Tuesday, March 12, 2013

Improvements noted in global economy - but is it sustainable?

Has the global economy turned the corner? Perhaps – manufacturing activity appears to be picking up throughout Asia, Germany and the US and even demand for airfreight may finally be improving. Still, it is too early to tell, particularly as it is always difficult to compare year-over-year data for the months of January and February because of the lunar Chinese New Year holiday.

However, while China’s manufacturing activity stumbled a bit for February, as noted by the China Customs Administration, its exports for the first two months of 2013 grew 24% while imports grew 5%.  The EU, US and the ASEAN countries were China’s top trading partners. Exports to the EU increased nearly 3.2% while exports to the US and the ASEAN countries grew 14.8% and 22% respectively. Exports of high-tech products grew 26.2% year on year.

Even in the midst of Europe’s economic squalor Germany appears to be a shining light as new orders and business confidence are on the rise.

And lastly, US manufacturing picked up steam in February as new orders jumped 4.5 points from January.

As manufacturing data points to a positive start for 2013, airfreight maybe seeing signs of improvement. The Association of Asia Pacific Airlines reported a 4.3% increase in tonnage for the month of January. This was probably due to the traditional demand for such transport leading up to the temporary closing of Chinese manufacturing to celebrate the New Year. In fact, according to Cathay Pacific General Manager Cargo Sales & Marketing, “Demand was generally quite robust out of our key Hong Kong and Mainland China markets in January, though we didn’t see any significant pre-Chinese New Year rush as in previous years.”

While demand for airfreight will likely be sluggish for February thanks to the Asian holiday, March may see demand rise due to rumored launch of high tech gadgets.

Improving economic signs and rising demand have also resulted in the building and expansion of distribution centers in Asia, the US and Europe. DB Schenker, DHL, UPS and Kerry Logistics are among the various logistics providers that are undertaking this task. Many of these facilities appear to be multi-customer focused whereas others are focused on industry-specific facilities.

The first two months of 2013 appear positive for the global economy as well as for logistics and transportation providers. Although the lunar Chinese New Year makes data comparison difficult, it is likely there may indeed be shoots of growth scattered across the world.