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The sea freight industry looks to be heading for another year of losses, according to industry consultants Drewry, who stated: "Carrier profit margins this year will be influenced by big swings on both prices and costs, but as things stand carriers will lose between $6bn-$10bn this year."
This followed on from the release of Q1 results from a number of carriers, including Maersk Line and NOL. A further negative indication of the market’s performance was the decision of CMA CGM to pull its 18,000-TEU container vessel, the Benjamin Franklin, from Trans-Pacific trade routes, after just five months of service. The company cited weak market conditions as the reason behind this decision, and announced that it would be redeployed to the Asia-Europe trade route.
With regards to the air freight market, the picture was also negative in the first quarter, as global freight tonne kilometers (FTKs) declined by 2 percent compared to the previous year. This was despite capacity growth of 6.9 percent, as measured in available freight tonne kilometers (AFTKs).
Nonetheless, there were positives. Despite the Brussels terrorist attacks, Airports Council International (ACI) reported that freight traffic across Europe was up by 2.1 percent in Q1 2016, when compared to the corresponding period during the previous year. IATA saw FTK growth of 1.3 percent in Europe during the same period, with the Middle East also improving, by 2.4 percent.
Nonetheless, the largest region by market share, Asia Pacific, saw FTK declines of 5.2 percent throughout the same period. North American FTKs also contracted, by 1.8 percent.
The air freight logistics confidence Index gained 0.4 points in May 2016, totaling 50.0. This result is 9.5 points below that for May 2015, and 5.7 points lower than in May 2014.
The present situation results rose by 1.2 points to 47.2. This was chiefly derived from a 3.2-point gain in the Europe to Asia lane, which was nonetheless the poorest performing of the lanes at 42.1. Two of the other three lanes noted gains, with Asia to Europe the exception, amounting to 44.4 after declining by 1.0 points. Europe-to-U.S. continued as the strongest lane, rising 1.5 points to 54.5. U.S.-to-Europe gained 1.2 points to 48.4.
In the expected outlook, the results by lane were almost unanimously negative, aside from a 0.1-point gain on the Europe-to-Asia lane. Asia-to-Europe fell the furthest, with a 1.3-point decline to 51.3. Meanwhile Europe-to-U.S. declined by 0.5 points to 55.3, and U.S.-to-Europe lost 0.7 points to 54.2.
The logistics confidence Index for sea freight declined to 44.5, precipitated by declining confidence in both the present and expected situations. The present situation fell by 0.9 points to 40.7, whilst the expected situation fell 0.7 points to 48.3.
In the case of the former, three of the four lanes saw month-on-month declines, led by a 1.5-point fall on the Europe-to-Asia lane, which has hit its lowest ever point at 32.8. In addition, U.S.-to-Europe declined by 1.3 points to 41.2, whilst Asia-to-Europe fell 0.9 points to 38.7. Europe-to-U.S. was the only lane to buck the trend, with a 0.3 point-improvement over April bringing the total up to 51.5.
The expected situation Index for sea freight also fell, losing 0.7 points against the April total. Whilst a significant 2.9 point gain saw the Asia-to-Europe line rise above 50 points to 50.7. Even greater declines in the Europe-to-U.S. and U.S.-to-Europe lanes, of 3.1 and 3.6 points respectively, offset this. The remaining lane, Europe-to-Asia, saw a 0.2-0point decline, amounting to 43.7.
Source: Transport Intelligence
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