Global corporations are in a wave of restructuring their supply chain operations, ranking India, Europe, and North America ahead of traditional powerhouse China as destinations executives expect to move production to in 2024 and onwards, according to a report from Agility, the Kuwait-based supply chain services provider.
The data comes from the firm’s “15th annual Agility Emerging Markets Logistics Index,” a survey of 830 logistics executives that builds a snapshot of industry sentiment and ranking of the world’s 50 leading emerging markets.
That research showed that 40% of respondents expect their businesses to be less reliant on China in five years. Their leading factors in decisions to de-risk in China include: difficulty of doing business; U.S.-China trade friction; a slowing economy; and the harshness of China’s COVID restrictions.
In global trends, the survey found that shipping and logistics costs that soared during the COVID pandemic and its aftermath are still climbing but at a slower rate. And more than 63% of survey respondents say their companies continue overhauling supply chains by spreading production to multiple locations or relocating it to home markets and nearby countries. China, the world’s leading producer, stands to be most affected: 37.4% of industry professionals say they plan move production/sourcing out of China or reduce investment there.
As they search for new locations to shift their supply chain and production business, many companies are looking in a new direction—Africa. Nearly 62% of global logistics professionals in a recent survey say their companies are planning additional or first-time investments in Africa, planning for expansion despite concerns about emerging markets risks. “This is the most optimism we’ve seen about Africa in the 15 years of the Index,” Agility Vice Chairman Tarek Sultan said in a release. “Africa’s population will double by 2050, when one in four people on the planet will be African. International businesses realize that the time is now for Africa -- they need to invest, establish their brands, and develop the next generation of African talent if they’re going to ride the coming wave of growth.”
Overall, China and India were 1 and 2 in the 50-country Index rankings. But as a region, Africa had 14 different countries that scored rankings: Egypt (20), Morocco (22), South Africa (24) and Kenya (25) were the top performers, followed by Ghana (31), Nigeria (36), Tunisia (37), Tanzania (41), Algeria (42), Uganda (43), Ethiopia (45), Mozambique (46), Angola (47), and Libya (50). Egypt has Africa’s highest-ranked domestic logistics opportunities -- 13th in that category; South Africa (15) was tops in Africa for international logistics; Morocco (12) has Africa’s best business fundamentals; and Kenya (9) is Africa’s most digitally ready.
Agility provides supply chain services and infrastructure with 45,000 employees across six continents. It runs the aviation services company Menzies Aviation; global fuel logistics business Tristar; logistics park operator across the Middle East, South Asia, and Africa Agility Logistics Parks; and a commercial real-estate company developing a mega-mall in the UAE, UPAC. The company also offers customs digitization services, remote-site infrastructure services, defense and government services, and e-commerce-enablement and digital logistics.
Gartner, Inc.