Nearly 70% of global logistics executives say they are bracing for recession amid higher costs, slowing demand, and ongoing supply chain disruption arising from China's battle to contain COVID, Russia's war in Ukraine, and the impact of climate change, according to the result of the 2023 Agility Emerging Markets Logistics Index.

The survey and Index commissioned by Agility found that 45.1% of the 637 global logistics executives it surveyed were "certain" of a recession, and another 23.2% said that a recession is "likely."

Only 12.6% said a recession is "unlikely", and 12.2% believe there is a "little chance of recession."

The survey also showed that 90% of 750 industry professionals surveyed say their shipping, storage and other logistics costs remain well above pre-pandemic levels of early 2020.

"Carriers and shippers are feeling the effects of higher energy prices, tight labour markets and broader inflation even though freight rates have fallen and ports have cleared cargo backlogs," said Tarek Sultan, Agility vice chairman.

"Three years after the start of the pandemic, there is still a lot of volatility in supply chains. Now there's fresh uncertainty as consumers and businesses pull back on spending and hiring.

The 2023 iteration of the survey is Agility's 14th annual snapshot of industry sentiment and ranking of the world's 50 leading emerging markets.

The Index ranks countries for overall competitiveness based on their logistics strengths, business climates and digital readiness — factors that make them attractive to logistics providers, freight forwarders, air and ocean carriers, distributors and investors. 

In a statement, Agility said China and India, the world's two largest countries, held their spots at No. 1 and 2 in the overall rankings.

UAE, Malaysia, Indonesia, Saudi Arabia, Qatar, Thailand, Mexico and Vietnam rounded out the top 10.

Meanwhile, Turkey, No. 10 in 2022, dropped to 11th, while No. 24 South Africa and 25 Kenya were the highest among countries in Sub-Saharan Africa.

"Arabian Gulf countries — UAE, Qatar, Saudi Arabia and Oman — again offered the best business conditions. Malaysia, with the 4th best environment for business, was the only non-Gulf country in the top 5," the report added.

The 2023 Agility Emerging Markets Logistics Index showed that China and India were tops for domestic and international logistics.

India jumped four spots to No. 1 in digital readiness, followed by UAE, China, Malaysia and Qatar.

Farther down, Agility noted that there was more volatility in the rankings than in any prior year of the Index.

Conflict, sanctions, political tumult, economic missteps and continued COVID fallout damaged the competitiveness of Ukraine, Iran, Russia, Colombia, Paraguay and others, it added.

The survey showed that 53% of logistics executives say their companies have committed to net-zero emissions, and another 6.1% say their businesses have achieved net zero.

Agility noted that in terms of climate change, half of those surveyed say climate change is a "concern" their businesses must plan for, while another 18% say it is already affecting them.

For expansion, the survey showed that 55% say they will be more aggressive in emerging markets expansion and investing or leave their existing plans untouched despite fears of recession.

"Respondents say the biggest advantage is improved tracking and visibility; the biggest disadvantage is error/exception management," the report added, pertaining to digitalisation efforts in the industry.

Impact of Ukraine war, shifting views on China

The report said 97% of respondents indicate that their businesses have been hurt by higher costs or other supply chain challenges as a result of the Russia-Ukraine conflict.

Meanwhile, there is an "even split" between companies planning to reduce their reliance on Chinese sourcing and those planning to expand in China, Agility said.

The survey found that of the 750 global logistics executives polled, nearly 40% say they are shifting some/all production from China: 16.1% say due to China's strict anti-COVID policies; 13.7% said doing business there has become more difficult; 12.7% because of its trade friction with the U.S.; 12.4% said due to slowing China economy; and 45% due to other factors, including rising costs & regulation.

But Agility noted that only 11% of respondents say their company's manufacturing footprint is the same as before COVID.

Overall Index rankings in Asia: China (1); India (2); Malaysia (4); Indonesia (5); Thailand (8); Vietnam (10); Philippines (18); Kazakhstan (22); Pakistan (26); Sri Lanka (30); Bangladesh (35); Cambodia (38); Myanmar (49).

"It is not possible to overstate the challenges faced by emerging markets countries in the past couple of years. Geopolitical tensions have combined with financial uncertainty and the lingering effects of the pandemic to create an ever more complex business and investment environment," said 
John Manners-Bell, chief executive of Ti.

"The role that the Agility Emerging Market Logistics Index plays in providing insight into this volatile, uncertain environment landscape is more critical than ever," he added.

Analysis and research firm for the logistics industry, Transport Intelligence (Ti), has compiled the Index since it was launched in 2009.