Supply chain industry executives do not foresee a global economic recovery until 2022 or beyond, despite an expectation that Asia, North America and Europe will rebound this year from the downturn triggered by the COVID-19 pandemic.
Of 1,200 industry professionals surveyed for the 2021 Agility Emerging Markets Logistics Index, 51.5% say they don’t expect a full recovery until 2022-2024. They see Latin America and Sub-Saharan Africa as the last regions to bounce back.
The survey is part of the 2021 Agility Emerging Markets Logistics Index, the company’s 12th annual snapshot of industry sentiment and ranking of the world’s 50 leading emerging markets.
The Index is a broad gauge of countries’ competitiveness based on their international and domestic logistics strengths and business fundamentals — factors that make them attractive to logistics providers, freight forwarders, shipping lines, air cargo carriers and distributors.
In 2021, China and India remain atop the overall Index. Vietnam leapt to No. 8, up to three spots, as Asia-Pacific and Gulf markets dominated the top 10. Nigeria rose five spots to No. 30, the highest climb for a Sub-Saharan Africa country in the 12 years of the Index. Gulf countries outperformed most others in the business climate, but eight Latin America markets improved their business fundamentals rankings. Malaysia and Nigeria made the most notable upward moves in domestic logistics; Turkey, Brazil, Morocco, Ukraine, Kenya and Myanmar made progress in international logistics competitiveness.
In the survey, logistics executives indicated they see the duration of the pandemic as the biggest factor in determining when global economic activity will return to 2019 levels, viewing U.S.-China trade relations, Brexit, protectionism and other factors as secondary.
“The economic disruption caused by the pandemic is not behind us. Lockdowns and shipping challenges will constrain consumer and business activity through much of 2021,” says Chris Price, CEO of Agility Global Integrated Logistics (GIL). “The companies, markets and regions poised to recover most quickly are likely to be those using digital technology to collect data, share information, get supply chain visibility, and transact with customers and stakeholders.”
How are industry executives trying to protect their supply chains? By a two-to-one margin, they are speeding up the adoption of technology and online business capabilities (41.3%) vs. choosing to move production through multi-shoring, near-shoring or reshoring strategies (21.9%).
Logistics executives felt disruption across the entire supply chain in 2020, saying they struggled to cope with port congestion (19.6%), transportation capacity (18.4%), supplies of parts and inputs (16.9%), distribution and delivery (16.1%), maintaining international operations (15.1%), and storage (13.8%).
In their own operations, industry executives say the most acute pain points were planning and forecasting for both supply and demand. Managing orders and cash flow were the areas next most affected by the pandemic.
Despite their caution, industry executives are feeling opportunistic about emerging markets. More than half (52.0%) of respondents say they plan to increase business activity in developing markets or say they have more confidence in emerging economies. Only 19.5% say they are less confident in emerging markets.