Supply chain executives are bracing for a global slowdown this year citing threats growth including the US-China trade standoff, a global economic slowdown and fresh risks from the coronavirus disease (Covid-19) outbreak.
According to results of the 2020 Agility Emerging Markets Logistics Index survey, 64% of industry professionals said a recession is likely in the next 12 months. Only 12% of the 780 respondents say a recession is unlikely.
At the same time, most logistics executives say their companies will ride out any turbulence in trade relations between the world’s two largest economies, while 70% of those with operations and investments in China say they will stay put and that their plans are unchanged despite the US-China trade battle.
"Supply chain industry executives anticipate a recession in 2020 amid concerns about downward pressure on global trade volumes, uncertain growth prospects, and ongoing friction between the US and China," Agility said in a statement.
Vietnam, India top alternative production hubs
If they were to move production or sourcing from China, Agility said most of the respondents would pick Vietnam and India as top choices of places to relocate — while noting that rising trade barriers is the factor to most likely hurt emerging markets growth.
The survey is part of the 2020 Agility Emerging Markets Logistics Index, the company’s 11th 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.
“The fears of a recession are not to be taken lightly, especially because of uncertainty about the impact of the coronavirus outbreak,” says Essa Al-Saleh, CEO of Agility Global Logistics.
“A positive sign, however, is that a large number of emerging markets economies were able to weather an array of issues — political and social unrest, structural problems, even international sanctions for some — without losing much ground in the past year.”
The Index ranks 50 countries by factors that make them attractive to logistics providers, freight forwarders, shipping lines, air cargo carriers and distributors.
In 2020, the top 10 emerging markets are China, India, United Arab Emirates, Indonesia, Malaysia, Saudi Arabia, Qatar, Mexico, Thailand and Turkey.
China, India and Indonesia rank highest for domestic logistics; China, India and Mexico are top for international logistics; and UAE, Malaysia and Saudi Arabia have the best business fundamentals.
