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Home » Freight Forwarders Continue to Experience Uncertainty in Their Market

Freight Forwarders Continue to Experience Uncertainty in Their Market

June 24, 2014
Transport Intelligence

Even though the overall airfreight logistics index has improved 4.4 points from June 2013, the June 2014 data suggests the airfreight market still remains fragile, declining 1.9 points to 53.8. The present situation remained the same as for May with Europe to the U.S. the only lane to decline, down 2.0 points to 49.7.

Meanwhile, the six-month expected situation is concerning as it fell 3.7 points to 57.7. All trade lanes declined with the outbound Europe lanes declining the steepest – Europe to Asia declined 4.8 points and Europe to U.S. declined 5.3 points.

Latest figures from IATA (April) suggest that while the freight market improved 3.2 percent above previous year levels, demand has not. Traffic levels in April were slightly below those of January and 1.1 percent lower than what was recorded in March. IATA indicated that European airlines saw demand for air cargo fall by 0.7 percent compared to April 2013. A slower start for carriers as they entered second quarter particularly as GDP growth in the Eurozone was just 0.2 percent in the first quarter.

The sea freight logistics confidence index declined 3.4 points to 56.7. In addition, the index is only 3.3 points higher than for June 2013. Both the present and expected situations noted declines as all trade lanes recorded declines for each situation.

The market continues to be faced with overcapacity and rate fluctuations. With the Chinese authorities rejecting the P3 alliance, carriers are now left scrambling to come up with other solutions. According to Transport Intelligence Senior Analyst Thomas Cullen, the alliance was an attempt to drive down costs and improve margins, something that remains an imperative for all players in the market. In the short term the urgency of such measures may have eased a little as Maersk at least seems to have established some form of cost-competitiveness advantage over its rivals. This suggests that CMA CGM and MSC may be under greater pressure to look for other solutions. For smaller players the pressure remains even greater.

Meanwhile, a potential strike or slow-down for the U.S. West Coast ports may prove disruptive. While the ports of Long Beach and Los Angeles still hold a large share of the Asia-Pacific cargo entering and leaving the U.S., each port has given up some share particularly since the last strike in 2002, a 10-day work stoppage that cost the U.S. government an estimated $1bn a day. Shippers have long memories and have since balanced out shipments to other ports, including those along the East Coast, in Canada and possibly Mexico.

Source: Transport Intelligence

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Air Cargo Logistics Global Logistics Ocean Transportation Transportation & Distribution Technology Transportation Management Pharmaceutical/Biotech
KEYWORDS Air Cargo Airfreight Global Logistics Logistics logistics & supply chain logistics management: transportation and distribution logistics services Ocean Cargo Ocean Transportation Pharmaceutical/Biotech Technology Transport Intelligence Transportation & Distribution Transportation Management
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