Supply Chain News / Air Cargo / Ocean

Logistics Confidence “Good”

The Stifel Logistics Confidence Index remains above 50.0.

December 17, 2013

Prepared in conjunction with Transport Intelligence, the Stifel Logistics Confidence Index remains above the 50.0 threshold. This is another record level since the introduction of the index in March 2012.

The overall index is a survey-based measure of activity in major European import and export trade lanes. Results are a blended indicator of present conditions and six-month expectations in both airfreight and ocean freight volumes. Sentiment in the present situation continues to trend upward, with December posting readings above normal seasonal expectations for a second month in a row. These results continue to suggest, said Stifel and Transport Intelligence, that forwarding activity in Europe-based trade lanes is recovering from its long slump. However, slow market growth, yield pressure, and excess capacity continue to be a challenge for the overall forwarding market.

Looking at Overall Logistics Confidence (a composite of the current situation and a six-month outlook), the December 2013 index was 19.7 percent higher than last year’s 48.0 reading for the same period and 0.7 percent higher than the prior month

The analysts observed, “For the present situation, volumes in Europe-based lanes were up 2.3 points sequentially, and remained in positive territory after having exceeded the 50.0 threshold last month [November] for the first time since the index began in March 2012. Slow, but continued recovery of the European economy has brought the forwarding markets back within the normal, seasonal volume threshold, in our view. Near term, we expect continued, but modest growth in the European forwarding market.”

Sentiment for current ocean freight volumes remained on par with to slightly above normal seasonal levels on all European trade lanes. Volumes improved on all lanes but one – the Europe-to-Asia lane, which fell 0.9 index points from the prior month to 54.8.

The Asia-to-Europe, Europe-U.S., and U.S.-to-Europe lanes all recorded gains. Asia-Europe gained 7.8 points, reaching 60.2. Europe-U.S. was up by 1.5 points to 53.7. U.S.-Europe rose 2.0 points 56.3. Optimism for the six-month outlook ticked backwards for European export lanes, but continued growing sequentially in Europe import lanes.

European airfreight volumes showed strong sequential growth in lanes touching Asia, but contracted slightly in lanes in and out of the U.S. The analysts commented that strength in Asian markets was consistent with takeaways from recent meetings in Asia, and may have much to do with episodic product launches in November. “Many high-tech shippers, like Apple, Sony, Microsoft, and Samsung, have significant buying clout, and margins on these shipments can be thin,” they commented. On a lane-by-lane basis, Europe to Asia and Asia to Europe grew 3.0 and 7.4 index points, respectively, while the Europe-to-U.S. and U.S.-to-Europe lanes fell 3.8 and 0.3 points, respectively.

Asked if they anticipate strong growth during the holiday season, the majority of respondents (44 percent) said “yes,” while 37 percent indicated they did not expect strong holiday growth. The remaining 19 percent were unsure. Most of the uncertainty centered upon continued economic trepidation, as well as climate conditions and the potential effect on consumer demand.

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