Friday, November 20, 2015

STIFEL INDEX AT THREE-YEAR LOW

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Stifel logistics index hits 3-year low

The index, which measures confidence in European ocean freight and air freight lanes, has declined for six consecutive months, with the Europe-to-U.S. lane the only glimmer of hope.

   A measure of confidence in the third party logistics industry has declined for the sixth consecutive month in November.
   The Stifel Logistics Confidence Index, which measures sentiment on European ocean freight and airfreight lanes, both inbound and outbound, fell to the lowest reading in three years in November, Stifel said. The index is produced by the investment bank’s logistics and transportation group in partnership with the consultancy Transport Intelligence.
   The monthly decline registered in air freight (0.4 points to 48.9) was more moderate than in ocean freight (2.8 points, amounting to 46.1), the companies said.
   “The continuation of negative macroeconomic trends at the global level, principally emanating from China, represent the principal cause of this,” Stifel and Ti said. “Chinese retail sales were up by 11 percent year over year in October, but the country saw exports fall by 6.9 percent over the same timeframe in value terms, while the import decline was even worse at 18.8 percent.”
   The six-month outlook for both air and ocean 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,” Stifel and Ti said. “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.”
   Last month, the Europe-to-U.S. lane represented the sole bright spark within the index, and that trend continued in the latest index. Stifel and Ti cited the strength of the U.S. dollar against the euro as a likely reason for the relatively positive performance of that lane.