The Stifel Logistics Confidence Index for July appears to mirror an uncertain economic environment. Since February of this year, the overall Index has increased one month and then declined the next reaching its high so far this year in May at 57.9. For the current month, the index is up 0.9 points over June to 56.1.
The two components of the Index have struggled during the first half of 2014 but both noted gains for July. The overall airfreight confidence index has yet to return to this year’s high reported in January, 56.5 but for July, it inched a bit closer to that high increasing 0.6 points to 54.4. Meanwhile, the overall sea freight confidence index reached its high in May, 60.1, but stumbled in June and recovered to 57.8 for July.
After four consecutive months of contraction, July’s present situation bumped up to 50.8, an indication of improving conditions with all but one lane above the 50 –level, a situation not seen since November 2013. The Asia to Europe trade lane noted the biggest increase from June climbing 3.3 points from 49.1 to 52.4 perhaps due to improving economic conditions in Europe. While the Europe to US lane slipped 0.5 points to 49.2 for the present situation, this lane recorded the largest increase for the six month expectation at 2.7 points from June to 57.2 points. This may indicate expectations for the holiday season and end of year inventory replenishment will be strong for US companies.
The sea freight present situation climbed 1.6 points over June to 53.8. Still, this is down from May’s high of 55.7. Similar to airfreight, the Asia to Europe trade lane noted the biggest increase from June up 2.9 points to 55.6. The Europe to Asia lane noted the weakest increase, 0.3 points from June to 51.4 which probably indicates the continued weakness in Asia’s overall economy. In fact, this lane noted a decline of 0.8 points over June for the six month expectations to 61.0. The six month expectations for the US lanes to and from Europe are weak, growing less than 1.0 point from June. This may be due to uncertainty of the results of the labor contract for US West Coast ports which expired the first of July. The Asia to Europe lane noted the biggest gain from June, up 1.6 points to 66.6. Again, like that of airfreight, this may be attributed to improving economic conditions in Europe.