Business is feeling the effects of inflation, geopolitical tension, port congestion and transportation costs, with those in South America and Africa facing a more negative business outlook, according to research conducted by Economist Impact.
The research was commissioned by DP World, part of the World Logistics Passport, and surveyed executive-level participants representing businesses in 26 countries. In South America and Africa, executives have a more negative outlook on the impact of transportation costs on business outlook.
For example, 42.5 percent and 49.5 percent of executives surveyed in South America and Africa respectively identified higher transport costs as the top limitation for increasing exports. This is compared to 19.9 percent for those in China, 27.5 percent in India and 25 percent in the UAE.
Mahmood Al Bastaki, general manager of the World Logistics Passport, said: “This new data tells us that different countries and regions are having remarkably different experiences of the same supply chain pressures. With export prospects for businesses in South America and Africa more likely to be impacted by rising transport costs, the private sector is in need of solutions that will help increase efficiencies and lower these costs to help ease inflationary pressures.”
Improvements in port and logistics infrastructure are cited as a key route to trade growth – for imports in particular. Improved Customs processes have been shown to be important in helping speed the flow of goods and keep trade moving and reducing time-to-trade – therefore boosting cost efficiency.
The report noted: “While the end of globalisation has been heralded as an expected consequence of geopolitical tensions between Washington and Beijing, the research revealed that companies are instead further diversifying their global trade networks rather than retrenching or regionalising – presenting opportunities for markets able to capitalise on diversifying procurement strategies.”
47.9 percent of executives around the world are seeking more diversity of supplier base regardless of location, with approximately three in five executives saying that choosing suppliers and markets based on the lowest possibility of being caught in a geopolitical dispute is ‘absolutely critical’.
This has been a boon for economies such as Vietnam and Mexico, which even pre-pandemic had benefitted from increased diversification of manufacturing bases due to geopolitical tensions. This trend was highlighted by project logisticians interviewed for HLPFI’s upcoming May/June 2022 edition, which includes reports on both Southeast Asia and Mexico and Central America.
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