The December logistics confidence index remained above the 50-level for both air and sea, and set yet another record high as the overall index figure increased 0.4 points to 57.5 as economies in Europe and the US continue on the road to recovery.
Stifel Logistics Confidence Index
Despite some declines on individual tradelanes, the overall current situation remained good. For airfreight, the current situation for all trade lanes combined increased almost 2.0 points to 52.8, while for Seafreight it increased 2.6 points to 56.3.
For the airfreight current situation, weakness on the US tradelanes was offset by strong gains on the Asia lanes. According to IATA, during October (latest data available), European airlines noted a 4.3% increase in freight tonne kilometers. This momentum appears to have carried over into November, resulting in the good increase seen on the Europe to Asia trade lane.
The strong growth exhibited on the Asia to Europe lane coincided with high tech launches in November from the likes of Sony, Microsoft, Apple and Samsung.
Meanwhile, the US air tradelanes contracted in December resulting in below-50 index levels for each lane. This contraction may be a lingering result of the 2-week US government partial shutdown observed in October.
Stifel Logistics Confidence Index: Air Freight
The sea freight current situation for combined lanes noted a 2.6 point increase to 56.3. All lanes, except one, exhibited increases. In particular, an almost 8.0 point increase for the Asia to Europe lane was noted which indicates improving economic conditions in Europe continue as overall business and consumer confidence appears to be on the rise. The Europe to Asia lane reported an almost 1 point decline as Asian demand for goods seemed to remain muted. Meanwhile, the US lanes noted increases as shippers look to replenish inventory ahead of the January 31, 2014 Chinese New Year.
Stifel Logistics Confidence Index: Sea Freight
Currrent Situation Data
Six Month Outlook
Uncertain global economic conditions resulted in confidence declines for the six month outlook. For air, the combined six month outlook for all tradelanes slipped 1.7 points to 59.9 whereas for sea, the combined six month outlook slipped 1.1 points to 60.9.
Confidence declines were recorded for all air tradelanes except one. This may be attributed to the growing trend of ‘on-shoring’ and rising trade barriers as noted in IATA’s recent forecast as well as a continuation of shifts towards sea freight.
Confidence in most sea trade lanes appears to have held up a bit better versus that in air lanes. Rates remain favorable for shippers as overcapacity persists. Still, the 4.3 point decline along the Europe to Asia tradelane was the primary culprit for the overall decline in confidence for this group of tradelanes. The uncertainty of potential changes within the sea freight sector, such as the possible new alliance, P3, could be attributing to this overall decline.
Six Month Outlook Data
Question of the Month
For this month’s question, we asked survey respondents if they anticipate strong growth during the holiday season. The majority of respondents, 44%, indicated yes while 37% indicated no and 19% were not sure. Interesting to note are several comments related to the uncertainty of the economy and climate conditions which are likely to hamper demand for consumer and retail products. However, one respondent indicated he was already receiving request for proposals to handle last minute charters. A mixed bag for sure, which continues to describe the environment many freight forwarders are operating in. Perhaps one respondent said it best, “In logistics, we never know.”
For more information on the Stifel index and on air and sea freight please visit the Ti Dashboard.
GLOBAL SUPPLY CHAIN INTELLIGENCE (GSCi)