Declines in the December Stifel Logistics Confidence Index indicate a possible stormy 2015 as both present and six month situations declined. The overall index was 1.4 points less than that of November and 0.1 points lower than December 2013 reading. This may be indicative to the current economic environment. For example, economic slowdowns are being reported throughout Europe while China’s government injects additional money into its economy to jump-start growth and Japan slips into a recession.
Present situation
The present situation for air freight which slipped 0.5 points to 53.6 suggests economic slowing may indeed be the culprit. IATA’s latest monthly air freight data cautions the rate of growth in the Chinese economy continues to slow down and may impact on air cargo. Meanwhile, the organization noted the Eurozone economy only just avoided recession in the third quarter. Poor business confidence and the ongoing sanctions against Russia will continue to weigh on European cargo in the months ahead.
For the Stifel Index, all lanes except Europe to US noted weakness. The increase of 4.6 points to 52.1 was the first time since May 2014 that this lane was above the 50-level which notes expansion. Encouraging economic signs from the US may be one of the reasons for this improvement. However, the Europe to Asia lane slipped 3.0 points to 47.0, a contraction.
Meanwhile, sea freight declined 2.9 points to 53.6 with all lanes declining. Slowing economic conditions, industry capacity concerns, volatile rates and the US west coast port situation seem to be weighing on freight forwarders. Europe to Asia lane recorded the largest decline of 5.0 points to 52.1 while Europe to the US was the only lane to see an increase, rising 0.5 points to 54.5 for the current month.
Present situation
6-month expected situation
The outlook does not appear to be positive for either air or sea. The sub-index for air freight fell 1.1 points to 55.8. Compared to December 2013, this sub-index is 1.9 points lower. The Asia to Europe lane recorded the biggest decline for the month, 5.2 points to 56.7. Meanwhile, the US to Europe lane was the only lane to note a gain, climbing 1.9 points to 59.6 for the month.
For sea freight, the sub-index declined 1.2 points to 64.3. Despite the decline, sentiment still seems to be strong. Compared to December 2013, the sub-index for sea freight is up 3.4 points. For the current month, the Asia to Europe lane noted the biggest decline of 3.2 points to 67.0 while the Europe to US lane, the only one to report a gain for the month, climbed 0.7 points to 66.8.
Expected Situation
Monthly industry question
Survey participants were asked what is the most important factor in selecting a forwarding partner? A majority, 68.4%, indicated service quality and consistency while 18.1% noted price followed by technology and visibility with 9.0% of the responses and scale and geographic footprint with 4.5%. Not surprisingly many comments noted that all of the attributes were equally important. But, one respondent who noted he was with a provider said that although technology and visibility and service quality and consistency are usually stated as important, when it actually comes down to the selection and utilization of a provider it is price that is the most important most of the time.
To take part in the latest Stifel Logistics Confidence Index Survey:
https://www.surveymonkey.com/r/?sm=CGZq%2f9JCkpSIFm6hKMIk4A%3d%3d
To download the full ‘Stifel Logistics Confidence Index – December 2014 document please use the following link:
