Market Intelligence [April 2024] Logistics Market Intelligence Quarterly Report

In March, the manufacturing PMI entered an expansionary phase at 50.3 in the U.S. and 50.8 in China, which markets interpret as signs of stabilization.

※ A leading indicator of the economic situation as a result of a monthly survey of more than 400 corporate purchasing/supply managers

- Korea expects semiconductor-oriented exports to drive economic growth amid sluggish domestic demand.

- China is expected to continue balanced qualitative growth across sectors through improved exports and activation of government stimulus policies.

- Vietnam is expected to recover to pre-COVID19 levels due to the recovery of the semiconductor industry and increased exports due to supply chain reorganization in developed countries.

- U.S. economic growth is being driven by a robust job market, but high inflation reduces expectations for Fed rate cuts.
- U.S. retail import volumes expected to increase yoy H1 as supply chain adjustments normalize.

- The EU is expected to continue experiencing low growth due to a slowdown in global demand and a surge in energy prices due to geopolitical conflicts.

The SCFI in 1Q 2024 averaged 2,038, up 92% from the average of 1,065 in 4Q 2023.
As of March 15, yoy, Asia-WCNA freight rates are up 155%, Asia-ECNA rates are up 129% due to the diversion of the Suez and Panama Canal routes.

Comprehensive index is expected to be 1,455 - 1,620 in 2Q 2024 and 962 - 1,220 in 3Q 2024.
Freight forecast for 2Q 2024 : USWC $2,922 / USEC $4,401 / North Europe $1,497

It is forecasted 3.9% demand growth in 2024, an improvement from 0.5% in 2023.
However, the demand/supply gap in 2024 is 5%p, which is expected to widen compared to the 3.6%p gap announced in Dec 2023.

[Asia] Supply-demand Deterioration of Asia-Europe Route
- Asia-N. Europe, Red Sea disruption expected to end after 1H. This will lead to a full-blown supply-demand deterioration due to the end-of-capacity offset effects.
- Asia-Med is the route most affected by the Red Sea disruption and is expected to deteriorate supply and demand due to an increase in effective vessel capacity and weak cargo volume after the first half of the year.

[Americas] Possibility of port strikes and increased lead times
- The peak season is expected to be brought forward to June due to concerns over a possible strike by port unions in the East Coast and Gulf Coast regions in the US.
- North American volumes recovering, leading to increased vessel numbers and lead times at major East and West Coast ports such as NY and LB in 1Q 2024.

[Europe] Higher Emissions Costs
- Detouring through the COGH(Cape of Good Hope) can increase carbon dioxide emissions by 260 - 354 %, resulting in higher emissions costs for shippers sailing from or to European countries.

Rate to The U.S and Europe continue to rise after the Lunar New Year Holiday.
Stabilized rates from China and Hong Kong while rates from VN and IN increased by 53~54% compared to 1Q 2023.

HKG-US : 2024 Q2 $4.68~$5.05, 3Q $4.28~$4.47, 4Q $3.77~$4.13
HKG-EUR : 2024 Q2 $3.88~$4.12, 3Q $3.63~$3.74, 4Q $3.59~$3.62

Pandemic cut supply sharply due to airport closures. It rebounded above pre-pandemic level after New-normal 2023.
Demand reached pre-19 levels by increased demand for diagnostic kits, relief supplies and e-commerce during Covid 19.

[Asia] ICN Airport export volume increased
- ICN Airport export volume increased by 13.2% and 4.4% on Jan 2024 and Feb 2024 due to the increased transit volume.
- In March 2024, Export volume hit a new high in 23 months increased 29% compared to Feb 2024.

[Americas] In 2024 Expecting expansion of supply to ease strong demand in transpacific
- From Feb '23 to Jan '24, the top 3 countries export goods to the U.S the most are No. 1 China, No. 2 Italy, and No. 3 Vietnam based on fashion and personal consumer goods. It is necessary to expand the supply of transpacific routes, where Asia-US demand is high.
- Airlines plan to supply belly with summer schedules according to vacation demand, usually 3 ~5 % more than winter schedules.

[Europe] High demand from India to Europe keeps rates high
- Textile volumes from India to Europe via air after inland trucking from East Asia cause severe backlog at airports across India in Chennai, Mumbai, Bengaluru as well as Delhi.
- Lead time IN-US takes 6 to 7 days, IN-EU takes 5 to 6 days and it takes about 9 days from booking to shipping due to congestion in the terminal.