Air freight confidence improved in the February edition of the Index, with an optimistic outlook amongst survey respondents. IATA has warned of uncertainty in the market for 2017, however, citing questions over, “stimulative policy interventions in the US and the extent to which impacts of the planned tax reform, infrastructure spending and regulatory overhaul will materialise in 2017.”
Nonetheless, the bulk of the overall Index growth was driven by a surge in sea freight confidence; particularly notable on the Asia to Europe lane.
This route is likely to see increased capacity during 2017, as the 2M Alliance (MSC and Maersk) and the newly-formed Ocean Alliance (CMA-CGM, China Cosco Shipping, Evergreen Line, OOCL) compete for influence. As a result of slot purchase agreements with Hyundai Merchant Marine and Hamburg Süd, 2M announced a new service on the Asia – North Europe trade on February 13th.
Of additional significance within the sea freight industry, two more carriers have now signed up to an e-commerce platform from Alibaba which threatens to disintermediate freight forwarding. February saw CMA CGM, along with Israeli carrier Zim, follow Maersk Line in partnering with OneTouch, a platform which assists Chinese SME exporters with online services such as customs clearance and logistics.
Meanwhile, Amazon has demonstrated its commitment to establishing a tighter control over its air freight operations. On January 31, the company announced plans to build an air hub at the Cincinnati/Northern Kentucky Airport (CVG), which is also home to Deutsche Post DHL Group’s North American regional air hub.
Air Freight
The Air Freight Index score represented a month-on-month improvement of 1.4 points to 52.5 for February 2017. When measured against the previous year’s result, the Index was up by 4.4 points, though it was down by 3.5 against February 2015.
The Air Freight Logistics Situation Index noted a minor month-on-month improvement of 0.5 points to 50.7. Month-on-month changes were characterised by positive performance in trades between Europe and Asia, and negative trades between Europe and the US.
Asia to Europe noted the strongest gain, up 2.9 points to 59.1, followed by Europe to Asia, with a rise of 1.8 points to 50.4. US to Europe was the worst performing of the lanes, with a 2.0 decline to 47.8, whilst the Europe to US lane fell 1.0 to 44.7.
The Air Freight Logistics Expectations Index noted greater growth of 2.4 points, taking it to 54.3. The only lane to record a decline was US to Europe, which was down 2.3 points to 50.9. By contrast, Europe to US grew by 1.0 points to 52.4, whilst Europe to Asia improved by 3.7 points to 54.0. Asia to Europe noted the strongest growth; a jump of 6.2 points taking it to a score of 59.3.
Sea Freight
The Sea Freight Logistics Confidence Index noted a 3.6 point gain for February, rising to 56.6. This result was markedly greater than in February 2016, when the Index hit 46.3, though it was 0.1 points less than the score of the Index in February 2015.
The Sea Freight Logistics Situation Index was up by 3.6 points month-on-month, scoring 55.3. This result was driven by two significant gains; a 7.6 point rise on the Europe to Asia lane, which stood at 52.5 points, and a 5.5 point increase on the Asia to Europe lane, which amounted to 65.3. By contrast, the Europe to US lane gained just 0.4 points to 51.6, and the US to Europe lane reported a similar 0.3 point gain to 49.9.
The Sea Freight Logistics Expectations Index improved by 3.7 points to 57.9 in February 2017. Growth was more balanced than in the Situational Index, with only the US to Europe lane (up 0.3 points to 52.8) noting a gain of less than 3 points. Asia to Europe led the way with a gain of 5.7 points to 62.6, followed by Europe to Asia, which rose 3.8 points to 58.1, and Europe to US, which gained 3.3 points to 55.3.
One-Off Question
The one-off question for February cited four years of decline in container shipping rates to ask participants: “Do you believe the market has now bottomed out and an increase in rates will be observed in 2017?”
Though there was a diverse split of views, a majority (51.6%) asserted that rates will increase. The next largest response group, with 34.4% of participants, stated that rates will stay about the same overall, whilst only 10.9% of survey respondents believed that rates will decrease. The outstanding 3.1% of responses were unsure.
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