Green Shoots or a False Dawn?

Recent positive economic indicators coming out of Europe, Asia and the US have given analysts reason to forecast a recovery in the global logistics industry. However for global freight and parcel volumes and revenues to rebound significantly – and therefore the tyre sales which rely on logistics firms’ prosperity – analysts at Datamonitor suggest there will need to be “major improvements in consumer confidence, industrial output and subsequent international trade volumes.”

German exports, which have traditionally driven the country’s economic growth, surged by 7 per cent in June compared to the previous month, representing the fastest such growth in almost three years. Imports were also up by seven percent month on month. As a result, the German economy has now exited the recession, recording 0.3% overall growth between April and June. With France matching this performance, Europe’s two largest economies have rebounded from a 12-month period of recession.
 
Such positive signs have not been exclusive to Europe. After four quarters of negative growth, Japan exited recession in Q2 after its economy grew 0.9%. Hong Kong also recorded growth, of 3.3%, in the same period. In the US, the IMS manufacturing survey rose in May and specifically the new orders index rose above the threshold for growth for the first time since December 2007. This indicates a swing in industrial production levels from steep contraction to flat or even modest expansion.
 
Both Japan and China have been boosted by rising domestic consumption and government stimulus plans. In China, the government’s stimulus plan helped spur growth in Q2 of 7.9% (an increase of 1.8% from the first quarter) and a rise in retail sales in June of 15%. Japan suffered with particularly negative results in Q1 when exports were badly impacted by the economic downturn. Government stimulus measures totaling $260billion, including cash handouts to stimulate spending, are thought to have kick-started the economy. Japanese manufacturers also benefited from recovering demand in China and other markets, with overall exports up 6.3% during the quarter.
 
However, such stimulus spending-driven growth cannot last forever and it is difficult to find evidence of any impact on the logistics and express industries, as Asia’s export dependent markets are still suffering from the slump in spending in Europe and North America. Once the stimulus budgets are spent, new sources of growth will be needed and as logistics and express companies’ volumes are coming from such low levels, a real recovery still seems a long way away, says Datamonitor logistics & express senior analyst Erik Van Baaren. “We have seen the year-on-year decline in air freight volumes at Hong Kong International Airport, the world’s busiest air cargo hub, ease in July with volumes down just 8.4%, representing the smallest monthly decline since September last year.