BVL/DIW Logistics Indicator in Q4 2009 - Strong positive signals for the logistics market in Germany
The turnaround that began in the German logistics industry back in mid-year continued in the fourth quarter. With a gain of 20 points, the current uptrend in the BVL/DIW Logistics Indicator is stronger than in the previous quarter (when sentiment showed an increase of 14-plus points. Although the new index level of 102.4 points indicates a move towards the "normal" line following the dramatic slide at the turn of 2008/2009, it should not be forgotten that the index gain is significantly underpinned by the optimistic forecasts for the future: even though the assessment of the situation in the current quarter (plus 27.6 index points) has improved more strongly than the score for expectations (which has gained just under 20 points), the gap between expectation and current situation indicators is still considerable at just over 37 index points. Our overall assessment must therefore take account of the fact that the expected improvement in the business trend for the coming 12 months is based on an assessment of the current situation that is still over 16 percent below the "normal" line.
The key trend in the development of the overall climate is the strong recovery on the supplier side (logistics service providers), whose sub-indicator gained 31.5 points. The trend among users in industry and the trading sector was considerably more restrained (climate improvement of just over 8.3 points). The improved scores for assessment of the current situation were the main driver in both groups. For the first time in over a year, the logistics sentiment among suppliers (107.7 index points) is once again more favourable than among users (97.2 index points).
On the supplier side, the turnaround in incoming orders from within and outside Germany played a key role in the drastic improvement in the assessments of the current situation (as reflected by a gain of 40 index points). Suppliers also succeeded in significantly reducing capacity under-utilisation. Most respondents expect to see a continuation of this trend over the next twelve months. With regard to the anticipated development of business, the logistics service providers are now moving closer to the demand volume for logistics as forecast for the future by users in industry and the trading sector. As a result, no further significant layoffs are planned and we should even see a slight expansion of operational capacities.
The index movements among respondents on the demand side are far more modest. This is mainly due to the fact that the extent of the collapse in the previous quarters was also more modest: the main adjustment burden of fluctuating logistics requirements was passed on to the supplier side, while companies were able to achieve satisfactory overall utilisation of their own capacities even in the quarters that were hit hardest by the crisis. With the demand for logistics services more or less stagnant, the improvement in the assessment of the current situation is due to slightly improved capacity utilisation and the still high but meanwhile slightly lower availability of capacity in the market. The expectation indicator for the user side is more or less unchanged (gain of 1.3 index points). There is also little or no movement in the individual expectation components. This means that, with operational capacities stagnating, there is a continued risk of personnel cutbacks in the industrial and trading companies.
The overwhelming majority of respondents do not believe that the tax breaks for companies planned by the new German government will generate any noticeable economic stimuli. 68 percent of the logistics service providers and an even higher 79 percent of the surveyed industrial and trading companies are sceptical about this measure. Boosting the after-tax returns of the companies is not seen as an effective way of addressing an economic downturn characterised by lack of demand.
