THE logistics industry in three regions—Asia, America and Europe—is having a hard time now for it to repeat last year’s positive performance.
In August the Stifel Logistics Confidence Index fell to 54.1 points, thus, making it the third time for the decrease this year since June and the lowest since September 2013, on the back of fierce competition, volatility and overcapacity.
At 51.3 points, the Logistics Situation Index also dropped, yet, slightly by 1.8 points.
Even though the current situation in sea freight that saw improvements over July’s score was vital in easing the decline and gave a bright spot in a month, it remains a concern overall.
What is more worrying is the Logistics Expectations Index, which fell by three points to 56.9—the lowest since January 2013.
Citing the volume statistics that showed a 3.5-percent hike from January to June of this year compared to the same period last year, International Air Transport Association (IATA) Director General and CEO Tony Tyler said that it has been “a disappointing first half of 2015, especially considering the strong finish to 2014.”
Hence, the falling six-month outlook suggests it’s unlikely to see a similarly strong finish to 2015.
According to IATA, airfreight volumes in June continued a slow pace of expansion as weak global growth and decelerating trade activity had volumes rose merely at a rate of 1.2 percent—just enough to repel claims of stagnation.
This dragged down the Logistics Situation Index for airfreight to its lowest this year, falling 4.1 points to 51.3.
It is noted that lanes out of Europe, among the three regions, were the most poor to perform, with that of Europe to Asia dropping by 7.2 points to 48.4, while Europe to the United States shed 5.6 points to 57.8.
A loss of 2.4 points led the US to Europe lane to go back under the neutral 50 mark to 48.3, as that of Asia to Europe had a drop of 1.3 points to 50.6. Projections are disappointing as Logistics Expectation Index for airfreight lost 3.2 points to 57.3.
The biggest decline was in the Asia to Europe lane, down 4.5 points to 58.2, followed by Europe to Asia lane, dropping by 3.7 points to a six-month low of 55.8.
Shedding 3.1 points, the US to Europe lane decreased to 55.1 in August, while the reverse Europe to US lane fell 1.2 points to 60.1 for the year—the lowest mark since October 2014—there’s still probably some optimism on its year-on-year performance, which put it 7.7 points ahead of August 2014.
Contrary to airfreight’s underwhelming performance, Logistics Situation Index for sea freight in August managed to be on the positive track with a 0.5-point rise driven by growths in the three of the four lanes reviewed.
The best performer was the Asia to Europe lane that increased by 3.4 points to 56.4, seconded by the US to Europe lane that surged by three points to 47.8. The Europe to Asia lane added 0.9 points to hit the 51 mark, and a second consecutive month above the neutral 50 level.
Still facing the industry’s challenging situation, the Europe to US lane declined sharply, decreasing by 5.4 points to 48.5 and indicating a contraction for the first time since March 2014.The strength of the greenbacks had exports from North Europe to North America balloon by 8.4 percent over the first five months of 2015. Significant capacity increases on the lane during that period, nevertheless, are threatening to outstrip demand.
Across the board, declines during the month of August happened again in the Logistics Expectation Index for sea freight, as 2.7 points were deducted to score 56.4.
A fall of 3.4 points to 58.1 was recorded in the index for the Europe to US lane, thus, leaving a concern on overcapacity for the remaining months of this year.
Also scoring 58.1, the Asia to Europe lane fell short of 3.3 points last month. The US to Europe lane shed three points to 51.1, while a drop of 1.1 point resulted a finish of 57.8 for the Europe to Asia lane.
The Stifel Logistics Confidence Index survey in August asked the respondents about the proportion of the customs clearance and consulting-trade management services markets that were controlled by freight forwarders.
The results showed that freight forwarders control 47.8 percent of the customs clearance market and 25.4 percent of the consultancy/trade management services market.