Latin Nations Improve Business Fundamentals in Global Index

Mexico, Chile, Uruguay show strength in annual logistics rankings

BAAR, Switzerland – February 9, 2021 – Latin American countries broadly improved the competitiveness of their business climates in 2020, a surprise finding in the 2021 Agility Emerging Markets Logistics Index.

The Index, in its 12^th year, looks at the logistics strengths and competitiveness of the world’s 50 leading emerging markets countries. In the area of business fundamentals, only Chile at No.5 ranks near the top, but eight Latin economies moved up in that category in the 2021 Index: Uruguay (12), Mexico (20), Peru (24), Colombia (27), Ecuador (28), Brazil (36), Paraguay (40) and Bolivia (41).

In the overall annual Index, Mexico ranks as the world’s No. 7 emerging market. Chile is 12^th, and Brazil is 16^th. Outside of the top 20, the remaining Latin American nations are scattered: Uruguay (23); Peru (25); Colombia (27); Ecuador (35); Argentina (36); Paraguay (43); Bolivia (44) and Venezuela (50).

Argentina slipped five spots in the 2021 Index and was alone among Latin countries in experiencing a sharp drop in its business fundamentals ranking, where it fell three places. In addition to pandemic-driven economic damage, Argentina was plagued by many long-standing economic problems as it restructured nearly $65bn in debt owed to private investors. 

International logistics opportunity and potential is highest in Mexico, which ranks No. 3 in that area of the Index despite seeing significant challenges raised by the COVID-19 pandemic and doubts about the direction of its economic policies. The country’s economy was battered by a contraction of 9% in 2020, according to IMF projections.

Domestic logistics opportunity and potential are highest in Brazil at No. 8, down three places from last year. Uruguay rose three spots to No. 25 in domestic logistics as well.

Venezuela, engulfed in political and economic turmoil, ranks last among the 50 Index countries for international logistics opportunity and 49^th for business fundamentals.

The Index ranks 50 countries by factors that make them attractive to logistics providers, freight forwarders, shipping lines, air cargo carriers and distributors. The top 10 are: China, India, Indonesia, United Arab Emirates, Malaysia, Saudi Arabia, Mexico, Vietnam, Qatar, 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.

Along with the Index, Agility surveyed more than 1,200 supply chain professionals for their views on the disruption caused by the COVID-19 pandemic. A majority, 52%, say they do not foresee a global economic recovery until 2022 or beyond, which includes South America. Those surveyed believe Asia, North America and Europe will rebound this year.

2021 Index and Survey Highlights

• Even when they consider easing dependence on China, few companies plan to bring manufacturing jobs back home. Only 7.8% of industry executives say relocating production from China would mean reshoring to their home countries. Vietnam (19.6%), India (17.4%) and Indonesia (12.4%) are the leading choices for relocation, followed by Thailand (10.3%) and Malaysia (9.6%), according to those surveyed.

• While total cost is driving overall shifts in production supply chains, today low-cost labor is barely a consideration for emerging markets investment — with only 2.2% of industry executives saying it’s important. Executives say the most important factors are government bureaucracy and regulation (25.8%); infrastructure quality (14.1%); and supply of skilled labor (8.0%). As companies examine new production locations, they say their biggest concerns are inadequate infrastructure (14.5%) and additional cost (13.5%).

• Of the executives surveyed, 19.1% say 2020 sales decreased as a result of the pandemic. But only 9.4% say COVID-related employee safety measures have decreased efficiency.

• The sustainability movement has momentum. More than a quarter (26.9%) of executives surveyed say their companies are boosting implementation of environmentally sustainable practices in the wake of the pandemic. Another 45.2% say their plans are unchanged, suggesting they have no intention of retreating from sustainability commitments.

• The most competitive emerging markets are manufacturing powerhouses in Asia and the business-friendly economies in the Gulf region. From Asia, China (1), India (2), Indonesia (3), Malaysia (5) and Vietnam (8) made the top 10. Gulf nations United Arab Emirates (4), Saudi Arabia (6), Qatar (9) also ranked in the top 10. Mexico came in at 7^th; Turkey was No. 10.

• Nigeria improved its competitiveness more than any country in the 2021 Index, moving up five spots to No. 30, the highest climb for any market in Sub-Saharan Africa in the 12 years of the Index. Nigeria improved its relative position in all three areas of the Index: business climate, international logistics and domestic logistics.

• The countries improving their domestic logistics strengths the most were Malaysia, Nigeria, Vietnam, Iran, Uruguay, Myanmar and Cambodia. The biggest strides in international logistics came from Morocco, Ukraine, Kenya, Myanmar and Paraguay.

Transport Intelligence (Ti), a leading analysis and research firm for the logistics industry, compiled the Index.

John Manners-Bell, Chief Executive of Ti, says: “The strength of the Agility Emerging Markets Logistics Index has always been to differentiate between those emerging markets which demonstrate resilience in the face of adversity and those which are more fragile. This year is no exception. Although some – especially China and Vietnam – have been able to rebalance around domestic industrial and consumer demand, the majority are still highly dependent on international markets and investment. A lack of global demand, combined with the breakdown of air and sea logistics networks, has had severe consequences for these economies and societies. As the COVID crisis finally unwinds over the next two years, those most resilient will bounce back the fastest. Inevitably, those which have failed to embrace market, trade, governmental and social reforms will be hardest hit by the fallout from the pandemic.”

2021 Agility Emerging Markets Logistics Index: www.agility.com/2021Index