The Stifel Logistics Confidence Index entered 2014 on a positive note. Despite a month-to-month 0.9 point decline in the overall Index reading to 56.6, the Logistics Confidence Index has remained above the 50-level for 12 months, meaning the market continues to exhibit a healthy confidence in air and sea freight forwarding.
The decline in the Index reading was the result of the present situation index declining from December. This index declined 2.8 points, although the expected situation index rose 1.1 points. The decline seems to indicate an air of caution exists for the global freight forwarding market.
Stifel Logistics Confidence Index
Air Freight Confidence Index
The air freight confidence present situation slipped from December. Trade lane data was mixed with increases noted for the US to Europe and Asia to Europe lanes while declines were noted for Europe to the US and Europe to Asia lanes.
The mixed data indicate a weak, but improving economy. The Eurozone’s manufacturing activity is improving across the region, albeit at a spotty rate. For December, Germany, Italy and Spain noted increases in export orders. However, France, the region’s second largest economy continues to struggle. UK’s manufacturing activity along with new orders slipped slightly for December as well.
IATA’s latest monthly data, November, indicated a strong month for European carriers, with demand increasing 8.0% year-over-year, probably due to new high-tech product launches. However, similar to manufacturing and economic activity, the organization notes recovery in the Eurozone will likely remain slow and fragile with growth in the region to be uneven across countries.
Meanwhile, the expected situation index increased 1.3 points to 61.2. Three of the trade lanes that are monitored, Europe to the US, US to Europe and Asia to Europe all had good increases. However, Europe to Asia had a 2.1 point decline from December. The expected decline in the Europe to Asia trade lane may be the result of ongoing concerns over Asia’s economic condition.
Stifel Air Freight Confidence Index: Present Situation
Sea Freight Confidence Index
Overall, the present situation index declined 4.4 points to 51.9. Month-to-month declines in the present sea freight confidence situation were recorded for all trade lanes. The decline in the present situation index could be attributed to ongoing attempts to raise rates in an environment in which too much capacity exists. In late November, member liners of the Transpacific Stabilization Agreement announced a round of rate hikes. The first of the two-stage rate increase was enacted in mid-December for shipping lines operating from Asia to the U.S. for late holiday season shipments and another increase is planned January 15th the Chinese New Year period in January. Not only have rates increased on the Asia to US trade lane but by the first week of January, rates have climbed on all trade lanes.
Forwarders, however, appeared more optimistic for the 6-month outlook. The expected sea freight situation climbed 0.8 points to 61.7 points with all trade lanes noting increases from December. Confidence appears high for a much improved second half of 2014.
Stifel Sea Freight Confidence Index: Present Situation
Monthly Question
With the beginning of the New Year, survey respondents were asked if they expected significant improvements in 2014. The majority of respondents (45.0%) indicated yes while 39.5% indicated no and 15.5% were unsure. Comments indicated that US will likely lead global economic improvements for the year and some comments indicated growth would be on par with that of 2013 until second quarter and then after that, significant improvement is anticipated.
For more information on the Stifel Logistics Confidence Index please visit the Ti Dashboard.
