Stifel: Industry confidence index sinks to all-time low

The Stifel Logistics Confidence Index has declined for seven consecutive months and hit an all-time low in December 2015.    The Stifel Logistics Confidence Index fell to a record low in December to a score of 45.4, a seventh consecutive month of decline, according to a statement from the investment firm’s transportation and logistics research group.
   The index, which is produced by Stifel in partnership with the U.K.-based advisory firm Transport Intelligence, measures market sentiment on sea freight and air freight lanes in both directions between Europe and the U.S. and Europe and Asia.
   The Europe to U.S. trade lane had the highest-scores across both air and sea for the month, which resulted from continued strength of the U.S. dollar against the Euro. However, performance on trade lanes in both directions between Europe and Asia continues to struggle.
   The total air freight logistics confidence index for December stood at 46.6 points, down 2.3 points month-over-month and down 9.2 points year-over-year.
   In addition, the total sea freight logistics confidence index for the month was 44.3 points, down 1.8 points month-over-month and down 14.7 points year-over-year.
   “Within the air freight industry, increasing numbers of passenger planes, combined with what IATA has termed ‘a tough global economic environment and feeble world trade,’ is resulting in increasingly poor load factors,” Stifel said of the January index reading. “Industry competitors have been somewhat protected by low fuel prices, but it is unclear how long this situation will persist. The underlying capacity problem, therefore, remains.”
   “It is clear, however, that steps are now being taken to tackle the overcapacity crisis endemic in the shipping industry,” the firm added. “Following news of Maersk committing to lay-up an 18,000 TEU vessel last month, a different approach has also been demonstrated, with decisive consequences for the market and the main players within it.
   “On Dec. 7, the world’s third-largest container shipping line, CMA CGM, agreed a deal with Temasek Holdings to acquire the struggling Neptune Orient Lines. Furthermore, news broke on Dec. 11 that Chinese authorities had given the green light for a merger between state-owned giants China Shipping and COSCO. The projected consequences of these deals will see the lines involved in the round of consolidation, along with industry leaders Maersk and Mediterranean Shipping Company, control nearly half of global container shipping capacity.”