Air Freight activity picks up, leaders project economic normalization

Davos shone the light on economic prospects last week, with global stakeholders projecting a year of normalization. The US is expected to resist recession, while Europe tries to lift itself against the weight of Germany. In Asia, Chinese Foreign Direct Investment (FDI) in Latin America is biasing towards Chinese goals, as it seeks new frontiers of competition with the west on the global scene. While China's economic recovery appears lackluster, White House National Economic Council Director Lael Brainard suggests that the U.S. economy remains resilient due to the diversification of supply chains in recent years. However, leading indicators in the U.S. have fallen for the 21st consecutive month, raising red flags in the rearview.

In the logistics industry, air freight demand has heightened due to delays and risks in the Red Sea, with companies opting for air cargo to counteract ocean transit delays. The global freight cycle is expected to enter a new stage in 2024, showing signs of recovery post-pandemic. However, South Africa faces continued supply-chain challenges, cargo theft has spiked, and joint freight deals collapse, emphasizing the industry's susceptibility to disruptions. The logistics sector also grapples with LNG freight rate fluctuations and container shortages, particularly impacting Indian exporters due to the Red Sea crisis.

In the short term, logistics companies should brace for higher freight rates, address ongoing supply-chain challenges, and navigate uncertainties stemming from geopolitical events. The short-term outlook remains volatile, as we keep an eye on the horizon.

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Weekly Highlights

Leaders at Davos see a global economy moving toward a new normal

Europe will suffer worst economic growth in 2024 – WEF

China shifts Latin America investment to compete with the west

Air freight volumes soar as Red Sea delays, risks make more big retailers, auto companies nervous

South African Supply-Chain Disruptions Far From Over, PwC says

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Economic News

“Our data show a clear shift in Chinese FDI towards specific industries in Latin America and the Caribbean. Many of these new priority areas are described by China as ‘new infrastructure’, a term which encompasses industries ?critical to China’s own economic growth strategy”

Margaret Myers, a co-author of the report by the Washington-based think-tank

Leaders at Davos see a global economy moving toward a new normal

European Central Bank President Christine Lagarde said she does not expect a return to economic “normality” in 2024, despite seeing a balancing of certain data points throughout the last 12 months...?Read more

China's 'lackluster recovery' not having strong effect on US economy

China's lackluster economic recovery has not had a particularly strong effect on the U.S. economy given diversification of supply chains over the past years, White House National Economic Council Director Lael Brainard said on Monday...?Read more

Leading indicators fall again, but U.S. appears no closer to recession

The leading indicators of the U.S. economy fell in December for the 21st month in a row, but a widely predicted recession still appears no closer than when the long losing streak first began...?Read more

Europe will suffer worst economic growth in 2024 – WEF

The WEF disclosed this in a publication, Chief Economists Outlook January 2024,’ as it commenced its 54th Annual Meeting at Davos-Klosters earlier this week...?Read more

As inflation slows, Europe Inc must show off its margin might

European companies haven't had such a low bar to clear in terms of earnings expectations in years, not least because of the highly complex geopolitical and macroeconomic backdrop, yet investors may only reward those that can protect their margins...?Read more

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China shifts Latin America investment to compete with the west

Beijing pivots away from costly infrastructure to focus on technology, renewables and critical minerals...?Read more

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Moody’s is negative on Asia’s sovereign creditworthiness in 2024 as China growth slows

Moody’s Investors Service has a negative outlook for sovereign creditworthiness in Asia-Pacific this year, due to China’s slower economic growth as well as tight funding and geopolitical risks...?Read more

"Has 2023 given me hope? … I would put it this way: It was a call for action because we have to rearrange some policies and … probably we are at the beginning of an era of new structural reforms."

Christian Lindner, Germany’s Minister of Finance?

Industry News

"It was a capacity issue.?Here you have a demand spike not because consumers are spending more but the need of companies to move products. This is all a result of companies trying to mitigate the ocean transit delays."

Niall van de Wouw, chief air freight officer for Xeneta

Air freight volumes soar as Red Sea delays, risks make more big retailers, auto companies nervous

A sharp rise in demand for air freight tracked by supply chain intel firm Xeneta demonstrates the rising anxiety among companies and shippers about the Red Sea crisis, air cargo volumes on the major apparel route from Vietnam to Europe spiking 62% in the week ending January 14...?Read more

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Freight Cycle Poised to Enter New Stage in 2024

U.S. freight cycle fundamentals will improve in 2024, according to the latest release of ACT Research’s Freight Forecast, U.S. Rate and Volume Outlook report. Freight demand is below trend but starting to recover as post-pandemic effects fade...?Read more

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South African Supply-Chain Disruptions Far From Over, PwC says

South Africa’s freight rail and port deficiencies are set to continue and businesses should brace for further supply-chain challenges this year, auditing firm PwC said...?Read more

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Cargo theft spiked over 57% in 2023 vs. 2022, new data shows

Nearly $130 million worth of goods was stolen in 2023, but since reporting cargo theft is not mandatory, the amount is likely higher than this, according to CargoNet...?Read more

Joint freight deal between Air France-KLM and CMA CGM collapses

Airplane freight carrier Air France-KLM and ocean carrier CMA CGM will withdraw on March 31 from a 2022 agreement to launch a joint commercial cargo operation, blaming market regulations that hindered the success of the deal...?Read more

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LNG freight rates weaken further despite Red Sea diversions

Spot liquefied natural gas (LNG) freight rates continue to weaken despite increasing reports of vessels diverting away from the Red Sea, according to Spark Commodities...?Read more

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'Nervousness' as container shortage starts to impact Indian exporters

Apart from rocketing freight rates, Indian exporters face another supply chain challenge linked to the Red Sea crisis: equipment availability...?Read more

" Diverting a voyage via the Cape of Good Hope from the Arabian Gulf to NWE adds only $0.09/MMBtu to the freight cost versus via Suez given Suez Canal savings, but increases laden voyage time by 9.5 days."

Qasim Afghan, Spark’s commercial analyst

Ranon Quote of the Week

“Positioning one mode against the other is an outdated way to look at greening transport, ignoring the fundamental realities of how the sector works today in Europe.”

Raluca Marian, IRU’s EU advocacy director

Technology, Policy and Sustainability Updates

Hydrogen’s Potential for Long-Distance Freight Transport

Climate change has taken the world by storm, with major sectors responsible for significant carbon emissions. One of these is transportation. However, hydrogen is a promising contender for making long-haul freight transport more sustainable...?Read more

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Will longer trucks harm Europe’s rail freight push?

The road freight industry has challenged a study commissioned by the rail sector which found that permitting heavier and longer trucks on EU roads will decrease the percentage of goods moved by trains, increasing emissions and raising societal costs...?Read more