LONDON, U.K.– The Stifel Logistics Confidence Index fell for a third consecutive month in August. With the Index now at 54.1, the first eight months of 2015 have been marked by general decline. Indeed, not only is the Index now at its lowest point of the year so far; fierce competition, volatility and overcapacity have all taken their toll and driven the Index to its lowest point since September 2013, said the Index.
Providing most concern seems to be the six-month outlook – a fall of 3.0 points brought the Logistics Expectations Index to 56.9, its lowest point since January 2013. On the release of volume statistics which showed a 3.5% year-on-year increase over the first half of 2015, IATA’s Director General and CEO noted that it had been “a disappointing first half of 2015, especially considering the strong finish to 2014.” The sentiment appears to be shared, and the falling six-month outlook suggests it’s unlikely we’ll see a similarly strong finish to 2015.
The Logistics Situation Index showed an easing in demand too, although the fall was slighter, resulting in a decline of 1.8 points to a mark of 51.3. That the current situation in sea freight saw gains over July’s score was significant in arresting the pace of decline, however, and provided a bright spot in a month that paints a concerning picture overall, said the Index.
Airfreight volumes in June indicated a continuation of slowing tonnage growth, according to IATA. Weak global growth and declining trade activity saw volumes increase at a rate of just 1.2% for the month, a margin barely enough to repel claims of stagnation. As a result, the Logistics Situation Index for airfreight fell 4.1 points to 51.3, its lowest point of the year. No individual lane saw an increase, but it was lanes out of Europe that performed most poorly to weigh on the Index. A fall of 7.2 points saw the Europe to Asia lane record a score of 48.4, while the Europe to US lane lost 5.6 points and fell to 57.8 as a result. A loss of 2.4 points saw the US to Europe lane fall back below the neutral 50 mark to 48.3, as the Asia to Europe lane showed a drop of 1.3 points to 50.6.
The Logistics Expectation Index for airfreight made for troubling reading for those hopeful of a repeat of last year’s strong finish as it shed 3.2 points to a mark of 57.3. The Asia to Europe lane led the decline with a fall of 4.5 points to 58.2, while the reverse Europe to Asia lane didn’t fare too much better as it recorded a decline of 3.7 points to a six-month low of 55.8. The US to Europe lane lost 3.1 points as it hit 55.1 in August. Although the Europe to US lane fell 1.2 points to 60.1 for the year, its lowest mark since October 2014, there is still perhaps some optimism to be found in its year-on-year performance which places it 7.7 points ahead of August 2014.
A 0.5 point rise in the Logistics Situation Index for sea freight provided a positive note in August as three of the four lanes examined recorded growth. Leading the way was the Asia to Europe lane which rose 3.4 points to 56.4. There were similarly positive signs on the US to Europe lane which gained 3.0 points, but at 47.8 conditions undoubtedly remain challenging. The Europe to Asia lane added 0.9 points to reach 51.0 and a second consecutive month above the neutral 50 mark. Weighing heavily on the present situation, however, was the Europe to US lane which declined sharply, falling 5.4 points to 48.5 and indicating a contraction for the first time since March 2014. The strength of the US dollar saw exports from North Europe to North America grow by 8.4% over the first five months of 2015, but significant capacity increases on the lane during that period are threatening to outstrip demand.
August’s familiar pattern of across the board declines returned in the Logistics Expectation Index for sea freight as 2.7 points were lost and a score of 56.4 recorded. Overcapacity on the Europe to US lane appears to be a concern over the remaining months of 2015 as a fall of 3.4 points saw the index for the lane decline to 58.1. Following a fall of 3.3 points, the Asia to Europe lane also saw a score of 58.1 recorded for August. The US to Europe lane fell 3.0 points to 51.1 points, while a fall of 1.1 points meant the Europe to Asia lane finished August at 57.8, said the report.