Buddha statue in Mamallapuram, Tamil Nadu, India. © 123RF
Buddha statue in Mamallapuram, Tamil Nadu, India. © 123RF

India has 'most potential' for logistics

26 February 2016

More than 1,200 supply chain professionals have identified India as the logistics market with “the most potential to grow” over the next five years. 

India was the only BRICS country to improve its position in the ranking of potential, created from a survey conducted as part of the Agility Emerging Markets Logistics Index 2016, knocking China off the top spot.

However, while they were optimistic about India's potential, 42% of logistics professionals said the country needed more structural reform to sustain its current growth and 21% said the country needed more than economic reform to unlock its potential.

Brazil stayed in third place, though 35% of survey respondents cited poor governance as a barrier to Brazil’s return to higher growth alongside corruption and excessive government debt.

The top two supply chain concerns for respondents were oil prices and China’s economic health, followed by the strength of the dollar and the health of the US economy.

Iran moved up 12 places (from 27th to 15th) as a potential major logistics market and also soared from 35th to 16th place among markets for potential investment over the next five years.

For the first time, logistics professionals saw economic shock as the leading supply chain risk in Asia Pacific, rather than natural disasters and corruption.

This reflects concern about the effect of a slowing Chinese economy and the potential for a ripple effect in the region.

Some 54.8% of logistics professionals thought the Chinese economy would face major challenges over the next two to three years and 38% are reassessing their China strategy as a result. Just over a fifth are re-examining their overall emerging markets strategy.

However, China retains its top position in the overall index – which takes into account metrics around growth attractiveness, compatibility and connectedness – followed by the United Arab Emirates, India, Malaysia and Saudi Arabia.

The primary risk for Latin America named by respondents was corruption, for the Middle East and North Africa it was terrorism and for sub-Saharan Africa it was poor infrastructure.

While only 21.2% of respondents indicated they have established operations in sub-Saharan Africa, 12.7% said they were planning enter markets there. South Africa and Nigeria were viewed as the most promising markets, followed by Kenya and Ghana.

For the first time respondents considered spending by Africa’s middle class to be a more important driver of growth than minerals and resources. Poor infrastructure and corruption remain the leading inhibitors to growth in the region, survey respondents said.

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