Chinese freight companies reported an improvement in operating conditions in August, citing better volumes, a more rapid increase in rates and slightly reduced cost pressures. Although profitability remains elusive, these companies were also generally more upbeat about business in the near future.
Their views stand in contrast to the relatively dour readings of the FTCR freight survey of recent months as the Chinese economy has slowed in the face of tighter credit conditions and rising trade tensions with the US.
The headline FTCR China Freight Index rose 4 points over July to 51.9, the best reading so far this year and the first month in six above the 50-point mark separating expansion from contraction.
It remains to be seen if this month’s improvement is an aberration. Our measure of companies citing rising or falling business as a factor behind changes in volumes, which tracks private and government-linked monthly industry surveys, also picked up in August.
However, while the government has pledged to stabilise the economy in the second half of this year, relief measures so far have been both limited and ineffective.
The FTCR China Freight Volume Index rose 5.6 points to a six-month high of 51.5, with 22.4 per cent of respondents reporting that volumes rose on the previous month, the most since March.
Our Freight Outlook Index rose 2.5 points from July to 52.7, though just 10.2 per cent of respondents said they expected improvement in the month ahead.
The FTCR China Freight Rate Index rose 2.4 to 51.7, though the 6.3 per cent of respondents who said they expected rates to improve was the smallest proportion since August 2016 (90.7 per cent of respondents said rates were unchanged).
The FTCR China Freight Cost Index fell 1.9 points to a four-month low of 56.1, while our cost outlook index, based on expectations in the coming months, fell 4.1 points to 54.1.
The FTCR Freight Profit Index rose 3.1 points to a five-month high of 48.0. Our profit index has not been above the 50 level, signalling rising profits, since January 2015. Our profit outlook index improved 2.6 points to 52.4.
The FTCR China Freight survey is based on interviews with 200 road, railway, waterway and air logistics companies. For further details click here. This report contains the headline figures from the latest Freight survey; the full results are available from our Database.
FT Confidential Research is an independent research service from the Financial Times, providing in-depth analysis of and statistical insight into China and south-east Asia. Our team of researchers in these key markets combine findings from our proprietary surveys with on-the-ground research to provide predictive analysis for investors.