Pessimism in logistics markets not reflected in the global economy

Optimism is in short supply across the logistics sector. The latest numbers from the Airports Council International report falling volumes of freight across all regions except the Middle East. This is very much in keeping with data across other freight markets which show demand becalmed over the past half-year.

Yet, it might be unwise to be too influenced by the present state of the logistics sector. The major Western economies are certainly not so depressed. Attention has been given to the dire state of Eurozone growth, but this is a deceptive number. The economies of southern Europe continue to contract, whilst the Netherlands is also in a poor state. However, Germany – by far the most important European economy – is showing highly respectable figures with expansion led by consumer demand as well as industrial production, leading to quarter-on-quarter growth of 0.7%. Even the French economy grew by 0.5% quarter-on-quarter, whilst outside the Eurozone the British recovery appeared to accelerate with a quarterly growth revision to 0.7%.

Elsewhere, the condition of the US economy seems to be uncertain with recent demand for consumer durables and investment goods disappointing. Yet, over the past two quarters, the US economy experienced growth of 1.7% as compared to the same period in 2012, with the underlying indicators such as unemployment and property sales looking reasonable. Even Japan has been prodded into life with exports driving an expansion of well over 2% per annum.

There is a distinct possibility that the appearance of moderate growth in the developed world will be cancelled out by the effects of problems in the big emerging markets. Brazil’s growth has been low for some time, whilst Russia is presently seeing a marked deceleration and India is experiencing acute volatility in its currency. The big concern is that China will not be able to stabilise its economy at the present 7.5% growth rate.

Despite the clouds on the horizon for the emerging markets, the improving picture in the developed world implies that world trade and thus demand for logistics services will increase over the next twelve months. The level of growth may not be at the 5% mark seen up until a couple of years ago, however it is unlikely that there will be no growth at all.