A veritable treasure trove of reports released in the second half of January unveiled a new look at the cargo and logistics industry, which is on the brink of positivity after two years of heavy slogging against structural and economic headwinds.
     First up was Danske Bank’s European Freight Forwarding Index, in which respondents said they were now expecting increasing volumes across all modes in the next two months. Although Danske’s airfreight sub-index dropped in December, demand expectations increased to 59 for February compared to 50 in January—any reading above 50 indicates expansion—as the survey’s European participants predicted accelerating volumes in the first quarter.
     IATA’s January Airline Business confidence Index gave a more global view than the Danske Index, and this was similarly upbeat. “More than 66 percent of respondents are expecting an increase in demand over the next 12 months,” the report found. “This is the biggest expected rate of increase since mid-2010, a very strong year for cargo.”
     According to IATA, the improved outlook is a reflection of “recent improvements in world trade growth and increases in business confidence.”
     The Stifel Logistics Confidence Index also entered 2014 on a positive note. The overall Index has remained above 50 for 12 months now, with expectations of further demand evident in the 56.6 logistics confidence reading recorded in January. The outlook for air freight is even more hopeful on some key lanes, mainly into Europe, which is finally showing signs of improved consumption and economic growth, suggesting rising imports.
     Even though the survey indicated a mixed picture by trade, with respondents forecasting improvements on the U.S. to Europe and Asia to Europe lanes, but declines on Europe to the U.S. and Europe to Asia, the forward outlook in the Air Freight Confidence Index was buoyant, with the ‘expected situation’ index up 1.3 points to 61.2 in January. “Three of the trade lanes that are monitored (see table below), Europe to the U.S., U.S. to Europe, and Asia to Europe all had good increases,” said the report. “However, Europe to Asia had a 2.1 point decline from December. The expected decline in the Europe to Asia trade lane may be the result of ongoing concerns over Asia’s economic condition.”

Stifel Air Freight Confidence Index: Present Situation

Air Freight Confidence Index	Present Situation		Expected Situation
	January	Change from December	January	Change from December
Europe To Asia	50.1	-4.7	60.7	-2.1
Asia To Europe	61.6	1.0	65.3	2.5
Europe To U.S.	47.8	-2.1	56.5	2.7
U.S. To Europe	45.6	1.5	61.5	2.0
All Lanes	51.7	-1.1	61.2	1.3

     Perhaps of even more interest to our readers was a new survey outlining in detail which air cargo lanes grew and contracted most during 2013. The 2014 Agility Emerging Markets Logistics Index, developed with Transport Intelligence, also shed a fascinating light on air cargo trends via its survey of more than 800 industry executives.
     This revealed that logistics and trade professionals are far more optimistic about the global economy in 2014 than they were a year ago, with 72 percent forecasting “modest growth” in global economic output and trade volumes in the next 12 months, compared to less than half a year ago. More than half of respondents expect “modest growth” in the U.S. and EU economies, while 58 percent expect to see emerging markets countries in Asia producing the highest growth rates in 2014.
     Turning specifically to air freight, China dominated trade lanes in 2013. But although it was the major origin of cargo globally, its air freight volume to the United States fell 7.5 percent in 2013 compared to a year earlier. “Among the top 10 largest air lanes, the biggest volume gains were Colombia-U.S., Chile-U.S., and Bangladesh-EU,” said the report, with the latter lane growing 96 percent year-on-year in 2013.
     However, the fastest growing lanes in terms of CAGR over 2005-2013 originated in Ethiopia, not least because of heavy investment by Ethiopian Airlines in its network. Over the period this saw growth of 27 percent on the Ethiopia-U.S. lane and 30 percent from the African country to the UE. “Ethiopia has benefited from the African Growth and opportunity Act (AGOA), which was enacted in 2001 as a U.S. trade initiative to encourage trade with 39 Sub-Saharan African nations,” said the report, which also predicted that growth ex-Ethiopia might taper off as government pricing controls on coffee and other agricultural exports came into force.
     China was also the market leader as a destination for air cargo from the U.S. and EU last year. Among the top 10 busiest lanes from U.S./EU destinations to emerging markets, EU air cargo bound for India and South Africa declined sharply, according to the report. “In air cargo, the emerging markets with the fastest growing exports to the U.S./EU were Ethiopia, Cambodia, Ecuador, Chile, Bangladesh, and Kenya, although the increases come off of relatively low margins,” said the report. “Ethiopia, Ukraine, Oman, Bahrain, Libya, Qatar, and Vietnam were destinations for inbound air cargo on the fastest-growing lanes between the U.S./EU and emerging markets.”
     The outlook for 2014 looks set to see further growth in trade between OECD countries and emerging economies, boosting logistics demand across modes.
     “Not only does the majority of the world’s population reside in emerging markets, but these markets offer expanding middle classes and a younger average age compared to the more developed markets of the U.S. and Europe,” said John Manners-Bell, Chief Executive of Transport Intelligence. “The need to meet the rising needs of these markets is a great opportunity for logistics providers, but it will also prove a bumpy process as economic, political, and other risks will need to be navigated carefully.”
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