Ti Talks Global Logistics & Trade with Absolute Strategy Research. 13 th December pm

Transcription

1 Ti Talks Global Logistics & Trade with Absolute Strategy Research 13 th December pm

2 Key Themes Latest logistics data and implications for global trade, focus on US How is the holiday season in the US shaping up for logistics providers? The potential implications of President-elect Donald Trump on global trade and logistics 2

3 Presenters Zahra Ward-Murphy, Global Equity Strategist is a macro-strategist, covering global macro and equity strategy themes. She also covers logistics, trade and China. Before joining ASR, Zahra worked as a global economist at Dresdner Kleinwort, and previously as an FX analyst at both Dresdner Kleinwort and BNP Paribas. She is a CFA charterholder. zahrawm@absolute-strategy.com/ Prof John Manners-Bell, is Chief Executive of Ti, Honorary Visiting Professor at the London Metropolitan University s Guildhall Faculty of Business and Law and an adviser to the World Economic Forum. He has over 25 years experience working in and analysing the global logistics sector. His second book, Supply Chain Risk won the Mention Speciale ACA-Bruel Prize for supply chain literature in jmannersbell@ti-insight.com /

4 Global Logistics & Trade Macro Overview Comprehensive global trade series (incl. commodities) says global trade growth remains muted c.1% YoY (Sep) However, more timely (Oct/Nov) logistics indicators continue to suggest trade growth is gaining some momentum into year-end: we look for a Q4 trade pick up Our ASR European Air Freight proxy rose to a new record high in October; though Frankfurt Air Freight dropped back in November due to pilot strike The ASR Asia Air Freight proxy rose > 9% YoY in October, suggesting a further acceleration in activity growth Our improved ASR US Air Freight proxy rose only modestly in October, though international freight appears more dynamic Asia and US Container Shipping growth improved in October 4

5 ASR Europe Air Freight Proxy Source: Various Airport Authorities 5

6 Frankfurt Air Freight and German Orders Growth Source: ASR Ltd. / Fraport / Thomson Reuters Datastream 6

7 ASR Asia Air Freight Proxy Source: Various Airport Authorities 7

8 ASR Regional Air Freight Proxies / Component series growth rates Air Freight Volumes Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Germany Air Cargo, SAA %MoM %YoY o / w Frankfurt Air Freight SAA %MoM %YoY Paris Air Freight SAA %MoM %YoY Amsterdam Schiphol Air Freight SAA %MoM %YoY London Heathrow Air Freight SAA %MoM %YoY Liege Air Freight SAA %MoM %YoY Spain Air Freight SAA %MoM %YoY Italy Air Freight SAA %MoM %YoY China Air Freight SAA % MoM %YoY Hong Kong Air Freight SAA % MoM %YoY S. Korea Incheon Air Freight SAA %MoM %YoY Taiwan Air Freight SAA %MoM %YoY Tokyo Air Freight SAA %MoM %YoY Memphis Air Freight SAA %MoM %YoY Anchorage Air Freight SAA %MoM %YoY Louisville Air Freight SAA % MoM %YoY Miami Air Freight SAA % MoM %YoY Los Angeles Air Freight SAA %MoM %YoY Chicago O'Hare Air Freight SAA %MoM %YoY ASR Europe Air Freight proxy, comprised of above European series, SAA %YoY ASR Asia Air Freight proxy, comprised of above Asian series, SAA %MoM %YoY ASR US Air Freight proxy, comprised of above US series, SAA %MoM %YoY ASR Global Air Freight proxy, comprised of individual series above, SAA %YoY Source: Various Airport Authorities 8

9 ASR Container Shipping Proxies Source: Various Port Authorities 9

10 US: Loaded containers arriving at West Coast ports 1,000,000 US West Coast-5 Container Traffic, NSA Inbound Level, TEU 950, , , , , , , , , , ,000 Peak season Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Various Port Authorities 10

11 Baltic Dry & China Containerized Freight Rates (Prices) Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17 China Containerized Freight Index % YoY (RHS) Source: Bloomberg 11

12 ASR Logistics Indicators vs. Global Trade Growth Source: Various Airport & Port Authorities 12

13 US Air Freight Volumes Source: Various Airport Authorities 13

14 ASR US Air Freight Proxy Source: ASR Ltd. / Various Airport Authorities 14

15 ASR US Air Freight Proxies: International vs Domestic Source: Various Airport Authorities 15

16 Trade Multiplier By Region Source: ASR Ltd / CPB 16

17 North America Weekly Rail Freight Volumes Source: AAR 17

18 Logistics and Christmas in the US Retail and Seasonality US National Retail Federation forecasts a 3.6% rise in nominal US holiday season sales for 2016 y-o-y. Beats 10-year average of 2.5% and is above seven-year average of 3.4% since Online sales expected to rise by 7% to 10% y-o-y. Since Q4 2008, actual online retail sales for Q4 have tended to be around 20pp higher than their corresponding seasonally adjusted Q4 growth figures according to US Census Bureau. Q4 peaks are becoming more pronounced over time. From 2000 to 2007, actual Q4 sales on average were 16.0pp higher than their seasonally adjusted figures. From 2008 to 2015, actual Q4 sales on average were 20.8pp higher than their seasonally adjusted figures. (see Global Express and Small Parcels 2016). 18

19 Logistics and Christmas in the US Amazon vs the Rest Retailers such as Macy s, Kohl s and Target have low sales and inventory expectations. Seasonal hiring is steady or down y-o-y. Last year, unusually warm weather led to weaker-than-expected sales and many unsold goods. With subdued growth and potentially lower margins, big store-based retailers are taking a cautious approach. Amazon conversely are hiring 120,000 in the US alone for holiday season, up from 100,000 in 2015 and 80,000 in It had 306,000 employees globally at the end of Q Amazon s Q4 operating profit forecast of $1.25bn to nothing disappointed investors, sending shares down 6%. But bigger investment in infrastructure in H2 compared to H1. 19

20 Logistics and Christmas in the US Express and Parcels Providers Between Thanksgiving and New Year s Eve, UPS forecasts its average daily volume globally will be approximately 28m packages, about 50% higher compared to normal. FedEx says its volume will double. UPS to hire around 95,000 seasonal employees in the US for the holiday season in 2016, increasing their workforce by about 25%. FedEx will add around 50,000 people UPS Average Daily Global Package Volume (millions) Full Year 2016 Holiday Season Forecast FedEx Average Daily Global Package Volume (millions) "Normal Volume" 2016 Holiday Season Forecast Source: UPS, FedEx 20

21 Trump and Logistics International Trade NAFTA relationship to change? Mexico to face 35% tariffs? TPP dead in the water? Relationship with China, US biggest import partner 45% tariffs? Uncertain with Trump! 21

22 Trump and Logistics Exposure Outside US NAFTA countries and some emerging markets quite exposed, major economies less so. (see Logistics Briefing) 25.0% Non-Bulk Goods Exports to US as a % of GDP 20.0% 15.0% 10.0% 5.0% 0.0% 22

23 Trump and Logistics Infrastructure Plan Trump plans to spend $1 trillion on infrastructure over the next 10 years. China has spent $1.4 trillion this year. OECD suggests infrastructure plans will increase US growth, Trump plans have some backing. But criticism over funding mechanism. Plan is for huge tax credits for private companies to invest in projects, which they would end up owning. Critics argue that it would be better for the government to just borrow at low interest rates and spend itself. 23

24 About Ti 24

25 About ASR Insight with Accuracy David Bowers and Ian Harnett founded Absolute Strategy Research with the singular aim to provide clients with the highest quality macro-strategy research and research service available. Both founders brought to ASR more than 20 years in investment research; a top ranking in Extel; and a top three ranking in Institutional Investor. Since its founding in London in 2006, the firm has grown to a global presence, with a secondary office in New York and consulting / joint venture relationships in Australia, Germany and Japan. The firm employs 30 investment professionals and works with over 100 institutional asset managers around the world. ASR does not operate as a publishing house, instead interacting with clients as partners, responding quickly and willingly to their research needs. 25

26 Ti Company Information 26