The Logistics Confidence Index has risen by 0.9 points month-on-month, and with scores of around 55 points since February, appears to have reached a stage of normality following a long preceding period of poor performance.
The Air Freight Index continues to climb on the back of Present Situation performance, illustrating the renewed strength of the air cargo industry. However overall growth of air freight was restricted due to poorer Expectations Index readings for volumes in six-months’ time.
During August, IATA reported that the air freight industry has witnessed the largest half-year increase in growth since 2010, off the back of stronger global economic performance. Asia, Europe and North America all witnessed double-digit growth in FTKs over the previous year, and whilst the organisation predicts that volumes relating to restocking have peaked, sustained growth nonetheless appears likely.
Within Sea Freight, the Index saw similar growth rates, albeit derived from the Logistics Expectations Index, rather than the Present Situation.
There has been relatively soft demand in the last few weeks of peak season, with both Drewry and the Shanghai Containerised Freight Index reporting a decline in spot prices. Further signs that the sea freight industry appears some way from normalization include the postponement of general rate increases by carriers, which were expected to take place at the start of September.
Looking ahead, there remain reasons to be optimistic, particularly given the uptick in global economic growth. Chinese manufacturing rose in August, as per the Caixin-IHS Markit manufacturing Purchasing Managers Index, which suggests a positive knock-on impact on export volumes.
Air Freight
The Air Freight Index registered a month-on-month rise of 0.8 points to 57.4 for August 2017. This score reflected a year-on-year improvement of 8.2 points, and a 24-month gain of 3.1 points.
The Air Freight Logistics Situation Index noted a month-on-month improvement of 3.0 points to 56.3. Whilst the Asia to Europe lane declined by 1.0 to 55.1, this was more than offset by the performance of the three other lanes. Growth was primarily led by the Europe to Asia lane, which rose by 6.3 points to 58.4, whilst the US to Europe lane also grew by a substantial 5.0 points, to 56.3. In addition, Europe to US grew 2.1 points to 55.2.
Air Freight Expectations were far less sanguine, with confidence falling 1.3 points overall, to 58.4. Half of the lanes recorded slight improvements, whilst the other half displayed moderate declines. Europe to US fell furthest, with a contraction of 3.6 points to 52.1, whilst Asia to Europe fell by a similar percentage, down 3.2 points to 63.4. Meanwhile, Europe to Asia gained 0.5 points to 58.9, and US to Europe was up 0.8 to 58.1.
Sea Freight
The Sea Freight Logistics Confidence Index recorded an overall score of 53.8, having risen by 0.9 points against the previous month’s score. The result was 5.4 points greater than the score registered in August 2016, and level with that recorded in June 2015.
Standing at 51.0, the Sea Freight Logistics Situation Index declined by 0.3 points against the previous month. This result occurred following declines in half of the four individual lanes, despite a strong improvement in the US to Europe lane, which increased 6.3 points to 45.5 points. This result was offset by the combined declines of Europe to US, which fell 4.9 points to 46.8, and Asia to Europe, which contracted by 3.2 points to 57.3. The remaining lane, Europe to Asia, noted a slight improvement of 0.7 points to 51.9.
The Sea Freight Logistics Expectations Index totaled 56.6 points, having risen by 2.2 against the July result. This outcome was derived from gains in three of the four lanes, led by US to Europe, which rose by 5.7 points to 52.5. Furthermore, Europe to Asia increased by 2.9 points to 53.5, whilst Europe to US gained 1.3 points to 51.2. The only lane to note a decline was Asia to Europe, which fell 1.4 points to 66.5.
One-Off Question
This month’s one-off question centered upon the economic performance of the Eurozone, asking: “Have you experienced increasing growth in volumes to or from the Eurozone over the course of the last quarter?”
The answers were split into two parts, first addressing growth in volumes inbound to the Eurozone, and secondly, growth in volumes outbound from the Eurozone.
In relation to the first part of the question, 41.4% of respondents, the largest response segment, reported that their volume growth over the last quarter was unchanged. Nonetheless, over a third of respondents (34.5%) stated that inbound volume growth has increased over this time, versus 13.8%, who stated that their volume growth has declined. The remaining 10.3% of respondents were unsure.
The second part of the question demonstrated a more polarized picture, with 41.4% of respondents stating they had seen an increase in outbound volume growth, versus 20.7% who witnessed outbound volume decline. Compared to inbound volumes, a smaller proportion (27.6%) saw no changes in outbound growth. Again, the remaining 10.3% stated they were unsure.
Source: Transport Intelligence, September 5, 2017
Author: Alex Le Roy
