Chinese freight firms report falling rates hitting profits Premium
FTCR China Freight Index below 50 for fifth month as optimism fades
The FTCR China Freight Index dipped in May as companies became less positive about the month ahead. The headline index fell 0.5 points month-on-month to 46.3 and was below the 47.7 average for the past 12 months. May also marked the fifth straight month that the index has been below the 50 level that separates expansion from contraction. Although cost pressures eased, there was no improvement in freight rates, leading to companies reporting a sixth straight month of falling profits.
* Our measure of freight volumes pointed to a fifth straight month of falls in May.
* The FTCR China Freight Volume Index rose to 42.7 from 42.3 in April, below the 44.5 average for the previous 12 months but above last May’s 41.2.
* Just 11.3 per cent of respondents said volumes were higher than the previous month, the smallest proportion since January.
* The FTCR China Freight Outlook Index suggested respondents were less positive about the month ahead.
* Our Freight Outlook Index fell to 50.7 from 52.8 in April, but remained above 50 for the third straight month.
* Freight rates dropped for a fourth straight month, although our index remained unchanged from April.
* The FTCR China Freight Rate Index again stood at 48.8, just below the 49.6 average for the previous 12 months but 3.5 points higher year-on-year.
* The majority of respondents, 67.6 per cent, reported that freight rates were unchanged from the previous month.
* The spike in costs reported last month eased in May.
* Our Freight Cost Index fell 6.3 points month-on-month to 53.8, below the average of 57.8 for the previous 12 months.
* The proportion of respondents reporting a rise in costs slipped to 20.7 per cent from 32.4 per cent in April, while 13.1 per cent reported falling costs, the largest proportion since August last year (13.7 per cent).
* Our measure of freight company profitability suggested that profits fell for a sixth straight month in May, although at the slowest pace so far this year.
* The FTCR China Freight Profit Index rose 3.2 points month-on-month to 46.9, the highest level since December (49.8) and above the average of 45.4 for the previous 12 months.
* The index has recorded only one reading above 50 in the past two years (November 2016).