Uncertainty in the global economy creates opportunities

2011 was the year many had expected the global economy to rebound strongly. Despite showing good momentum for perhaps a few months, a series of events, such as the tragic Japanese earthquake and tsunami, the Arab Spring, the European debt crisis and rising oil prices, disrupted global supply chains and shook shippers‘ confidence.

As a result, by the second half of the year, economic indicators and freight demand were trending downwards. Still, based on analysis, Ti’s latest Global Monthly Monitor suggests there were pockets of optimism and these pockets are likely to carry over into 2012.

Asian exports declined throughout the year. The decline was particularly noted in the Association of Pacific Airlines (AAPA) data. Through November, total cargo declined almost 5% (see Ti Dashboard – Air Cargo: Carriers). As a result of declining exports, China, in particular, announced plans to move from an export-driven economy. The government intends to study ways in which to stimulate domestic consumption. As such, transport and logistics companies with a domestic Asian infrastructure in place should benefit from this trend in 2012.

Entering 2012, the biggest economic question mark remains to be Europe. With the debt crisis yet to be resolved, threats of recession hangs over the region. However, ocean freight has remained strong as exports increased almost 9% through October. The ports of Rotterdam and Antwerp reported annual records as Rotterdam recorded a record throughput for 2011, while Antwerp recorded record levels of containers and liquid bulk.

Finally, the US proved to be a surprise. Although unemployment remains high, manufacturing activity steadily increased during the last few months of the year and exports showed great promise (Manufacturing PMI). It is estimated that containerised exports will increase over 5% and imports will increase 2% in 2012. Although domestic airfreight continues to struggle, trucking and rail intermodal posted strong gains for the year. Trucking cargo increased 5.4% through the end of November and rail intermodal ended the year 5.3% higher than in 2010 (US & Canada: Rail Intermodal).

For transport and logistics providers, opportunities will exist in 2012. In particular, opportunities remain in industries that are "recession-proof"; such as healthcare and food & beverage. The Asian domestic market will offer opportunities as will the export markets in the US and Europe.

As in any questionable economic period, consolidation is anticipated. This will be the case for the transport and logistics sector as many providers, hit hard by the economic downturn and sluggish recovery, will succumb to either bankruptcy or become acquisition targets for those more financially secured providers.

Ti Global Logistics Monitor
The Ti Global Logistics Monitor provides a monthly update of the state of the global transportation and logistics market by drawing together the leading air, sea, road and rail indicators from around the world. The Monitor also provides a snapshot of the latest economic, trade and consumer confidence indices.

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