Logistics Industry Experiences Gradual Recovery

The devastating effect of the 2008-2009 world financial crisis has been hard felt in the logistics industry. Global logistics volumes fell dramatically and the financial stability of many large common carriers became questionable. Ocean carriers cut significant capacities, airlines reduced flights and road transport carriers were forced to park their fleets in the hope that global trade would rebound. The good news is that this rebound may be upon us now. Macro economic data and trade volumes have been indicating a gradual recovery from the dismal results of 2008 and 2009. Many industry experts are forecasting a very gradual recovery in logistics volumes.  Several carriers are already seeing increases in shipment activity.

According to HIS Global Insight, the economic recovery is expected to generate a significant growth in the shipping volumes around the world with APAC to North America routes leading the way. In 2010 the average global growth rate is expected to reach 8.5% and hit 10% for APAC to North America bound cargo volumes. For 2011 the growth rate is expected to be slightly lower, but it is still expected to be around 7.8% mark.

However the recovery is not going to be equally strong in all regions. According to HIS report, the strongest growth is expected on Trans Pacific Routes while Trans Atlantic volumes are only expected to rebound to 2007 levels by 2013. APAC to Europe volumes are expected to build on the previous year’s growth, but Europe to APAC shipments are expected to take a little longer than previously expected.

All signs of recovery are present; market indexes are up, currencies have stabilized and orders for durable goods are steadily increasing. Global demand is rising and the world’s leading shipping lines are eager to restore the pre crisis level capacities that they had to cut when the world trade collapsed.

APL is reporting a 32% volume increase in handling of the 40’ containers with an average of 12% increase in revenues per shipped container. According to the information released by the company, it handled 204,400 equivalent units for the period of 4 weeks; period ending on April 2. This is an 8% increase from the previous 4 week period and represents a 32% increase on year to year bases. Capacities of bulk (liquid and dry) shipping are expected to reach pre crisis levels by the end of the year, experiencing on average 9% growth in 2010 and staying stable for the foreseeable future.

The situation is also improving for air cargo. According to the director general of IATA, Giovanni Bisignani, the volume of the airfreight handled on year to year basis has increased by 28.1% worldwide. However, according to the report released by the organization, the effects of the global economic crisis have not fully disappeared. Passenger and cargo volumes are still down by 1% from the highs of 2008. Even though the economic collapse has hit hard the air freight industry, almost all regions of the world have shown a steady pace of recovery, with the Latin America emerging as a leader with an impressive 47.9% growth rate followed by the US, with an average of 32.2% increase in shipments.

We have come a long way from the low points of late 2008 and early 2009. It was an unprecedented challenge to the logistics industry globally. While the process of the full recovery is not going to be an easy one, we remain very optimistic that international trade volumes and logistics volumes will continue their recover to pre-recession levels.