MEDIUM RISK for entreprises
A recession was avoided in 2019, but no rebound is on the cards for 2020.
Inflation expectations are best revealed by those who have skin in the game.
For every drop by 1 percentage point in interest rates, savings rates increased by 0.2 percentage points in Europe.
What to Watch?
World trade growth appears to be the main driver for transportation of any kind whatsoever, although the requirements of people transportation strongly differ from these of goods transportation. In volume terms, world trade growth amounted to +4.3% on a yearly average in 2017 while it amounted to half as much as +2.1% in 2016. The good news is that we expect the global trade growth to hit +3.9% in 2018, in other words a supportive background for the second consecutive year despite a poor outlook across the Middle East.
Because of its flexibility, road transport is usually used to carry goods nationwide and takes the lion’s share (around 70%) of the transportation market as a whole. However, trucking companies have to pay attention to higher costs associated with retaining truck drivers and rising fuel prices that might cut margins eventually. The bigger the country, the most favored rail transport is. So railroad traffic shall profit from same uptrends as road transport, in addition to soaring demand in raw materials across America and Eurasia. Air transport enjoys the surge in air passenger travel even if some big players start complaining about low-cost airlines’ fierce (and new) competition over long-haul routes. The better outlook for maritime transport has still to contend with slack capacity, rising fuel costs and tighter regulations to ensure margin increases.
Road transport: High degree of fragmentation among road transport firms, especially in Europe
Rail transport: The bigger the country, the better for rail transport
Air transport: Low-cost airlines’ competition spreading out over long-haul routes
Maritime transport: Stronger Chinese demand in bulk goods helping boost the marine sector
These assessments are, as always, subject to the disclaimer provided below.
This material is published by Euler Hermes SA, a Company of Allianz, for information purposes only and should not be regarded as providing any specific advice. Recipients should make their own independent evaluation of this information and no action should be taken, solely relying on it. This material should not be reproduced or disclosed without our consent. It is not intended for distribution in any jurisdiction in which this would be prohibited. Whilst this information is believed to be reliable, it has not been independently verified by Euler Hermes and Euler Hermes makes no representation or warranty (express or implied) of any kind, as regards the accuracy or completeness of this information, nor does it accept any responsibility or liability for any loss or damage arising in any way from any use made of or reliance placed on, this information. Unless otherwise stated, any views, forecasts, or estimates are solely those of the Euler Hermes Economics Department, as of this date and are subject to change without notice. Euler Hermes SA is authorised and regulated by the Financial Markets Authority of France.
© Copyright 2017 Euler Hermes. All rights reserved.