Freight Carriers Still Hurt By Low Rates, Weak Market

Market remains weak for both ocean and air carriers despite some slightly positive statistics about rising confidence in the freight-forwarding sector.

Companies involved in the international freight business don't need to be told this, but according to this Forbes article based on new statistics from the latest Stifel Logistics Confidence Index,  the market remains weak for both ocean and air carriers despite some slightly positive statistics about rising confidence in the freight-forwarding sector.

The latest Stifel Logistics Confidence Index, which measures freight activity across selected European trade lanes, appears to reveal “a healthy confidence” in air and sea-freight forwarding, remaining above the 50 threshold for 12 months now.

On a month-to-month basis, however, the index showed a 0.9-point decline in logistics confidence for December. Air freight was up 0.1 points, but sea freight fell 1.8 points. The “present situation” index was even worse, dropping by a total of 2.8 points — down 1.1 points for air freight, and 4.4 points for sea.

“The decline seems to indicate an air of caution exists for the global freight forwarding market,” said Stifel Nicolaus and Transport Intelligence, who collaborate on the confidence index.

All major trade lanes saw drops  in confidence for sea freight. Carriers are still struggling to raise rates in a time of overcapacity. Previous hikes have been scuttled by container lines’ insistence on flooding the market with new and bigger ships, supposedly to bring down unit operating costs. With large amounts of ship space available carriers are begging for business and have been forced to back off their plans for boosting rates.

The Stifel Logistics index had  mixed results on the air freight side, reporting increased carrier and forwarder confidence on U.S.-to-Europe and Europe-to-Asia trade lanes, with declines from Europe to the U.S. and Europe to Asia. The report’s authors said the results reflected “a weak, but improving economy.” Manufacturing across the Eurozone is picking up at a “spotty rate.” Activity in France and the U.K., in particular, was down.

The most recent Stifel Nicolaus confidence survey asked respondents whether they expect to see significant improvements in 2014. Forty-five percent said yes, 39.5% no and 15.5% were uncertain. Some believe first-quarter growth will be roughly equal to that of 2013. But “confidence appears high for a much improved second half of 2014,” the authors said.

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