Logistics sector in emerging markets faces fierce competition

The development of emerging markets in the decades ahead will fundamentally change world trade patterns creating opportunities and challenges in the logistics sector, according to PricewaterhouseCoopers’ latest Transportation and Logistics 2030 report. (See page 1) Some of the highlights of the report demonstrate the dominance of China and India in the seven-country line-up which includes Brazil, China, India, Mexico, Russia, South Africa and Turkey. • Free Trade Zones and resulting increases in foreign direct investment are expected to lead to above-average growth in the logistics sector in emerging markets. FTZs are in place in almost all emerging markets with 600 in the approval process in India. The Asean-China Free Trade Agreement represents the world’s third largest free trade area after EU and Nafta. • Emerging markets will continue to face challenges around law enforcement and were the worst offenders in Transparency International’s Bribe Payers’ Index. (See graph). • Market growth will see the entry of multinational logistics service providers leading to fierce competition followed by consolidation and the number of logistics providers is expected to fall sharply. PwC analysis shows that 69% of companies that were taken over during the second quarter of 2010 were located in Asia and Oceania. • Logistics service providers from emerging markets are unlikely to gain significant market share in developed countries. Instead they will concentrate on domestic markets and the strong growing neighbouring countries.