Looking at global logistics trends

Looking at global logistics trends

Agility survey says low oil prices, China are biggest 2016 risks

The latest “emerging markets” supply chain survey conducted by Agility Global Integrated Logistics finds that 61% of the 1,100 logistics industry executives it polled said they are “unclear” on the direction of the global economy or expect more volatility in 2016, with low global oil prices and the stumbling Chinese economy generating the biggest risk going forward.

Yet Essa Al-Saleh, president and CEO of Agility, said in a statement that, “despite the turbulence,” the fundamentals driving growth remain consistent – a rising middle class with spending power, progress in poverty reduction, growing populations.

“That’s why we are still positive on the outlook for emerging markets and see them driving global growth,” he added.

Agility’s survey found that supply chain executives expect an uptick in emerging markets growth in 2016, despite concerns about further slowing in China, fluctuations in oil prices, and the possibility that the U.S. economy could weaken.

Some 59.4% say the International Monetary Fund (IMF) forecast of 4.7% growth in emerging markets is “about right,” as emerging markets grew an estimated 3.6 % to 4.2% in 2015, though that is down from 4.5% in 2014, Agility noted.

Some of the findings from Agility’s seventh such survey include:

  • Industry executives view oil prices and China’s economy as the leading risks to the global economy in 2016.
  • Logistics executives see “economic shock” as the top risk in Asia Pacific, a sign of concern that a slowdown in China could ripple through economies and supply chains elsewhere in the region.
  • A significant percentage (38%) said they are reassessing their China strategies. In the past, industry executives said natural disasters and corruption were the top risks in Asia.
  • For the first time, logistics professionals see consumer spending in Africa as a more important driver of growth than energy and minerals. They identified Nigeria, South Africa, Ghana and Kenya as Africa’s most promising markets.
  • In spite of recent growth and investment, Sub-Saharan Africa remains a frontier market for most supply chain executives as only 21.2% said they have operations there.
  • For the first time, supply chain professionals surveyed see India – rather than China – as the emerging market with the most growth potential.
  • Countries in Latin America are losing ground to other emerging markets as a result of recession and political turmoil in Brazil, the region’s biggest economy, and depressed prices for commodity exports.
  • Of the 10 countries that slipped furthest in the Index, six are in Latin America: Peru, Argentina, Uruguay, Brazil, Colombia and Venezuela. Even so, Chile continues to be the top-ranked emerging market with GDP [gross domestic product] under $300 million.
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