Top 8 emerging logistics markets
Research undertaken for the Agility Emerging Markets Logistics Index records some notable changes in the global rankings. Supply Chain Digital takes a closer look.
Ranking 45 emerging markets based on size and growth attractiveness, compatibility, and connectedness, the Agility Emerging Markets Logistics Index (AEMLI) uses data from a number of globally influential sources. These include the International Monetary Fund, World Bank, UN, World Economic Forum, and International Air Transport Association, as well as a variety of government agencies across the world.
The report says: “The upheaval caused by the global forces that have shaped much of the emerging market landscape over the last 12 months is illustrated within the high degree of fluctuation seen in this year’s ranking.” And that it is “Those best positioned to manage macroeconomic turbulence” that have managed to retain or advance their position in the rankings.
Change in ranking: 1
Mexico’s oil reserves, while substantial, have not had the best luck on the markets. The private sector was invited to participate two years ago, but the industry was immediately hit (and continues to suffer from) the fall in global prices. Mexico not only boasts close proximity to the USA which has ensured that the country has developed trade and infrastructure links with the world’s largest economy, but also low labour costs which has contributed to its rise.
Change in ranking: -3
Close geographical proximity to an economic powerhouse has not been able to save Indonesia from falling three places in the rankings. The government has responded to the fall in commodity prices by attempting to bolster the country’s business environment but, especially from a logistics point of view, the country’s outlook is not as positive as it once was. Coupled with fiscal tightening in the fallout from the commodities slump, Indonesia’s entire infrastructure network remains marred by corruption, poor procedures and underdevelopment.
Change in ranking: -3
Yet another casualty of the fall in oil prices, Brazil has placed outside the top 3 positions for the first time. While the country’s middle class has grown in the past two decades, this has not been enough to prevent job losses in the wake of the commodities slump. This has also compounded the fact that the country’s infrastructure network needs to be upgraded while, at the same time, new frameworks developed to eliminate corruption and save time.
5) Saudi Arabia
Change in ranking: -3
It is perhaps unsurprising to see that Saudi Arabia has slipped down in the rankings given its dependence on oil, but the importance of its economic planning should not be understated. Taking into account its strategic position in the Gulf, the Kingdom is taking measures to exploit this while making concerted efforts to diversify its economy for a post-hydrocarbon future.
Change in ranking: 4
One of the highest growers out of the 45, Malaysia has been undergoing a strong shift towards a diversified economy following years of commodity trade dependence. The country has developed a robust manufacturing base consisting of manufacturing, parts and assembly, as well as a growing palm oil industry.
Change in ranking: 2
India has shifted up two places in the ranking and for good reason; it is the seventh largest economy in the world and is continuously expanding its manufacturing capabilities, most notably through the ‘Make in India’ initiative.
The AMELI highlights perhaps the greatest challenge: “India’s current tax regime effectively creates 29 sub-national markets within the continent-sized nation and requires checkpoints on major transportation lanes that create queues of trucks and delays in transit, while eroding value and efficiency, and adding significant complexity.”
Change in ranking: 2
Coupled with its prime geographic location and substantial capital, the United Arab Emirates is well-positioned to transform itself into a regional hub connecting other oil-rich countries with the rest of the world. The country also has a number of well-known initiatives in place to encourage businesses to set up show, which adds a further incentive.
Change in ranking: no change
China has benefitted from years of substantial economic growth, backing up its endlessly expanding manufacturing sector with suitable investments in airports, roads, railways, and ports. Losing $5 trillion from its stock markets last year has helped to highlight the fact that much still needs to be done to make the logistics environment more robust, particularly through improving the rural/urban divide and by tackling corruption.
Top 10 air freight carriers
10. Cargolux Group
The Luxembourgish freight carrier Cargolux Group (comprised of Cargolux Airlines and Cargolux Italia, established in 2008) remained in the number 10 spot, with a total reported FTK (Freight Tonne Kilometer) equaling 7.45 bn, which represents a 7.7% expansion year-over-year. The carrier group currently operates a fleet of 30 aircraft (26 through Cargolux Airlines and an addition four through Cargolux Italia), primarily variants of the Boeing 747.
9. Korean Air
Headquartered in Seoul, Korean Air provides cargo and passenger services to over 100 destinations in 44 countries. The carrier fell from eighth place in the previous year’s rankings, with a total FTK of 7.66 bn, representing a 7.1% decrease year-over-year. Korean Air reported a net revenue of $10.7bn in 2017, also reporting a return to profitability for the first time in five years, according to Forbes.
8. Air France-KLM
The Air France-KLM freight carrier group was founded in 1947. The group is comprised of Air France, KLM, and Martinair, and is based in Paris, France. Falling from seventh place in the Freight 50 rankings, the carrier reported a total FTK of 8.13 bn, which represents a 9.2% decrease in traffic year-over-year. The group reported a net revenue of $29.08bn at the end of 2017 and is ranked #28 on Forbes Magazine’s list of Best Employers.
7. Qatar Airways
Qatar Airways, the nationally owned airline of the Kingdom of Qatar is based in Doha, and ascended two places in the Freight 50 rankings, with a total FTK of 9.22 bn, representing a 19.6% increase in comparison to the previous financial year. The carrier’s Cargo division recently launched facilities at its hub in Doha to provide a “Seamless Cool Chain”, comprised of a “2,470 square metres Climate Control Centre situated at the airside… equipped with segregated temperature-controlled sections for storing pharmaceuticals and perishables.” This end-to-end supply chain control is expected to further improve Qatar’s standing as a leader of Middle Eastern air freight.
6. Lufthansa Group
Based in Cologne, Germany, the Lufthansa Group (comprised of Lufthansa, Swiss, Austrian, and Brussels Airlines) fell from the fourth position in the Freight 50, with a combined FTK of 9.46 bn. While this represents a 1.6% increase in traffic, year-over-year, the carrier was forced down the list by drastic growth from other German freight company, DHL. According to Forbes, Lufthansa’s revenue and net profits ($41.5 bn and $2.78 bn, respectively) in 2017 are both the highest reported by the company over a ten-year period.
5. Cathay Group
The Cathay Group (composed of Cathay Pacific Airlines and Dragonair) is headquartered in Hong Kong and its Cargo division accounts for 21% of the airline’s total revenue. The company’s first dedicated cargo flight between Hong Kong, Frankfurt, and London, was established in 1981, according to the official site. Now, Cathay Pacific’s Cargo Division services over 47 destinations worldwide. The carrier fell from the fourth position on the Freight 50 ranking, as its total FTK fell by 3.6%, to 10.21 bn. According to Forbes, Cathay Pacific experienced a second year of unprofitability, although the airline’s asset portfolio reached a record high in 2017, with a net value of $24.1bn.
4. DHL Express Group
Operating as the largest European carrier group, DHL Express Group (composed of DHL Air, DHL International, Air Hong Kong, Polar Air Cargo, ABX Air, Southern Air, Aerologic, and EAT Leipzig) rose two positions in the Freight 50 rankings. The carrier reported a total FTK of 10.56 bn, which represents an increase of 15.1% year-over-year. In 2018, at the Farnborough Air Show, DHL Express announced the purchase of 14 Boeing 777s, part of a new strategy to modernise its fleet.
3. UPS Airlines
Headquartered in Atlanta, Georgia, UPS Airlines is part of United Parcel Service, Inc. Founded in 1908, UPS is the oldest company in the Top Ten, and retained third place in the Freight 50 rankings, with a total FTK of 11.26 bn. This represents a 3.9% increase year-over-year. The Company as a whole reported a net revenue of $67.7 bn, according to Forbes, representing a continuation of a ten-year trend of continuous growth. Forbes also ranks UPS among the world’s top 100 most-innovative companies, and the world’s top 50 most-valuable brands.
2. Emirates Skycargo
The state-owned air freight carrier for the UAE, Emirates Skycargo remains in second place on the Freight 50, with a total FTK of 12.27 bn, representing a 0.4% decrease year-over-year. The carrier’s central hub in Dubai allows its 259-strong fleet to reach over 1.5 bn consumers in under eight hours. Current purchasing plans are underway for Emirates Skycargo to almost double its fleet size. According to Albawaba, “In response to increasing demand from its customers, Emirates SkyCargo introduced a range of air transport solutions specific to industry verticals including Emirates Pharma, Emirates Wheels and Emirates Fresh.” Emirates Wheels has transported close to 150 cars per month since the program’s inception.
1. FedEx Express
Founded in 1998, FedEx Express is both the youngest and largest air freight carrier worldwide, with a total FTK of 15.71 bn. Haulage decreased by 0.9% year-over-year, while revenue increased to $60.5 bn in 2016, and again to $63.8 bn in 2017, continuing an eight-year growth trend. FedEx employs 395,000 members of staff, with FedEx Express operating across twelve transport hubs globally. The carrier purchased an additional 24 Boeing 777 variants in 2018, maintaining their company’s position as the largest airline in terms of cargo haulage.