Ti’s latest Global Logistics Monitor suggest increases in freight
tonnage will be modest at best for second and third quarters due to slowing
Asian economies, recession in Europe and slowing economic growth in the US.
The global economy emerged from first quarter in a
precarious position as the Asian economy slowed, an increasing number of
European countries entered recession and growing concerns of slower economic growth
for the US. Indeed, based on transportation and logistics providers’ commentary
from first quarter earnings, expectations for second quarter and into third
quarter are not high as many providers expect little increase in freight at
best.
Data compiled in the latest Global Logistics Monitor
suggests this may be the case. While first quarter is typically a slow one,
March data was a mix bag, varying among the regions.
For the most part, ports ended the quarter on a positive
note. Imports particularly picked up for many US ports while European ports
struggled with low increases in containers. Asian ports noted good throughput
in March after a slow start to the year due to the Chinese New Year. However,
as capacity continues to be removed from the market, rates are on the increase
in an attempt to recover from last year’s free fall.
Airfreight continues to struggle amid high oil prices and
shifts to other modes. Declines have been noted by Asian and European airline
associations – 4.5% (March) and 1.9% (February) respectively. Airports are also noting declines in these
two regions while US airports were a surprise in March. Some US airports such
as Miami, Chicago and Los Angeles all noted increases in cargo for the month of
March however, this increase may be due to the launch of new electronic
products from Apple and Samsung and thus may not carry over into April.
As we move into the second
quarter, oil prices have declined but remain above $100 a barrel; this will
continue to negatively affect the airfreight market. Also, capacity is entering
the market as air cargo providers take possession of new fleet, this along with
declining yields will further exacerbate an already difficult situation.
Future demand for air and ocean
freight will depend on such economic indicators as manufacturing activity.
Although weak, Asia noted some improvement in manufacturing activity while the
US reported another surprising increase of 1% in April. Europe, however, already
suffering from its economic woes, noted sharp declines. As a result, any
notable rise in freight demand will likely come from the US and/or Asia.
As such, for logistics and
transportation providers in search of opportunities in this uncertain environment,
domestic markets appear to be a possibility as US NAFTA and intermodal trade
continues to expand. Intra-Asia trade, although highly competitive, is another
growth spot and finally, Europe, despite its economic situation, domestic
opportunities such as road freight exist.
Ti's Global Logistics Monitor is a monthly report available for subscription. It analyzes the latest global, Asian, European and US economic and transportation/logistics data and utilizes up-to-date charts and graphs also available for subscription via Ti's Dashboard service.