LONDON, U.K.–For the sixth month in succession, the Stifel Logistics Confidence Index declined. This trend resulted in the November Index score falling to the lowest registered for three years, said the report.
The monthly decline registered in air freight was more moderate than that witnessed in sea freight; the former was down by 0.4 points to 48.9, whilst the latter dropped 2.8 points, amounting to 46.1. The continuation of negative macroeconomic trends at the global level, principally emanating from China, represent the principal cause of this. Chinese retail sales were up by 11% year on year in October, but the country saw exports fall by 6.9% over the same timeframe in value terms, whilst the import decline was even worse at 18.8%.
The six month outlook for both air and sea freight fell at the same rate as the present situation, declining 1.6 points from October to total 50.2. When compared to the figures measured in previous years though, it is significantly lower. The Logistics Expectations Index is down 12.4 points against November 2014, and 11.6 points against November 2013. The source of the decline is clear when expected performance is broken down. Sea freight fell by 2.7 points to 48.1 in November, whilst air freight fell by only 0.4 points to 52.3, remaining above the 50 point mark. The reason for this is the systemic overcapacity that has come to characterize container shipping, which is driving carriers to consider desperate measures in order to survive. A stark reminder of how damaging the situation has become was Maersk’s decision to lay-up one of its 18,000 TEU Triple-E class vessels in what Drewry has described as a “wake up call” for the industry, the report added.
Last month, the Europe to US lane represented the sole bright spark within the Index, and this has continued, at least with regards to the present situation. The Europe to US sea freight trade lane grew by 3.8 point month-on-month, which brought it to 55.8. The air freight Index also recorded growth on this lane, albeit at 0.1 points to 56.4. Nonetheless, in each case the Europe to US lane remains the only one in the present Index which stands above the 50 point mark. One potential reason for the performance of this trade lane is that the strength of the US dollar against the Euro has promoted transatlantic exports.