HSBC: Lowers forecast for air, sea freight

HSBC: Lowers forecast for air, sea freight    Investment bank HSBC is predicting 2009 will see the sharpest decline in demand for air and sea freight in 30 years.
   A report from Robin Byde, global sector head of shipping and logistics, said HSBC now believes demand for air freight will fall 20 percent year over year instead of the 7 percent drop it had previously forecast. Sea freight volumes are now expected to drop 10 percent instead of 2.3 percent.
   “Global freight flows remain weak. Whether this is a more permanent unraveling of global supply chains (i.e. de-globalization) is open to debate; our view is that global sourcing is too well-established,” the report said.
   HSBC said it expects earnings will fall by about 35 percent in 2009 when compared to 2007, but it thinks “2009 is the trough with a modest recovery in 2010”.
   “A slew of recent data from the airlines, container shipping lines, forwarders and ports indicates that first quarter freight flows are as weak as in the fourth quarter 2008,” it added.
   HSBC pointed to several pieces of positive news, including the $250 billion in trade finance pledged by the Group of Twenty nations last week, which it said should benefit the freight and logistics industry.
   It also said there may be an increase in merger and acquisitions noting firms like Deutsche Post-DHL, FedEx, Kuehne + Nagel and Panalpina “are debt-free or have net cash.” Such deals could potentially boost earnings.