The Weekly Roar

In this week’s Roar: The Logistics Managers Index and Supply Chain Pressure reports are in, more of the same on the Red Sea, air cargo news, and the EU’s climate goals.

The first Logistics Managers’ Index Report of 2024 is in, and the news is good. As in, for the first time since the fall of 2019, every metric in the Index is expanding, putting the current LMI score at 55.6. The drivers are growth in inventory and transportation — specifically inventory levels and transportation prices. And warehousing metrics are seeing slow but steady growth. Overall, the industry is expected to continue to grow in 2024, however, it’s expected to be at a slower rate than it was in 2021 and 2022 (which are times few in the supply chain industry want to re-live.)

Recent reports from the New York Fed show that supply chain pressures rose slightly in January, but still remain significantly below the peak levels late in 2021. The rise is likely due to disruptions linked to issues in the Middle East. For comparison, the bank’s Global Supply Chain Pressure Index for January was -0.11 — any negative numbers indicate below normal pressure — and December’s Index was -0.15. If we look at December 2021, during major disruptions due to the pandemic, the peak was 4.33.

The ongoing disruptions in the Red Sea continue to impact freight, with the potential for further delays and rising costs, which undoubtedly will be passed on to the consumer. And with the Federal Reserve unlikely to cut interest rates again soon, this could have a further dampening effect on the industry.

In air cargo, the World Cargo Summit outlined some opportunities and challenges. While there are reasons for optimism in the industry, such as growing demand and the unstoppable e-commerce boom, there are some concerns. For example, a lack of reliable data, the need for more capacity, and the impact of sustainability on the industry. However, as those challenges are addressed, the industry is expected to grow in the coming years.

The European Commission recently published a proposal for a 2040 climate target that would make the EU climate neutral by 2050. How? An increased focus on greener shipping and by working closely with the industry’s global regulator, the International Maritime Organization (IMO). The commission has acknowledged the increased costs of sustainable fuels and will look at regulatory measures that will further production. European shipowners are thankful.

For the rest of the week’s top shipping news, check out the article highlights below.