Good day,
As analyst Amit Mehrorta recently said on Saturday on FreightWaves Radio, “The first and foremost fundamental view that we have at Deutsche Bank and our research franchise is that the state of the freight market is very strong. [However,] the capital markets and the financial markets can diverge from what’s happening on Main Street. What the market is afraid of is a slowdown of growth.”
With that in mind, here’s an overview of what’s happening today:
Asian stocks have edged higher. Positive sentiment was kept in check, however, after a Wall Street advance fizzled with investors finding little in Federal Reserve Chairman Jerome Powell’s Congress testimony to extend the recent rally. Meanwhile, the dollar held overnight losses and Treasuries steadied, according to Bloomberg reports. Equities posted modest gains in Sydney, Seoul, and Tokyo. Earlier, the S&P 500 Index dropped in the final hour of trading to close in the red after Powell warned that growth looked uneven and policy makers will be patient on interest-rate adjustments. The pound extended gains spurred by a promise from U.K. Prime Minister Theresa May for a vote to again delay Brexit if her proposed deal fails.
Investors are still grappling with a host of uncertainties from further developments on trade to Brexit that could rein in a recovery in global equities from December lows. At the same time, President Trump is in Hanoi for a second summit with North Korean leader Kim Jong Un. Elsewhere, crude oil climbed, reversing a loss from earlier in the week that were spurred by criticism from Trump that prices are too high.
To heighten uncertainty across global markets and businesses, Trump signaled that he is moving toward peace with China in a trade standoff. The president’s relationship with his own trade negotiator is now showing signs of strain, according to the New York Times.
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Quotable:
“We sort of felt there was this tipping point coming where a lot of software and services companies would have an opportunity to thrive in the industry, which because it’s so immense – it touches everything from manufacturing to agriculture to all the major industries of consequence. We thought it would be bigger than the first wave of the internet.”
—Chris Stallman, partner at Fontinalis Partners, talking about why the firm has invested in the transportation space
In other news:
FedEx partners with Walmart, Pizza Hut to test last-mile delivery robot
FedEx Corp this summer plans to begin testing a robot to handle home deliveries for partners ranging from Walmart Inc to Pizza Hut. (Reuters)
US Gulf-Asia VLCCs drive global tanker patterns
The US Gulf is exporting record crude volumes as shale oil find new markets in Asia and Europe. (Lloyd’s List)
IIoT market to expand at a CAGR of 24%
TMR report cites growing adoption of advanced manufacturing techniques and increasing number of strategic partnerships as key drivers of growth of the global Industrial Internet of Things market. (Modern Materials Holding)
Kuehne+Nagel full-year profits helped by “outstanding” airfreight
Kuehne+Nagel reported increases in revenues and profits last year as its airfreight division “continued its outstanding development.” (Air Cargo News)
Panalpina shareholders launch battle for more control as merger talk fills the air
Panalpina’s shareholders have begun a new public battle for more control of the company, as it grapples with potential tie-ups with DSV or Agility. (The Loadstar)
Final thoughts:
The hesitancy for carriers to move capacity to the spot market and their limited exposure is why there is a lagging relationship between carrier revenues and spot market rates. Contract rates may be relatively flimsy in terms of guaranteeing much of anything by either shipper in terms of volume or carrier in terms of capacity, but they do establish a relationship between the two. Managing the balance between honoring contracts and taking advantage of near-term market conditions has become increasingly important as the market dynamic shifts again in 2019.
Hammer down everyone!