HSBC forecasts lower freight volumes

   Transportation analysts at HSBC have cut their shipment flow forecasts in the face of a weakening global economy.
   “The outlook for volumes remains weak. Growth, industrial production and exports from China are likely to remain weak this year, and this will dampen demand for freight. We now forecast that containers, airfreight box and parcel volumes will contract in 2012,” the bank said in a research report published Wednesday.
   HSBC said it is forecasting about a 3 percent decline in containers, airfreight box and parcel volumes in 2012 compared to a previous forecast of 4 percent growth. It notes this compares with a contraction in volumes of about 8 percent in 2009.
   It also predicted “rates will remain weak, particularly if operators are unwilling to cut capacity,” said the report published Wednesday. “To add to the pain, high fuel costs will continue to squeeze margins.”
   HSBC said it is cutting company forecasts and is assuming that 2012 EBIT (earnings before interest and tax) on the universe of nine logistics and shipping companies it follows will fall by 5 percent instead of rising 7 percent as it had previously predicted. It says its conclusion is that “we predict a fairly weak year for earnings but a 2009-style rout is unlikely.”
   Among the comments on the stocks of individual companies in the 64-page report, HSBC highlighted:

• UPS, which it downgraded from overweight to neutral. It said while UPS’s “fundamentals are sound,” the impact of slowing China exports is a worry for the first quarter and the company’s valuation is unattractive.
• Deutsche Post-DHL, which it rates as overweight. The company “looks good value to us, its dividend yield is attractive and well supported, and stress-testing of forecasts for all our companies indicates that DP-DHL’s earnings could prove more resilient than most.
• Mærsk, which it upgraded to overweight from neutral. It said “the near-term outlook for containers is weak, but the supply-side is starting to shake out and some operators may fail. Mærsk’s strong market position, big new efficient ships and balance sheet should help it prosper.” It also said Maersk’s oil, gas and offshore services business are are “trading well and provide a stable cash platform, compensating for more volatile shipping.”

   Other companies highlighted in the report are DSV, FedEx, Kuehne & Nagel, Panalpina, Post NL and TNT Express.