The Danske Bank's Freight Forwarding Index shows a bleak future for European forwarders that experienced a contraction in volumes in November. The index dropped 40 from 52 in October, significantly lower than the level predicted by forwarders two months ago. Prospects for European forwards have also worsened, with expectations for January at a historical low.
The index surveys freight forwarding companies in order to determine variations in actual volumes against volumes handled two months ago, as well as expectations of volumes of goods over the next two months. The index uses a scale between 0 and 100, with values above 50 indicating an expansion in demand.
Lower volumes were experienced by all modes of transport for November, although air forwarders continue to be hit the hardest. The index value for air forwarding remained almost flat at 38; this is well below the significant 50 level, signifying a strong contraction in volumes compared with two months ago. The index for road fell from 62 in October to 46 in November, while the index for sea freight was down at 44 from 52 last month.
For almost all countries the index value was below 50 for November. Norway was the only country to experience an expansion in volumes compared with two months ago; although demand is expected to contract over the next two months. The Benelux was the only area to see expectations increase (the forecast value rose to 39 from 25 predicted last month).
Seasonal variations mean that volumes in January tend to lower; however the expected index value of 39 is still significantly lower than the actual value of 56 registered in January 2011. Expectations suggest that air freight volumes will continue to suffer more than both road and sea freight, with the index for air freight falling to a low of 30 in two month's time. Road freight volumes will also decline with the index forecast to fall to 39, from 49 predicted last month. Sea freight will only see a minor contraction in volumes with an index value of 48 expected for January.
