Agility survey predicts effects of trade tensions, emerging economies

Kuwait-based international forwarder Agility Logistics released its emerging markets logistics analysis that shows the hindrances that protectionist policies pose to the momentum of globalization, but also highlighted some emerging markets that are being fueled by a continued demand for e-commerce.

At the forefront of the study, Agility noted that, since July 2018, the International Monetary Fund has cut its global growth forecast for 2019 from 3.9 to 3.5 percent, and decreased its forecast for emerging markets from 5.1 to 4.5 percent growth, as the world anticipates deceleration in the United States, China and the European Unoion markets.

While the Chinese market maintained its number-one score on Agility’s Emerging Markets Logistic Index for the ninth year in a row – which takes into account domestic and international logistics, as well as business fundamentals – the survey results show that participants expect volumes on the China-U.S. trade lane to fall at a rate of about 10 percent in 2019, compared to the previous year.

Acknowledging worries surrounding the effects of protectionism, the rise in popularity of global e-commerce platforms such as Alibaba and Amazon have spurred on the growth of small and medium-sized enterprises (MSMEs) in emerging markets – which will continue be a boon to airfreight demand, regardless of trade tensions.

According to the results, there will be likely be shifts to other neighboring trade lanes that will bump up trade volumes in regions such as Southeast Asia, namely Indonesia and Malaysia, which could serve as manufacturing alternatives to China, respectively ranking four and five on Agility’s 2019 index.

India’s economy, which ranked second, is being driven by robust increases to manufacturing and e-commerce demand. About half of those surveyed expect India’s e-commerce market to grow just as fast as, or faster than, China’s online retail sector, with the emergence of e-tailers like India-based Flipkart, comparable to that of Alibaba.

And United Arab Emirates, which ranked third, is also garnering attention for its network of free trade zones and its growing logistics infrastructure – a combination that makes the Middle East region an increasingly appealing central point for carriers flying between Europe and Asia.

The 66-page analysis includes insights from more than 500 surveyed logistics professionals, as well as Agility’s own forecasts of economic trends in international logistics trends for 2019.

To read the full results of the survey, check out Agility’s website.