Global economic doldrums slowed emerging markets in 2012, but those countries remain bright spots for investors, manufacturers and logistics executives, still wary of the uncertain outlook for the United States and Europe.

Emerging markets felt the effects of the continuing global slowdown in 2012 but generally weathered it better than developed countries that are their main markets. The 45 emerging markets featured in the 2013 Agility Emerging Markets Logistics Index grew at an average of 4.4 per cent. In contrast, the U.S. economy grew at 2.2 per cent while the EU contracted 0.2 per cent.

Heading into 2013, enthusiasm for emerging markets is strong among trade and logistics professionals, even as they indicate they are rethinking the importance of low-cost labor, facing tougher choices over how and where to source, and beginning to look beyond the so-called BRIC countries of China, Brazil, India and Russia.

Seventy-three percent of those surveyed feel prospects for emerging markets in 2013 are “good” or “very good.” The figure is about the same percentage as a year ago – but the number who feel ‘very good’ is up sharply, to 22 per cent from 14 per cent. The global outlook is cloudier: 46 per cent expect modest global growth while 47 per cent say global GDP will be flat.

“Business confidence is at a premium in an uncertain global economy,” said Essa Al-Saleh, President and CEO of Agility Global Integrated Logistics. “This year’s Index – in terms of the hard data and industry sentiment – is encouraging when it comes to the promise of emerging markets. It shows that they remain resilient and will continue to offer some of the best opportunities for near-term and long-term business growth.”

“The Agility Emerging Markets Logistics Index, now in its fourth year, shows once again the importance of emerging markets to the development of the global logistics industry,” said John Manners-Bell, Ti’s Chief Executive. “Despite weakened demand for exports in Europe and the United States, confidence in the developing world is high, and investment continues apace. Not all markets display the same level of potential, though, and the Index clearly shows which countries are ‘open for business,’ and which must do much more if they are to realize the benefits that integration in the global trading community can bring.”

Brazil disappoints, tantalizes

Brazil held its No. 3 spot behind China and India in the Index country rankings, despite slumping manufacturing and exports. Business and financial leaders have complained that Brazilian policy makers sent confusing signals. Brazil failed to move past India in the rankings despite outperforming India in two of the three main Index metrics. Brazil topped India in market compatibility – a mix of key economic and social development indicators – and connectedness, which measures the overall efficiency of transportation infrastructure and the customs/border procedures. Trade and logistics industry professionals are extremely optimistic about Brazil. It ranked alongside China as the top country where they intend to expand in the next five years and tied with China for best growth outlook among the BRIC countries. Brazil trailed China and India among countries that industry experts believe will “emerge as major logistics markets in the next five years.”

Mexico gets a fresh look, Chile slips

Mexico is benefiting from increased demand for automotive parts in the United States and a resurgence of interest from companies that want to near-source production for the U.S. market. Mexico moved to 9th place in the Index rankings after slipping for two years. It continues to be hampered by poor economic and social development indicators that hurt its “market compatibility” ranking, which was the lowest among the top 16 countries in the Index. Industry professionals asked to name countries that would emerge as major logistics markets in the next five years ranked Mexico No. 8, but they ranked Mexico 10th when it came to countries where they intend to expand.

Chile fell two places to 11th in the Index. Growing concerns about income distribution and the lack of strong shipping connections hurt its score.

Argentina jumped three spots to No. 19 in the overall rankings. It was among a group of countries – Morocco, Kazakhstan and Ukraine – that leapfrogged Uruguay, Bahrain, Tunisia and Peru.

Trade lanes shifting

In ocean freight moving from the US/EU to emerging markets, the EU-Brazil lane was by far the biggest volume gainer in 2012, a year in which volume fell or was relatively flat across all other major lanes.

The primary air lanes between the US/EU and Latin America – US-Brazil, EU-Brazil and EU-Mexico – were all down. Shipments from Paraguay showed strong increases of small totals. Among the top air cargo lanes from emerging markets to the US/EU, Columbia-US (No. 4) and Chile-US (No. 6) were the only volume gainers. Volume along the Peru-EU (No. 8) and Mexico-EU (No. 10) lanes declined or was flat.

Where they rank

Brazil (3) and Mexico (9) were the top-ranking emerging markets countries from the Americas. The others in the top 45 were Chile (11), Argentina (19), Uruguay (21), Peru (24), Venezuela (35), Ecuador (37), Paraguay (40) and Bolivia (44).