New report suggests an uptick for forwarders

Demand, capacity and profitability have all shown huge unpredictability both in the air and sea freight sectors, said analysts, yet it is confidence -- or rather the lack of it -- which has set the overall tone.
By Patrick Burnson, Executive Editor
August 24, 2010 - LM Editorial

The global trading system is experiencing “extraordinary volatility” and this is being reflected in the performance of the freight forwarding industry, said Jon Manners-Bell of Transport Intelligence (Ti), a London-based think tank. Demand, capacity and profitability have all shown huge unpredictability both in the air and sea freight sectors, he said, yet it is confidence—or rather the lack of it—which has set the overall tone.

“In some respects the past twelve months have been a good time for the sector with demand recovering at a remarkable rate in a number of key routes,” he noted in a recent report.  “The crash in volumes experienced in 2008 and early 2009 appeared to herald a long term slump in global trade and logistics. However this slump has not occurred. Rather the reverse.”

Ti’s latest research indicates that despite the lack of capacity for both air cargo and ocean freight shippers, may well continue to the central problem, however.

According Manners-Bell, the sector was caught in the “perfect storm” of falling volumes and rates.

“Having benefited for so long from the growth of global supply chains, it now found itself in free fall as Western retailers and manufacturers were left with excess inventory in their warehouses,” he said. “This resulted in the suspension of orders to predominantly suppliers many of whom are based in Asia. The timing of this reaction could not have been worse.”

Indeed, he observed that with shipping lines and airlines still increasing their capacity, over capacity became rife on all major lanes and rates dropped dramatically. The result, said Ti analysts, was that the slowdown in 2008 became a slump in 2009 (the market fell by 23.4 percent) although by the end of the year the market was showing signs of upturn.



About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

UPS today announced diluted earnings per share of $1.32 for the third quarter 2014, a 13.8% improvement over the prior year period. Operating profit increased 8.3%, resulting from balanced growth across all three segments.

The Department of Transportation’s Bureau of Transportation Statistics (BTS) reported this week that U.S. trade with its North America Free Trade Agreement (NAFTA) partners Canada and Mexico increased 4.4 percent from August 2013 to August 2014 at $100.6 billion.

As expected, global trade dipped from August to September but still saw annual gains, according to data issued this week by Panjiva, an online search engine with detailed information on global suppliers and manufacturers.

Transportation and logistics merger and acquisition (M&A) activity in the third quarter saw annual gains, which were driven by smaller deals in the trucking logistics, shipping, and passenger air sectors, according to data issued in the Intersections report by PwC this week.

With the holidays rapidly approaching, it appears retailers are not quite done getting inventory set up and on the shelves in time for what is expected to be a fairly active shopping season. That much was evident based on recent data for September volumes issued by the Port of Los Angeles (POLA) and the Port of Long Beach (POLB).

About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review. Patrick covers international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. Contact Patrick Burnson

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA