ZEW/Prognos Survey: Falls in Transport Volumes and Prices in Almost All Markets

Expectations for developments in transport markets over the coming six-month period are unequivocal for both transport volumes and prices. Experts partially expect to see significant falls. This is the case for inland freight markets, road, rail and shipping freight, as well as for air and sea freight. These are the findings of the Prognos/ZEW Transport Market Barometer (TransportmarktBarometer) for the first quarter of 2016. In this quarterly survey, Prognos AG, Basel, and the Mannheim Centre for European Economic Research (ZEW) asks approximately 250 top executives from the transport and loading industry about their expectations for the development of transport volumes and prices on a six-month horizon.

The surveyed experts have rarely been in such agreement when it comes to their predictions for price developments. Whereas prices had still been anticipated to increase in the previous quarter, they are now expected to fall in all transport sectors without exception.

The price developments expected in the air and sea freight sectors are particularly striking. The proportion of surveyed experts expecting to see price falls in the air freight market has never been so large. A third of those surveyed expect to see price decreases for routes within Europe and to North America, whilst 40 per cent expect decreases for routes to the Asia Pacific region. Similarly, more than half of experts are convinced that sea freight prices for Asia Pacific routes are set to fall. A third of those surveyed expect that prices for sea freight within Europe and to North America will fall.

For land-based freight carriers, expected developments in volume are as pessimistic as those for price developments. The fact that experts expect to see particularly significant falls in prices for road freight to Eastern Europe is a result of low diesel prices and the declining business cycle which is affecting all markets, as well as continued tensions in the Ukraine, and the economic weakness of Russia.

Expectations for developments in road freight are predominantly negative

Transport volumes should develop in much the same way as prices in the coming six months. Expectations for developments in road freight are predominantly negative. Experts predict a slight fall in transport volumes for inland shipping and rail freight. For courier, express and package services (CEP services), the proportion of survey participants expecting to see increases in volumes is falling. Overall, development is showing a slight downward trend. For combined traffic, the sentiment indicator, which reflects the balance of positive and negative expectations, implies only a slight downward trend for Germany and Eastern Europe.

In air freight, negative developments are primarily expected to be seen for routes to North America. Although hardly a single expert expected to see falls in transport volumes in the previous quarter, the proportion of participants now expecting to see such negative developments has risen to 25 per cent. At the same time, the proportion of participants expecting increases in transport volumes has fallen to 20 per cent. The sentiment indicator for traffic volumes for air freight to North America is therefore at its lowest level since the beginning of 2012. The strength of the dollar and uncertainty regarding the consequences of falls in oil prices, both of which might have a long-term negative impact on economic growth in America, seem to be the source of these negative predictions. Poor expectations for economic developments in Japan and China are also the cause for a lack of optimism in regard to the transport market with Asia.

The balance of positive and negative expectations for developments in volumes in sea freight, as indicated by the sentiment indicator, are also continuing to progress toward an all-time low. Whilst the downward trend for routes to North America has somewhat slowed, the downward trend for the European market and for routes to the Asia Pacific region is continuing. Given that developments in air freight tend to be reflected, with some delay, in other sectors, it remains to be seen whether negative developments shall also be seen in the next Transport Market Barometer.

For more information please contact

Dr. Martin Kesternich (ZEW), Phone +49 621 /1235-337

E-mail kesternich@zew.de

Hans-Paul Kienzler (Prognos AG), Phone +41 61 /3273 476

E-mail Hans-Paul.Kienzler@prognos.com

The Prognos/ZEW Transportmarktbarometer (Transport Market Barometer)

Since 1998, Prognos AG, Basel, and the Mannheim Centre for European Economic Research (ZEW) have surveyed some 250 experts from the transport sector on a quarterly basis about the development of transport markets. Experts are asked to predict whether, in the coming six months, transport volumes and transport prices will (strongly/weakly) increase, (strongly/weakly) decrease, or remain the same. The survey examines national and cross-border transport between Germany and Western and Eastern Europe with regard to the following transport sectors: road freight, rail freight, inland shipping, combined traffic, courier, express and package services. Moreover, experts assess the development in air and sea freight from Germany and other European countries to North America and the Asia-Pacific region.