The global economy grew at a moderate though robust pace in Q3, keeping full-year growth in line with previous expectations. Growth, however, is once again unbalanced across regions and sectors. The services sector remains the main driver, while the fragile recovery in manufacturing activity observed in the first half of the year came to a halt. The Global Manufacturing Purchasing Managers Index fell into contractionary territory in Q3, averaging 49.4. New orders plummeted, and inventories rose among manufacturers in the US and Europe.
When it comes to regions, the US is still driving the global expansion. The Federal Reserve's move of 50bp cut cast out recession fears, and the US consumer is still optimistic, supported by a resilient labor market and continued wage gains. Total goods demand was up 2.7% year-over-year in July and August. Sticky core inflation and a recent dip in consumer confidence are clouds on the horizon for US consumption but all in all, the expectation is to see continued robust economic growth.
Container trade remained strong in Q3. Demand is estimated to have grown 4-6% year-over-year. Exports out of China and Southeast Asia make up a very large portion of such growth. Imports grew above average in Latin America and North America, while imports into Africa turned negative.
Ocean update
The Drewry WCI composite index decreased 4% to $3,095 per FEU, which is 70% below the previous pandemic peak of $10,377 in September 2021, but 118% more than the average 2019 (pre-pandemic) of $1,420. Some minimal congestion caused by the ILA three-day strike in early October remains at US East Coast and Gulf ports though operations have mostly recovered. Some observers anticipate that the strike will still lead to some capacity and equipment shortages at Asian origins in early November.
Ground freight update
North American ground freight saw a 0.3% year-over-year volume decline in July and August, though signs suggest that the sector has stabilized, with contract truckload volumes showing improvement. Truckload supply continued to expand, exerting downward pressure on rates, while tight capacity in the Less Than Truckload segment contributed to higher rates as reported in our latest Q3 results.
Air freight update
The global air freight market has seen a mixed picture in recent months. On the capacity side, September saw a slight slowdown in growth to 5% year-over-year, though the expansion continues to be driven primarily by international widebody traffic.
In terms of pricing, global freight rates have remained relatively stable but with notable discrepancies across trade lanes. One positive development has been the decline in jet fuel prices in September, which outpaced the drop in crude oil prices and narrowed the refining crack spread to $13 per barrel.
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For more information:
Mikkel Linnet
A.P. Moller - Maersk
Tel: +45 24821196
Email: [email protected]
www.maersk.com