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Predictions 2016: Agility CEO Tarek Sultan

Predictions 2016: Agility CEO Tarek Sultan

Despite a mixed global economic picture, there are plenty of reasons to be optimistic

We certainly live in interesting times – with both huge challenges on the horizon and many reasons to feel excited about the future. From a supply chain perspective, there are three big global trends that I am keeping an eye on as we move into 2016.

Volatility – and opportunity – in emerging markets

The global economic picture continues to be mixed, with sluggishness in China and Europe casting a long shadow. Add to this the falling prices of oil, which affects key emerging economies in the Middle East, and geopolitical instability in the region more broadly, and many fellow business leaders are cautious about the prospects of growth in 2016.

I continue to be optimistic, however. In the medium term, there are myriad signs pointing to economic recovery and growth – highlighted by the American Federal Reserve’s recent decision to raise interest rates for the first time since the financial crisis struck almost seven years ago. A sneak preview of the annual Agility Emerging Markets Logistics Index, which will be published in January, shows us that although some of the bigger emerging markets economies like China and Brazil may be experiencing temporary setbacks, there are many “rising stars” that are continuing to generate opportunities. Countries like Indonesia, Malaysia, the United Arab Emirates, and Saudi, as well as the African continent (home to some of the world’s fastest growing economies), represent huge potential.

From an Agility perspective, emerging markets continue to represent the largest contribution in terms of our headcount, revenue and profitability. Our market leadership in Asia and the Middle East, and increasing footprint in Africa, represent an early understanding of the potential of these markets. We will continue to invest in developing our services in emerging markets – including deepening our contract logistics and domestic distribution footprint – to serve the needs of growing consumer classes. In Africa, for example, Agility is building a series of distribution parks that will offer guaranteed power, security and connectivity to multinationals seeking to connect to Africa, and African companies that are growing their global relationships. The first Agility Distribution Park will open in Ghana in Q1 of 2016.

Innovation and the potential for digital disruption in the supply chain industry

Major shifts in technology are happening right now, in mobile, cloud, robotics, big data, the internet of things, and sharing economy business models – all of which have the potential to profoundly reshape global supply chains and the way the logistics industry has traditionally operated.

Again, while others may see this as a potential risk, I see this as a huge potential opportunity. Investing in systems and technologies allow companies like ours to offer our customers more flexible and cost-effective ways to manage their supply chains.

Here’s an example: for three decades, although production and sourcing gravitated from developed markets to emerging markets where labor and materials were cheaper; storage, consolidation and distribution remained close to end markets near points of sale in the Americas and Europe. Now, Agility is able to offer customers the opportunity to store their goods at origin until it’s time to move them to stores, avoiding the high cost of storage in mature markets. How is this possible? Global 3PLs now provide status tracking and inventory management remotely through connected systems, even in low-cost countries. In other words, just-in-time shipping is reliable, predictable and easy because of carrier connectivity and tools that offer visibility into shipping.

This is an area Agility will continue to sharpen its focus on in 2016. We believe that our customer-facing solutions are already market leading, but will continue to invest in transforming our company through technology – it’s the only way to thrive.

Optimism created by global climate change agreement

The recent agreement on climate change reached at the Paris Climate Change Conference is a potential game changer, as it brings $100bn annually to the efforts to better manage environmental issues through development and poverty eradication.

I see this agreement as a positive sign on multiple fronts. First, it represents a commitment to cooperation in a world that sometimes seems increasingly fractured. Second, it will unleash the development of new technologies and business opportunities, particularly in emerging markets. And third, it represents an important step towards a more sustainable global economy that will hopefully see fewer risks of disruptions from catastrophic floods, earthquakes, volcanos and natural disasters.

Agility has long been committed to giving back to shareholders, customers, employees, partners, the communities in which we operate, and the planet in which we live. We have offered pro bono logistics support in more than 30 major natural disasters in the world, invested in 1000+ community programmes in 70 countries that have reached more than one million people, and work closely with customers to green supply chains and think and act green. We look forward to being a small part of a coordinated global effort to mitigate environmental risk, while simultaneously improving economic development. It’s a double and mutually reinforcing proposition: do the right thing for future generations, and increase opportunities for trade and growth in the process.

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