Last week, Material Handling and Logistics called attention to the Stifel Logistics Confidence Index indicating that the first eight months of 2015 have not been positive indicators to the logistics and transportation universe. The report indicates: “Fierce competition, volatility and overcapacity have all taken their toll and driven the Index to its lowest point since September 2013.”

From our Supply Chain Matters lens, this report should not be a surprise to transportation and procurement teams and is a reflection of further industry turbulence ahead.

The report touches upon the airfreight sector and notes that the Logistics Situation Index for airfreight fell 4.1 points, its lowest point of the year because of lackluster volume. Likewise, the Logistics Expectation Index for airfreight was reported as troubling despite the upcoming holiday shipping period. It is yet another indication that capacity cutbacks from carriers will continue.

The Logistics Situation Index for sea freight was noted as slightly positive, as three of the four major lanes examined recorded some growth.  The Europe to U.S. lane reportedly declined sharply, and puzzling indication of the effects a far stronger U.S. dollar which would make European imports more attractive. However, exports from North Europe to North America were reported growing by 8.4 percent over the first five months of 2015, but considerable capacity increases on the lane are threatening to outstrip shipping demand.

For Supply Chain Matters, this latest index related report reflects further evidence of the significant overcapacity situation for both seaborne and airfreight that is currently driving industry spot pricing and other dynamics. We recently called attention to announcements of ocean container consortium cutbacks on Asia to Europe ratings that take effect in September.