Increasing interest in the transatlantic trade lane

In the company’s capital markets day in September, the CEO of Kuehne + Nagel noted that the company will target the transatlantic container trade to offset slowing Asian exports to Europe. While the Asian market remains strong, Kuehne + Nagel said that there are changes in traffic flows such an increase in import volumes into China.

Indeed, the Stifel sea freight logistics confidence level has been on the rise for the transatlantic lane. In fact, the Europe to US route has increased 13.1 points from contraction in September 2013 to 56.9 in September 2014 while the US to Europe route has increased 3.0 points for the same period to 57.1. This increase in confidence in large part is due to improving economic conditions in the US.

As a result of the increasing confidence along the transatlantic lane, an expansion of services from logistics providers such as Yusen Logistics (UK) has been announced. Recently, the company launched its Transatlantic Export LCL Service. With nationwide UK collections, Yusen’s service provides full coverage of North America, with access to all major inland destinations.

The Stifel survey further noted the six-month expectation for sea freight on the transatlantic lane is also positive. The Europe to US route has increased 8.3 points from September 2013 to 63.5 in September 2014 while the US to Europe route has increased 3.6 points for the same period to 63.6.

Despite the sometimes heated ongoing debate concerning the passage of the Transatlantic Trade and Investment Partnership (TTIP), there is optimism among logistics and transport providers concerning the potential passage of this agreement. According to the European Commission, the TTIP aims at removing trade barriers in a range of economic sectors.

Besides cutting tariffs across all sectors, the EU and the US also want to tackle barriers behind the customs border – such as differences in technical regulations, standards and approval procedures.

As Kuehne + Nagel noted during its capital markets day, trade flows are changing but interesting enough, the transatlantic lane which historically was the largest trade in tonnage and value prior to the rise of Asia, has come almost full circle. Not only can interest in this lane be attributed to improving US economic conditions but also as a potentially less risky lane as compared to those involving emerging markets.

To download previous Stifel Logistics Confidence Index papers, please click here. To take part in this month’s survey please click here.