Air freight upbeat as overall logistics sentiments underwhelm

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pk-gpoThe Stifel Logistics Confidence Index has reached its 14th consecutive month of negative confidence in November, with the numbers suggesting this will continue into 2017, according to research service provider Transport Intelligence (Ti).

As reflected in the index, global trade remains at a low ebb, as it has for some time. Efforts remain underway to address overcapacity in the container shipping industry, with the Baltic and International Maritime Council reporting at the start of November that containership demolition has officially reached an all-time high, with ships totaling a capacity of 500,000 TEUs having already been scrapped this year.

Nonetheless, most of this demolition is accounted for by now-obsolete Panamax vessels, which continue to be replaced by bigger ships. Drewry reported in October that the next two years will witness “annual fleet growth of between 5% and 6% and many more ultra large container vessels (ULCVs),” though the consultancy claims the market has bottomed out.

Air freight is the notable bright spot at present, said Ti. While the International Air Transport Association stresses that the long-term condition of the industry is not good, the organization reported a 6.1% year-on-year increase in September, exceeding a capacity increase of 4.7% over the same timeframe.

This, said the report, tallies with the results of the Situational Index for Air Freight, the one bright spot in the Stifel Logistics Confidence Index this month, which recorded an improvement in the present market.

For November, the Air Freight Index amounted to 49.3, down 0.6 points against the previous month’s score of 49.9. Stacked against the results for prior years, the score was 0.4 points greater than in November 2015, but 7.6 points below the total measured in November 2014.

Change in the Air Freight Logistics Situation Index was positive, with an overall month-on-month gain of 0.7 points to 47.4 recorded. Of the lanes covered, Europe to Asia was flat month-on-month, but this was the exceptional result. The Asia-to-Europe and U.S.-to-Europe lanes both noted the biggest month-on-month points gains, while Europe to U.S. showed a slight improvement.

The Air Freight Logistics Expectations Index remained above the neutral 50 points mark, but fell by 1.9 points month-on-month to 51.1, offsetting the gains noted in the Present Situation Index. U.S. to Europe was the sole lane to improve month-on-month, as Asia to Europe posted the deepest decline, followed by Europe to U.S., then Europe-to-Asia lane.

The Sea Freight Index, on the other hand, recorded an overall total of 47.4 for November 2016, having lost 1.6 points against the October result. Compared to November 2015, the index was up by 1.3 points; however, the score was 13.6 points below that recorded in November 2014.

The Sea Freight Logistics Situation score declined by 1.3 points month-on-month to 44.8, marking a departure from the preceding five months of consecutive increases. The Present Index score of the Europe-to-U.S. lane was the sole month-on-month gainer for the entire Sea Freight Index in November. In marked contrast, Europe to Asia contracted the most, with Asia to Europe and U.S. to Europe trailing close behind.

Sea Freight Logistics Expectations fell by 1.9 points month-on-month to a neutral score of 50.0. The index was characterized by declines across all lanes, led by the Europe-to- U.S. route. Losers for the period as well were U.S.-to-Europe lane, Asia to Europe, and Europe to Asia, the latter recording the slightest month-on-month decline for the period.

Photo: Sabung.hamster