In a noteworthy shift, global corporations are strategically restructuring their supply chain operations, with a notable preference for India, Europe, and North America over China, according to findings from the “15th annual Agility Emerging Markets Logistics Index” by Agility, a Kuwait-based supply chain services provider. The report, based on insights from 830 logistics executives worldwide, offers a comprehensive overview of industry sentiments and ranks the top 50 emerging markets.
The survey reveals a significant trend, with 40% of respondents anticipating reduced dependence on China in the next five years. Factors influencing this shift include challenges in doing business, U.S.-China trade tensions, China’s economic slowdown, and the stringent COVID restrictions imposed by the country. Notably, global shipping and logistics costs, which surged during the pandemic, continue to rise, albeit at a slower pace.
Over 63% of survey participants indicate ongoing supply chain transformations, involving the diversification of production locations or relocation to domestic markets and neighboring countries. China, as the world’s leading producer, is expected to feel the impact, with 37.4% of industry professionals planning to shift production or reduce investments in the country.
Surprisingly, Africa emerges as a new focus for companies seeking alternative supply chain and production locations. In a recent survey, nearly 62% of logistics professionals express intentions to invest in Africa, despite concerns about emerging market risks. Agility’s Vice Chairman, Tarek Sultan, emphasizes the unprecedented optimism for Africa, citing the continent’s projected population growth and the need for international businesses to invest and establish their presence.
While China and India maintain the top two positions in the overall Index rankings, Africa stands out with 14 different countries making the list. Egypt, Morocco, South Africa, and Kenya lead the African rankings. Egypt excels in domestic logistics opportunities, South Africa dominates international logistics, Morocco boasts the best business fundamentals, and Kenya is recognized as the most digitally ready in Africa.
Agility, a prominent player in supply chain services with a global presence, runs diverse ventures, including Menzies Aviation in aviation services, Tristar in global fuel logistics, Agility Logistics Parks in logistics park operations, and UPAC in commercial real estate. The company also provides customs digitization, remote-site infrastructure, defense and government services, and e-commerce-enablement and digital logistics.
