Consumer confidence dip could hit freight volumes

Freight volumes could be negatively affected if companies monitoring the South African consumer confidence indexes, as well as global economic trends, decide to cut back on inventory and revise December sales forecasts down. In the third quarter of 2011, the FNB/BER Consumer Confidence Index (CCI) dropped due to a “large decline in the percentage of consumers expecting an improvement in the economy,” says Cees Bruggemans, chief economist at First National Bank. South African consumers are not alone. In August, US consumer confidence hit its lowest level in more than two years, according to the New York-based Conference Board research group. In Europe, German consumer confidence hits its lowest level in 10 months during August, despite low unemployment and rising wages. All of this is bad news for shipping companies, which will continue to experience rates pressure. Australian-based Macquarie Equities Research says a combination of increased capacity and weakened restocking “is not likely to inspire higher ocean freight rates”. “Given the considerable amount of overcapacity currently seen on some trade lanes – in particular Asia-Europe – we consider it unlikely that peak season volumes will be sufficient to stimulate a meaningful upturn in freight rates,” the report said.