Key Findings Produced by Mike King & Associates and Logistics Trends & Insights LLC
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Air and ocean volumes on the major East-West trades will continue to accelerate in the coming months, according to the latest survey results for the APAC Forwarding Index.
The survey results are being compiled by consultants Mike King and Cathy Roberson to help create a new APAC Forwarding Index which will be published this summer – the third survey is available here and open to anyone with insight into key trade lanes to and from APAC.
APAC OCEAN FORWARDING MARKETS
After a solid start to 2017 which has seen ocean freight markets buoyed by healthy demand growth, May Index survey respondents predict further traffic expansion in the coming months. Over 40% of respondents expect volumes to be higher in August than in May on ocean lanes to and from the APAC region, while a similar amount predict volumes will remain the same.
In keeping with the traditional peak season surge in Q3, two thirds of survey respondents forecast that APAC-Europe westbound volumes will be higher in August than they were in May. On the head-haul APAC-North America trade, 44% also predict higher volumes over the same period, with only 11% expecting box numbers to fall.
“We’ve had a solid start to 2017,” said one ocean liner respondent. “Exports from Asia have been strong and, after the normal May lull and on completion of Transpac contracting, we’d be surprised if we didn’t see a good peak season.”
Strong optimism for the summer months followed a solid May. 47.5% of respondents reported higher Month-on-Month (M-o-M) volumes in May compared to April, while just 5% reported ‘lower’ M-o-M volumes. M-o-M volume growth was also reported on all major ocean trades.
“The demand side of the picture has been strong thus far in 2017 as our latest survey has illustrated,” said Roberson. “Respondents are rightly optimistic that volumes of exports to North America and Europe will build in the coming months as the peak season gets underway.
“Exports out of the US continue to underperform, but Asian demand for European exports is ticking along and we expect this will continue at least through Q3. We expect lines will be able to
consolidate most of their General Rate Increases if they keep their supply discipline as they smooth out network disruptions due to the start of the new Alliance services in April. We’d expect forwarders to seek higher margins on higher rates where possible.”
APAC AIR FORWARDING MARKETS
Over half of survey respondents predicted APAC volumes across all lanes would be higher in August than in May, with 40% also expecting them to remain the same.Only 9% of respondents expect lower volumes in August compared to May across all APAC lanes.
Sentiment was most bullish on the APAC-Europe, APAC-North America and APAC-Emerging Market lanes where the majority of respondent expect air freight volumes to be higher in August than in May.
“The three-month outlook for airfreight remains positive,” said Roberson. “Across all lanes over half of respondents expect volumes to be higher in August than now with optimism most obvious on the APAC-North America lane where 71.43% of respondents predict higher volumes in August than in May. The lane is expected to benefit from key electronic product launches in the coming months.”
Growth in air freight volumes was also apparent in May compared to April. 52.3% of survey respondents indicated air freight volumes were higher in May compared to a month earlier, while only 4.5% of all respondents reported a M-o-M drop in APAC volumes.
Growth was most evident on the APAC-Europe, Europe-APAC, APAC-North America and APAC-Emerging Markets lanes where 78%, 67%, 57% and 67%, respectively, of respondents reported higher M-o-M volumes.
One respondent said major product launches later in the year, such as the new iPhone which multinational Logistics Service Providers were already shipping, would help bolster demand out of APAC. He also said Asian demand growth had outstripped Europe and the US in percentage terms over the last year. “Asia and particularly India are the rising stars of the future,” he added.
Roberson said APAC forwarding markets were on their best run of positive demand growth seen for at least two years. “Forwarders and other logistics stakeholders have struggled with low rates by air and ocean for an extended period,” she said. “But there are signs that
supply-demand equilibrium is returning to both markets and this should create new margin opportunities for those with a strong footprint in Asia.
“To what extent digital forwarders will win chunks of this expanding pie will be interesting to follow over the rest of 2017.”