The latest Stifel Nicolaus Logistics Confidence Index saw its first positive gain after six consecutive months of sequential decline, according to the investment bank and its partner, the analyst and research firm Transport Intelligence.
The index is a monthly survey of international shippers and forwarders measuring freight activity across several European-based trade lanes.
“Despite the modest positive traction, sentiment continues to underperform normal expectations for this time of year,” Stifel Nicolaus said. “Results reflected continued weakness in air freight, set against improvement in ocean freight. Though forwarders believe that current market volumes remain below the seasonal norm, they continue to expect the picture to be better than the seasonal norm six months from now.”
The index showed that air freight volumes continue to lag ocean freight volumes, and an overwhelming majority of survey respondents (81 percent) acknowledge an emerging trade-down between the two modes.
“It is unclear how much of this trade-down is a result of temporary shipper caution, and how much will stick, but such a trend may pose at least some degree of long-run structural challenge to air freight-biased forwarders,” Stifel Nicolaus said. “Continued weakness in the air freight market seems to confirm our suggestion last month that an uptick in the index was the likely result of episodic tech product launches.
“Over the near term, we believe certain events could bolster volumes, including a strong inventory restocking push in the first half of 2013, a more general positive economic surprise, and the materialization of an ILA port strike, which remains a possibility, in our view. Longer-term though, structural challenges, such as market share encroachment from air express on one side and ocean freight on the other, as well as miniaturization of technology, nearshoring, and supply chain regionalization will likely continue to pressure margins, in our view.”
Lucy Palmer, economist at Ti and compiler of the index, said “despite a slight improvement in the sea freight index for November, results are far from indicating any surge in volumes for the peak season. We have seen some encouraging signs this month, but whether or not this will be the beginning of an upward trend remains to be seen.” - Eric Johnson