Tuesday, September 24, 2013

New trade patterns generated by emerging markets

Ti’s Emerging Markets Logistics Conference, sponsored by Agility, opened with over 120 delegates in attendance on Tuesday, September 24 in Singapore.  

 After opening remarks by Ti’s CEO John Manners-Bell, CEO and President of Agility, Essa Al-Saleh set the tone for the conference by providing an overview of the Agility Emerging Markets Index.  The index, now in its fourth year and produced by Ti, provides deeper insights into emerging markets based on facts and experiences.

According to Mr. Al-Saleh, China, India, Brazil and Russia continue to dominate but are facing increasing challenges – China is facing labor costs and income disparities whereas India and Brazil are suffering from weak infrastructure and Russia remains dependent on natural resources for trade.

Meanwhile, second tier emerging markets are growing quickly such as Saudi Arabia, UAE, Indonesia, Malaysia and Turkey. As a result, new trade patterns are emerging such as that between China and Africa and smaller niche trade lanes. True, these markets’ growth rates may be high but they are from a smaller base compared to the likes of Brazil, China and Russia.

In fact, according to panelist Deanne De Vries, Agility’s Director for the Africa region, “Africa is growing at a rapid clip. Trade between Asia and Africa was valued at $304bn in 2010 but by 2020 it is expected to grow to $1.5 trillion. In fact, Maersk recently announced it is investing $2bn in 22 container ships to connect West Africa and Asia.”

Among the growth drivers of emerging markets include the removal of trade barriers, population growth, and increase in buying potential and rising infrastructure investments.

However, this growth also comes with challenges such as language and cultural barriers, limited regulatory framework and compliance, poor infrastructure, security concerns and skilled labour force.

Still, Ernst and Young expects  growth in emerging markets to grow 4.6% in 2013 and growing 6.0% in 2015-16, much faster than the advanced economies. In fact, by 2020, it is expected emerging markets will account for 2/3 of global economic growth.

The theme of growth and opportunity continued throughout the day as trends and issues affecting emerging countries were discussed such as changing trade networks, the impact of increasing integration and the rise of the Asian middle class were covered.

The Agility sponsored - conference finishes up on Tuesday as supply chain risk, security and corruption and infrastructure issues and ecommerce are discussed.