Air freight optimism drives increase in Stifel Logistics Confidence Index

Air freight optimism resulted in a 1.0 point gain in the overall Stifel Logistics Confidence Index, rising to 57.3 for February. In comparison, this month’s overall index is up 0.3 points from March 2014 and 4.8 points from March 2013.

Indeed, in IATA’s Economic Performance of the Air Transport Industry report, lower oil prices and stronger worldwide GDP growth are the main drivers behind its expected improved profitability for airlines as well as slight increase in cargo tonnage for 2015. But, while the real cost of transporting cargo is expected to decline by almost 6.0% this year, IATA cautions that cargo revenues will still likely be 5% lower than in 2010.


Stifel Confidence Index: Total

Air Freight

The air sub-index noted a 1.9 point increase in the present situation and a 2.8 point gain for the six month outlook. Even though there was a strong increase in the present situation, individual lanes were mixed with lanes destined to Europe declining while those from Europe rose. In fact, the Europe to US lane registered a healthy 3.9 point increase to 60.3 and Europe to Asia increased by 2.4 points to 47.1. The Europe to Asia lane still notes contraction, however, the 2.4 point gain offers encouragement that things may be turning around for this lane.

For the six-month outlook, one lane noted a decline, US to Europe, slipping 1.9 points to 55.8. Meanwhile, the other three lanes reported strong increases with Europe to the US gaining 3.1 points to 65.5; Europe to Asia up 3.9 points to 64.4 and the biggest gain was noted for the Asia to Europe lane, up 5.5 points to 60.0, an indication of improving economic conditions perhaps.


Stifel Confidence Index: Air Freight

Sea Freight

Sea freight remains sluggish which is likely due to ongoing industry issues of capacity and congestion at ports. The overall sub-index remained the same as February, with the only difference being a 0.1 point rise in the present situation.

For the present situation, lanes were mixed with Asia to Europe and Europe to US declining. However, the declines were offset by increases in Europe to Asia, up 1.6 points to 50.2, and US to Europe, up 1.4 points to 50.4. This was the first month this year that US to Europe index was above the 50-level.

The six-month outlook remained unchanged and similar to the present situation, lanes were mixed. Declines were noted on the US lanes with Europe to US falling 1.3 points to 63.3 and US to Europe declining by 3.1 points to 52.9. Meanwhile, the Asia to Europe lane increased by 1.4 points to 60.4 and Europe to Asia increased by 2.3 points to 63.2.


Stifel Confidence Index: Sea Freight

Monthly Question

We asked survey participants if there had been any abnormal rate volatility on the Asia-Pacific trade lane. Most respondents, 38.5%, noted there had, but that it was temporary, while 28.4% said that volatility was due to structural changes. Some 33.0% indicated the rate volatility seen on the Asia-Pacific trade lane was normal.

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