DHL forwarding unit unveils trade barometer index

The predictive trade index is designed to help the market understand the direction of ocean freight and airfreight trade growth.    DHL Global Forwarding on Thursday unveiled a new predictive trade index built around the collection of data from the movement of intermediate goods and raw materials.
   The index, called the DHL Global Trade Barometer, is meant to help the market understand the direction of ocean freight and airfreight trade growth globally, looking two to three months forward. It uses data collected by Seabury Consulting, now a part of Accenture, in seven countries across 10 commodities.
   The data is refined using a proprietary Seabury algorithm to provide directional guidance as to the growth of global trade. DHL said it will provide the trade barometer by country at a later date.
   The forwarding unit has been piloting the barometer internally, benchmarking it against DHL’s own in-house data, and decided to launch it publicly to help customers, and the market at large, understand where trade growth was headed.
   Tim Scharwath, chief executive officer of DHL Global Forwarding, said during a briefing in Manhattan Thursday that the index could be used to assist with pricing, capacity and modal decisions.
   “Customers can optimize their supply chains and identify new opportunities for business,” he said. “It helps us internally, so if we see there’s strong airfreight growth out of China, it’s helped us decide to contract for capacity earlier.
   “It could be pricing, capacity-buying decisions, which trade lanes to use. It will be interesting for us to find out how this will develop in the future. The reaction from the market is important, and to see how we can support customers.”
   Scharwath said the release of the trade barometer is part of a broader campaign to showcase DHL’s data and digital proficiency, as customers grapple with new technological imperatives and new startup tech vendors that emerge.
   “It’s to show them we as a company are able to do these things around digitization,” he said. “I foresee us using it more granularly with internal customers and as a broader barometer to be used publicly by the market.”
   The decision to use the so-called movement of intermediate goods (like the tag on a T-shirt or a part that goes into a mobile phone) to underlie the index was made because those goods represent more than half of global trade volumes.
   The current reading for the index as a whole is 64, down from 66 in December. The baseline for the index is 50, meaning if it is above 50, trade is growing. So the fact the index declined from December to January means trade growth is declining, not that trade volume is declining.
   Split by mode, the index has a reading for ocean trade of 60 in January, down from 61 in December, while airfreight has a reading of 71, down from 73.
   The seven countries used in the index – the United States, China, India, Japan, South Korea, Germany and the United Kingdom – account for 75 percent of global trade.
   The index will be released quarterly.