The Logistics Confidence Index, calculated in collaboration with KPMG Turkey and Istanbul University Faculty of Transportation and Logistics, completed the last quarter of 2020 with a positive outlook. Thus, the sector maintained its positive outlook for two consecutive quarters.
The Logistics Confidence Index increased by approximately 1 percent in the fourth quarter of 2020 compared to the previous three-month period, reaching 110.38 points. The index indicates a larger increase of approximately 15 percent compared to the last quarter of 2019. The Current Situation Index, which shows the current status of the sector, has continued to improve since the beginning of the second quarter, rising to 107.54 points.
The index measuring the sector's human resources needs also followed the general recovery trend, measuring 105.84 with a 25 percent increase in the last quarter, signaling that the outlook for employment in the sector has turned positive.
Looking at expectations for the first quarter of 2021, the index for business conditions in the transportation sector was measured at 114.60, up approximately 9 percent quarter-on-quarter. The expectation index for the sector's human resources needs in the next three months also increased by approximately 18 percent to 123.36.
Negative profitability expectations in the first quarter
On the other hand, the index measuring the sector's expectations for profitability in the first quarter of 2021 fell by 20 percent to 82.48, and the profitability outlook turned negative. The weak expectations for profitability are attributed to the serious cost increases that are being felt on a global scale. The Baltic Dry Index exceeding the $1,800 threshold in January was due to the significant increase in freight rates for shipments from China to Europe due to container supply problems. In February, although the Baltic dry cargo index slightly declined to the $1,440 threshold, the index still indicates an increase of over 200 percent compared to the same period last year. The triple-digit increases recorded in freight rates on an annual basis are putting pressure on the sector.
Global ports have two to three years
Evaluating the index, KPMG Turkey Transportation Sector Leader Yavuz Öner said that although cargo transportation is in the recovery process, it may take two to three years for things to get back on track in maritime. Öner said:
“The transportation sector continues the recovery trend that started in the second half of 2020. In terms of sub-sectors, the effects of the pandemic were most intensely observed in aviation due to the decline in passenger transportation. However, the sector entered the recovery process with the support of the high demand for cargo transportation. In line with the statements of the International Air Transport Association (IATA), governments and airlines can cooperate to implement standard operating procedures between countries in international passenger transportation during the normalization process. In maritime, a decline in trade volume at ports was also observed in parallel with the disruptions in the supply chain. A recovery was recorded thanks to the support of port operators and governments worldwide. However, the maritime sector is directly affected by end-consumer demand and trade volume, depending on the location of the traded products and the supply chain network. Accordingly, it may take two or three years for certain global ports to return to pre-Covid-19 levels.” Öner stated that there are serious expectations for increased investments in regional and national supply chain and logistics infrastructures following the disruptions in the supply chain during the pandemic process, and said, “The large investments envisaged in the supply chain may put pressure on transportation and logistics providers, including ports, airports and railways. Transportation companies may have to review their operations, cost structures and business models in order to adapt to this new environment and ensure sustainability.”
