Confidence booster for air forwarders

The Stifel Logistics Confidence Index released in May reports the air freight index increased 2.5 points to 59.5 in May, 3.8 points higher than May 2014 and 10.6 points more than May 2013. This should be good news for air forwarders as they move through the year. Europe to Asia had the largest increase climbing 7 points to 58.2, while Europe to the U.S. increased 3 points to 62.7. U.S. to Europe was up 0.7 points to 48.1 and the Asia to Europe lane slid 2 points to 52.6.

The report is based on responses from a monthly survey, completed by several logistics professionals. Questions regarding volumes they are currently experiencing, relative to the time of the year, and what they see coming up in the next six months are raised in the survey. The four trade lanes covered are Europe to Asia, Asia to Europe, Europe to the U.S. and the U.S. to Europe.

Based on respondent’s answers, air freight is improving while sea freight demand is falling. Airfreight volumes were strong in all trade lanes except Asia to Europe. In fact, current airfreight volumes are accelerating with May airfreight volume at 55.5, which reflects expansion for 11 consecutive months. Europe-Asia and Europe-U.S. were particularly strong, bolstered (in their view) by favorable currency swings.

Asked if currency had a meaningful impact on shipments from Europe to the U.S, 62.4 of the respondents suggested that it did, 16.5 percent didn’t see an impact and 21.2 percent were unsure.

Stifel’s investment conclusions were to “hold” on freight forwarders with significant European trade exposure such as Kuehne +  Nagel, Panalpina and DHL. They believe stocks are currently fairly-to-fully valued. Kuehne + Nagel is the most stable and highest-quality in its opinion but Panalpina has the most long-term opportunity for margin expansion and capital appreciation.