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13 Oct 2023
The Normality of Norman Normal
AP Moeller Maersk (MAERSK-B:CPH), 0 | A.P. Moller - Maersk A/S Class B (MAERSK.B:CSE), 0 | United Parcel Service (UPS:NYSE), 0 | United Parcel Service, Inc. Class B (UPS:NYS), 0 | Deutsche Post AG (DHL:ETR), 0 | FedEx Corporation (FDX:NYSE), 0 | FedEx Corporation (FDX:NYS), 0 | DSV (DSV:CPH), 0 | DSV A/S (DSV:CSE), 0 | Kuehne & Nagel International AG (KNIN:SWX), 0 | EXPEDITORS INTL WASH (EXPD:NYSE), 0 | Expeditors International of Washington, Inc. (EXPD:NYS), 0 | C H ROBINSON WORLDWIDE (CHRW:NYSE), 0 | C.H. Robinson Worldwide, Inc. (CHRW:NAS), 0
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The Normality of Norman Normal
AP Moeller Maersk (MAERSK-B:CPH), 0 | A.P. Moller - Maersk A/S Class B (MAERSK.B:CSE), 0 | United Parcel Service (UPS:NYSE), 0 | United Parcel Service, Inc. Class B (UPS:NYS), 0 | Deutsche Post AG (DHL:ETR), 0 | FedEx Corporation (FDX:NYSE), 0 | FedEx Corporation (FDX:NYS), 0 | DSV (DSV:CPH), 0 | DSV A/S (DSV:CSE), 0 | Kuehne & Nagel International AG (KNIN:SWX), 0 | EXPEDITORS INTL WASH (EXPD:NYSE), 0 | Expeditors International of Washington, Inc. (EXPD:NYS), 0 | C H ROBINSON WORLDWIDE (CHRW:NYSE), 0 | C.H. Robinson Worldwide, Inc. (CHRW:NAS), 0
- Published:
13 Oct 2023 -
Author:
Joynson Robert RJ | Watkins Hugo HW -
Pages:
38
Container volumes are back to normal, with the new normal resembling the old normal
Several of the stocks under our coverage have expressed frustrations with respect to weak end-demand over the past year; most notably the Forwarders and Container lines. During late-2022/early-2023 this sentiment was entirely fair, but not anymore. The V-shape recovery we predicted in our 25-May report is playing out, with global container volumes now running at +6% versus pre-pandemic levels and US container imports +8% - see Figs 1 and 2 respectively. Over a period of four years, these growth rates are distinctly normal. Indeed considering the dilutive impact of ongoing inventory de-stocking, we would argue they are rather good.
US imports are now +8% versus 2018-2019 levels despite ongoing inventory de-stocking
US container imports are now +8% versus the 2018-2019 baseline; a major improvement from the -6% trough seen in late-2022/early-2023. When inventory headwinds fade, our analysis continues to suggest this delta will settle in the mid-teens. Either way, the recovery in US imports will soon become more obvious, with YoY growth now positive (Fig 3) and likely to rise to +20% for Nov-Dec.
European imports are back to flat, while East-west head volumes are +7% vs. pre-Covid
Unlike in the US, where container imports were +20% vs. pre-Covid levels in 2021, this was never the case for Europe where the corresponding delta was just +3%. This was followed by a c.6% slump following Russia''s invasion of Ukraine, but normality has now returned with recent European import volumes back in-line with 2019 levels. East-west headhaul volumes overall are currently +7% vs. 2019 levels while North-south headhaul volumes are +11% (Fig 4), equating to CAGRs of +2% and +3% respectively over four years - developments that are entirely normal.
Some of our stocks are seeing weak volumes due to market share losses, not weak markets
Our recent discussions with investors...