global logistics operators, continue to
dominate individuals’ thoughts.
However, surprisingly, the UAE was believed by
many respondents (10.7% of the total sample) to
represent a greater opportunity for 3PLs than Brazil.
This may be due to the country’s development as
both an import gateway for the GCC States as well
as an important transit hub for goods between Asia
and Europe / Africa.
Figure 7: Perceived Important Logistics Hubs of the Future
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ain
e
Ind
on
esia
Ch
ile
Thai
lan
d
Egyp
t
Paki
stan
Sou
th A
fric
a
Om
an
Phili
pp
ines
Arg
enti
na
Peru
Co
lom
bia
Ven
ezu
ela
Alg
eria
Tan
zan
ia
Cam
bo
dia
Slov
akia
Oth
er
Source: Transport Intelligence
4.1
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Agility Emerging Markets Logistics Index 2011
If we look at the top ten markets ranked as potential logistics hubs of the future in greater detail, a couple of
further surprises emerge.
Figure 8: Top Ten Potential Logistics Hubs
140
120
100
80
60
40
20
0
Res
po
nd
ents
Ind
ia
Bra
zil
UA
E
Russ
ia
Sau
di A
rab
ia
Turk
ey
Vie
tnam
Qat
ar
Mal
aysi
a
Cze
ch R
epu
blic
Source: Transport Intelligence
Turkey has long been touted as a potential near-
sourcing market to serve the ever enlarging
European Union. The country already has strong
manufacturing bases in the automotive and clothing
/ textile industries, as well as having a direct land
link to the EU through the newest members,
Bulgaria and Romania. Likewise, Vietnam has been
called ‘China+One’, for some time, eluding to its
far cheaper cost base and the opportunities this
provides as an alternative manufacturing base. It
is, therefore, somewhat surprising that Saudi Arabia
is considered, by many, to represent a greater
opportunity than these.
This is, undoubtedly, due in part by its position as
the world’s leading oil producer but is also likely to
be affected by the wealth of much of the indigenous
population and their desire for western luxury
products.
Saudi Arabia is also developing six ‘economic cities’,
in an attempt to replicate the success witnessed
in Dubai. The largest of these will be the King
Abdullah Economic City which will comprise six key
components – a seaport, an industrial zone, a central
business district, a resort district, an educational
zone and residential communities. Once completed
the Economic City will be a hub for at least 2,700
manufacturing companies and the 13.8 sq km port
is estimated to emerge as one of the world’s top fi ve
largest industrial ports.
4.1
19
Agility Emerging Markets Logistics Index 2011
With the exception of the BRIC economies, the
Middle Eastern / North African region has attracted
most attention from the respondents, with 55% of
the sample identifying countries located within this
region as potential future logistics hubs.
In addition to the UAE and Saudi Arabia, mentioned
above, markets of interest in the region include Qatar
(possibly due in part to the recent development and
coverage of the successful World Cup bid), Jordan,
Egypt, Oman and Algeria.
Of these countries, Egypt is less of a surprise as it
possesses many of the characteristics required of a
developing nation. It has a large and predominantly
young population, largely located within a relatively
small geographic area (the Nile Delta). It acts
as both a growing consumer market as well as a
manufacturing hub for Europe and the Middle East
and is developing its infrastructure, particularly its
roads and ports, as well as dedicated logistics parks.
Figure 9: Regional Analysis
Source: Transport Intelligence
4.1
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Agility Emerging Markets Logistics Index 2011
4.2 Question 2 - Why are these countries considered to be important emerging markets?
The main reasons cited for countries emerging as
potential logistics hubs are highlighted below.
Economic growth is, by far, the predominant
factor with all of the countries listed in the top ten
experiencing higher than average growth rates.
Geographic location was also deemed an important
factor. India, for example, is seen as a preferable
manufacturing base for European and Middle Eastern
markets, having far less distance to cover than
Chinese exporters.
Figure 10: Factors behind Countries’ Emergence as Potential Logistics Hubs
Source: Transport Intelligence
4.2
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Agility Emerging Markets Logistics Index 2011
Looking at the factors affecting the top 3 markets
potential to be future logistics hubs it can be noted
that for the two BRIC economies (India and Brazil)
they are both dominated by economic growth,
although India is also believed to benefi t from its
location.
The UAE, on the other hand, is perceived to be
important due mainly to its geographic location.
Figure 11: Factors behind India’s, Brazil’s and UAE’s Emergence as Potential Logistics Hubs
120
100
80
60
40
20
0 Ind
ia
Bra
zil
UA
E
Economic growth
FDI
Growing population
Geographic location
Near sourcing market
Growing exporter
Source: Transport Intelligence
4.2
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Agility Emerging Markets Logistics Index 2011
4.3 Question 3 - Which markets will offer the least opportunities for logistics companies in the next 5 years?
Pakistan was viewed, by far, as the least attractive
market, with concerns over security being the most
widely held.
Interestingly, Brazil, which was considered to be the
second most attractive market, also ranks as the
third least attractive potential logistics hub. Security
and poor infrastructure were cited as major issues.
It is obvious that this market polarises views – it is
attractive from the perspective of size and growth,
but not from the practicalities of doing business.
Figure 12: Least Attractive Markets as Logistics Hubs
50
45
40
35
30
25
20
15
10
5
0
Source: Transport Intelligence
4.3
�3
Agility Emerging Markets Logistics Index 2011
4.4 Question 4 – What factors do you believe prevent these markets from emerging as major logistics hubs of the future?
Looking at the factors affecting the three least
attractive potential logistics hubs, security was the
main concern for Pakistan and Brazil, while poor
infrastructure was an important factor for all three.
Interestingly, no respondents cited customs issues
as a negative factor, perhaps due to the large
dependence on local companies handling this activity
in many emerging markets.
Figure 13: Least Attractive Markets as Logistics Hubs
40
35
30
25
20
15
10
5
0
Security
Poor infrastructure
Corruption
Human rights issues
Ease of doing business
Difficult customes procecures
Geographical location
Government policies
Pakistan Bangladesh Brazil
Source: Transport Intelligence
4.4
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Agility Emerging Markets Logistics Index 2011
4.5 Question 5 - Which markets have you expanded into in the past 5 years?
India has witnessed the highest level of FDI in
the past 5 years, followed by Brazil, the UAE.
This correlates directly with question 1, which
investigated the markets believed to represent major
logistics hubs in the future.
Along with those companies expected to fi gure in
the top ten (India, Brazil, Russia and the UAE), the
near-sourcing markets of Turkey and Mexico have
been on the recent expansion list of companies.
Interestingly, Saudi Arabia, the surprise from
question 1, was also a target market for 21% of the
respondents.
Vietnam and South Africa have also experienced a
reasonable level of FDI recently.
Figure 14: Overseas investment in the past 5 Years (number of respondents)
140
120
100
80
60
40
20
0
Source: Transport Intelligence
4.5
The African nations of Ethiopia and Tanzania were among the least that had experienced FDI from the sample
audience, perhaps highlighting that these markets are not yet ready to exploit.
��
Agility Emerging Markets Logistics Index 2011
4.6 Question 6 - Which markets do you expect to expand into in the next 5 years?
As with past investments, India is the market that the
majority of the respondents expect to expand into
in the next 5 years, with the other BRIC countries
of Brazil and Russia, along with the UAE, also of
continued interest.
South Africa, Vietnam, Mexico and Turkey have also
been highlighted as areas on interest in the future.
Figure 15: Overseas investments anticipated in the next 5 years (number of respondents)
80
70
60
50
40
30
20
10
0
Source: Transport Intelligence
4.6
��
Agility Emerging Markets Logistics Index 2011
4.7 Question 7 - Which regions will emerge as the next major low cost manufacturing locations in the next 15 to 20 years?
Western China is believed by most respondents as
being the next low cost manufacturing opportunity.
This location is already starting to benefi t from
increases in the costs in coastal areas of China
with some manufacturers moving further inland.
However, poor infrastructure, particularly with regard
to roads, has impeded on the growth potential.
Developments of new roads and airports are
underway, attempting to link this region with the
eastern part of China but it is too early to determine
how effective these are.
South East Asia (including Vietnam, Thailand and
India) was also identifi ed as a major potential
manufacturing hub of the future. Vietnam and
India already compete with China as major global
manufacturing hubs, both having lower labour costs.
They also represent important consumer bases in the
future.
Although a number of nations are investing in Sub-
Saharan Africa, predominantly for its natural minerals
(China leading the way), the continent is some way
behind these other two regions and Latin America.
Figure 16: Future Potential Low Cost Manufacturing Locations (number of respondents)
140
120
100
80
60
40
20
0Sub-Saharan
AfricaSouth East
AsiaLatin
AmericaWestern
ChinaCISMiddle East
and NorthAfrica
Source: Transport Intelligence
4.7
�7
Agility Emerging Markets Logistics Index 2011
From its roots in emerging markets, Agility brings efficiency
to supply chains in some of the globe’s most challenging
environments, offering unmatched personal service, a global
footprint and customized capabilities in developed countries and
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provides supply chain solutions to meet complex and traditional customer needs. GIL offers air, sea and road
freight forwarding, warehousing, distribution and specialized services in project logistics, fairs and events,
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Agility’s unique collection of portfolio businesses includes Agility Defense & Government Services, a logistics
provider to governments, ministries of defense and international organizations. Agility’s Infrastructure group
of companies manages commercial and industrial real estate and offers solutions in customs optimization and
clearance, waste management and recycling, aviation services, remote infrastructure and life support.
For more information about Agility, visit www.agilitylogistics.com/emergingmarkets
Ti is one of the world’s leading providers of expert research and
analysis dedicated to the global logistics industry. Utilising the
expertise of professionals with many years experience in the mail,
express and logistics industry, Transport Intelligence has developed
a range of market leading web-based products, reports, profiles
and services used by all the world’s leading logistics suppliers,
consultancies and banks as well as many users of logistics services.
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Agility Emerging Markets Logistics Index 2011
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