Disappointing half for global transport, logistics, little relief in sight

OPTIMISM at the beginning of the year has ended in gloom after a disappointing first half with declines in demand for Asian goods, resulting in capacity problems for carrier and logistics sectors alike, according to London's Transport Intelligence.

The region's export-driven economy continues to decline as its major trade partners Europe and the US contend with economic concerns of their own, said London's Transport Intelligence's Ti Global Logistics Monitor, which provides a monthly update on the state of the global transportation and logistics market.

Airlines in particular, hit with high oil prices and declines in demand, have scrambled to re-adjust capacity to fit the current demands. The Association of Asia Pacific Airlines (AAPA) reported cargo movement declined 5.3 per cent during May and year to date, cargo is down 5.0 per cent. European air cargo providers are also reporting lower volumes. For example, air cargo provider Lufthansa reported a 12.3 per cent decline in total cargo and a 12.8 per cent decline along its Asia trade lane.

Ocean freight providers are also removing capacity while raising rates in an attempt to recoup from losses over the past year or so. However, ports appear to be holding their own as many have noted positive cargo movement, but this may be due to shifts away from using air freight. In addition, increases in transhipments appear to be on the rise, particularly in Asia.

North American economies have shown encouraging growth. Both Mexico and Canada continue to report strong manufacturing activity through June - perhaps due to demands in automobile manufacturing. However, US manufacturing activity declined in both May and June. In fact, June activity declined sharply, by over three per cent, sparking concerns for the economy.

Still, US port activity remains positive with both imports and exports remaining strong through May for such ports as Los Angeles, Savannah and Charleston.

The outlook for the remainder of 2012 is doubtful as the global economy continues to show signs of increased weakness. On a bright note, oil prices have declined to below US$100 a barrel which should benefit transport providers and there are also indications of a positive peak season, based on recent shipper surveys.

Finally, the questionable economic situation seems to be sparking an increased interest in mergers and acquisitions across all regions as providers look to consolidate their positions as well as to expand into new regions and/or services.