China, India dominate Agility Emerging Markets Logistics Index
Analysis highlighted that shift to online retail, digitalisation and sustainability will be the legacy of the pandemic.
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.
The Agility Emerging Markets Logistics Index 2022 examined four key areas for logistics market development:
- Domestic logistics opportunities;
- International logistics opportunities;
- Business fundamentals; and
- Digital readiness
The analysis by Agility, a global supply chain company, highlighted that an accelerated shift to online retail, digitalisation and sustainability will be the legacy of the Covid-19 pandemic.
Agility's Take: China still indispensable
"Two years later, the world is no less reliant on China, which still accounts for the largest share of global production across an astounding number of industries. Even so, China's customers and investors might have reasons to start viewing it in a new light."
The report added that China remains indispensable to the global supply chain.
While India ranks 2nd overall, it ranks at 14th for business fundamentals, its highest ever position in the ranking. "Achieving 5th position in the new digital readiness ranking highlights the need for business environment reforms to further unlock India's potential."
The United Arab Emirates combines top-ranking performance in both the business fundamentals and digital readiness categories to rank 3rd overall in the Agility Emerging Markets Logistics Index.
High freight rates, port congestion to continue
"A majority of logistics professionals surveyed for the Index see record ocean and air rates, clogged ports, and other supply chain disruption persisting into late 2022, even 2023. Pandemic-related closures and congestion are the biggest issues, in their view, followed by the ocean container shortage, carrier capacity issues, and port infrastructure," the report said.
While 15 percent participants felt high sea rates will be here to stay, over 11 percent felt so for air rates.
Digital readiness: How emerging markets will separate themselves
In 2021, the United Nations issued a report saying that 37 percent of the world's population – about 2.9 billion people – have never used the Internet. Most live in developing countries, it said. "At the same time, the UN reported a Covid connectivity boost in Internet usage. The number of people using the Internet rose to about 4.9 billion, up 17 percent from 2019. Why? School closures, searches for health updates, the shift to e-commerce and other factors moved more people online.
Digital was a big theme in the survey of logistics professionals for this year's Index, the report said. "They identified adoption of technology as the leading driver of economic and business growth for emerging markets. They picked operational technology, supply chain sustainability, and advanced tech such as AI as the three main focuses for the logistics industry in 2022 and beyond."
So, for emerging markets, digital's day is here.
"We see such a strong connection between a country's digital capabilities and its growth prospects that we have added a Digital Readiness ranking to this year's 50-country
Agility Emerging Markets Logistics Index," says Tarek Sultan, CEO of Agility, a global supply chain company. "Increasingly, the competitiveness of these economies will be determined by their ability to develop digitally skilled businesses and talent pools, as well as lowering emissions intensity in ways that spur growth rather than sacrificing it."
Agility's Take: 5 ways the pandemic changed supply chain forever
1. Supply chain is on the front-burner for good
2. Flexibility +resilience+ business continuity > cost
3. Buyer-supplier relationships have been altered
4. Business lines are blurred and workarounds are SOPs; and
5. The inventory playbook has been ripped up.
"What's clear is that nearly two years after the world first learned of Covid, the supply chain is still experiencing an unfortunate series of firsts," Tarek Sultan wrote in a blog published by the World Economic Forum. "A historic level of carrier unreliability. Record-high freight rates. Record-low warehouse vacancies. And more."
It will pass. When it does, look for a more intelligent supply chain, Sultan concluded.