Little Change in Overall Shipping Confidence
Thursday, April 17, 2014

Little change occurred in the latest monthly Stifel Logistics Confidence Index. Slipping only 0.1 points from 57 in March to 56.9 this month, the overall index did however favor improvements in the present situation increasing 1.6 points to 51.8. However, expectations for the next six months dimmed falling 1.8 points to 62 for April.

The monthly airfreight data is such an example. For April, the present situation increased 0.5 points to 49 whereas expectations declined 2 points to 61.3. The present situation indicates a current market in contraction due to the index figure below the 50-level. However, compared to April 2013, the present situation has improved 7 points.

By lane, all lanes except U.S. to Europe, are below the 50-level but compared to the same month in 2013, much improvement has been made. Europe to Asia has improved at 8.1 points higher than 2013 followed by U.S. to Europe up 7.1 points. In fact, for the current month, the U.S. to Europe lane climbed above the 50-level for the first time since the Stifel survey begun.

The airfreight expected situation declined on all trade lanes except Europe to Asia which noted a 1.2 point increase to 62. Etihad Cargo, a division of Etihad Airways, has noted increases in this trade lane in particular. “We are seeing an adjustment of flows between European exports in China, for example, Chinese middle class consumers buying European goods and that’s creating a market for car spares and different equipment moving into China,” said David Kerr, Vice President of Cargo at Etihad Airways.

The overall sea freight logistics confidence index increased 0.6 points to 58.6 due to increases in the present situations. Similarly to airfreight, the expected situation declined 1.6 points to 62.6.

While overcapacity and erratic rates continue to plague the sea freight market, the outlook maybe uncertain as the Hapag Lloyd-CSAV was agreed and the P3 Alliance received approval by the U.S. government during March. Perhaps additional alliances maybe forthcoming as a recent BusinessWeek article suggested that Hamburg Sud would possibly be interested in reviving merger plans with Hapag-Lloyd AG.

For the present situation, all lanes recorded increases with the U.S. lanes increasing the greatest – Europe to U.S. up 3 points to 51 while U.S. to Europe increased 2.8 points to 52.7 points. All trade lanes are now above the 50-level, noting stronger confidence. Meanwhile all lanes noted declines for the expected situation with U.S. to Europe noting the biggest decline at 2.2 points to 58.1 points.

Finally, in our one-off question for the month, we asked what is most hindering the global airfreight market recovery? The majority of the survey respondents noted a shift to 0cean freight (38.8%) followed by growth in belly capacity (23.5%), oil prices (16.3%), nearshoring (14.3%) and lastly protectionism with 7.1% of the total responses. An interesting comment and one that should also be considered as a possible hindrance was “Advanced supply chain technology is bringing better visibility, leading to diminished need for expedited delivery.”


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