Confidence among European freight forwarders has deteriorated for the third consecutive month, according to the latest Stifel Nicolaus Logistics Confidence Index.
The investment bank’s transportation and logistics research group has partnered with U.K.-based research firm Transport Intelligence to develop the index, which measures freight activity across several European-based trade lanes.
“Results for July show continued sequential deterioration in both the present climate and the six-month outlook, although the decline is more pronounced in air freight than in sea freight,” Stifel Nicolaus said.
The bank did add that future expectations remain positive, above the index threshold value of 50 where expansion is still expected.
In the ocean freight market, current expectations declined 4.6 percent sequentially from an indexed reading of 45.4 to 43.3. Sentiment for the six-month expected outlook fell too, from 56.8 to 55.5.
“But for the first time since the index's inception in March 2012, the logistics confidence metric, which averages the present and expected situation, fell below par,” the bank said. “Air freight saw similar results, with current, expected, and the average ‘logistics confidence’ readings posting sequential declines of 3.4 percent across the board.”
Stifel Nicolaus said the current European debt situation continues to weigh on European demand for imports, adding a recovery is unlikely until the first quarter of 2013 at the earliest.
“Volumes remain tepid-to-weak, and carrier price increases are likely to have squeezed freight forwarding margins this quarter (in ocean), but we believe most of the bad news has been priced-in - just no real upside near-term,” the bank wrote. “The current market is, in our view, the perfect storm of negativity for forwarders, given weak volumes and the ocean margin squeeze, but the latter situation should begin to roll over shortly, in our view, as should the former, if confidence index expectations translate to growth in six months.” - Eric Johnson