Forwarders expect good fourth quarter

Monday, 06 September 2010

Danske Bank has revised the outlook for its third-quarter freight forwarding index, predicting a further recovery in freight volumes compared to its initial “double-dip” prediction, writes Katerina Kerr.

Johannes Møller, equity analyst of transportation for Danske Bank, said: “Our proprietary European freight forwarding index for August was better than participants expected two months ago and expectations continue to trend higher as we come out of the summer period.

“The jury is still out as to whether we will get a double-dip or ‘only’ a mid-cycle slowdown, but so far the freight market in Europe is firing on all cylinders, which bodes well for strong third quarter reports.

“Economic data from the US shows signs of a slowdown in economic growth and hence we were a little nervous in seeing if our freight index gave the same indications for Europe. However, this has not been the case.”

The survey, which questioned 160 European forwarders, showed participants are optimistic that volumes will improve in September and October.

The index for the current situation in European freight forwarding during August came in at 61, an increase on last year’s 50 and better than participants had expected two month ago, when the forwarding looking index, which measures participants’ expectations for the market in two months, reached 54.

Looking forward, forwarders expect the index in September to reach a level of 66 and October to reach 74, making it clear that volumes are expected to pick up in the third quarter.

“Based on our index we believe the third quarter report from freight forwarders should be fairly strong, as volumes have been holding up well, while at the same time we have seen container rates starting to slide, which should make it possible for freight forwarders to improve gross profit per unit from a low level in the first half of 2010,” said Møller.