Global logistics: High freight rates and resilient demand support near-term earnings, but medium-term supply risks continue to build

Overview

This report is Bernstein’s pulse check on the global logistics supply chain, with the core conclusion that rates continue to rise while demand has not materially weakened. Conflict, capacity constraints, fuel surcharges, and pre-quarter-end shipping demand have jointly pushed up prices across ocean freight, air freight, and North American ground transportation. In the short term, this creates a favorable earnings environment for freight forwarders, express delivery, rail/intermodal, and some transport companies; however, the report also warns that an expanding ocean shipping orderbook, low scrapping rates, and potential route normalization could pressure rates in the medium term.

Core views

First, ocean shipping demand remains strong, with April container volumes up 4% YoY and double-digit growth across transpacific, Asia-Europe, and intra-Asia routes, supporting Maersk’s full-year market growth guidance of 2%-4%. Second, ocean shipping prices have risen sharply due to the conflict and pre-peak-season demand, with both SCFI and WCI more than 100% above pre-conflict levels. Third, the air freight market remains elevated as Middle Eastern carriers’ capacity declines and fuel and insurance surcharges persist, while shipments of AI, semiconductors, and high-value electronics support demand. Fourth, improvements in North American trucking and domestic intermodal are mainly driven by tighter supply, with regulatory enforcement, fuel pressure, and carrier exits pushing up prices. Fifth, medium-term risks are concentrated in new ocean shipping capacity, a Red Sea/Suez reopening, worsening demand, and market share competition.

Analysis framework

The report combines industry high-frequency data with company ratings, tracking ocean shipping volumes, SCFI, WCI, air freight chargeable weight, PMI, truck spot rates, intermodal volumes, airline capacity, and companies’ operating leverage, then mapping changes in rates, demand, supply, and costs to the earnings elasticity and valuation views of European and North American logistics companies.

Methodology notes

• Industry cycle trackingSupply chain pulse check

  A four-factor framework of rates, demand, capacity, and costs

  The framework assesses the logistics sector’s near-term earnings environment and medium-term risks through ocean and air freight rates, cargo volumes, PMI, fuel costs, airline capacity, fleet supply, and truck supply contraction.

• Stock ratingBernstein stock rating framework

  Relative performance rating

  Bernstein’s branded stock ratings are based on expected performance relative to the relevant market index over the next 12 months: Outperform means expected to outperform, Market-Perform means broadly in line, and Underperform means expected to underperform.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• DSV

  Top European logistics pick, rated Outperform, target price DKK 2,100.00

  Strengths

  Potential integration synergies from DB Schenker, a strong track record of delivering M&A synergies, asset-light model, and potential resumption of buybacks in the future.

  Weaknesses

  Execution and synergy delivery for a large acquisition still need to be validated.

  Comparison

  Compared with Kuehne+Nagel, DSV relies more on acquisition integration and synergy release, and Bernstein believes the valuation does not yet fully reflect the synergy benefits.

  Risks

  Slower-than-expected integration progress, deleveraging slower than expected, and a downturn in the freight forwarding cycle.

• DHL

  Integrated logistics and express company, rated Market-Perform, target price €44.00

  Strengths

  Its Express business operates in a three-player oligopoly, benefiting from e-commerce and global trade, while medium- to long-term GDP-plus growth and a stable dividend are attractive.

  Weaknesses

  Earnings are highly sensitive to e-commerce and global trade, and a B2B recovery still requires improvement in customer verticals such as autos, capital goods, and technology.

  Comparison

  Compared with pure freight forwarders, DHL has a more diversified but more asset-heavy business, though there is valuation recovery potential from simplification and a possible spin-off.

  Risks

  Weaker trade or e-commerce demand, insufficient asset utilization, and spin-off progress falling short of expectations.

• Kuehne+Nagel

  Pure freight forwarder, rated Market-Perform, target price CHF 190.00

  Strengths

  Asset-light and flexible cost structure, providing some protection in a downturn.

  Weaknesses

  Execution in 2024 lagged DHL and DSV, volume growth underperformed, and cost cuts were not sufficient to fully offset the pressure.

  Comparison

  Like DSV, it is a large listed freight forwarder, but its strategy is more focused on organic growth and high dividends; in the short term, investor confidence needs execution improvement to recover.

  Risks

  Continued execution underperformance versus peers, overly passive cost cutting, and limited investor willingness to allocate capital.

• AP Moller - Maersk

  Container shipping company, rated Underperform, target price DKK 10,700

  Strengths

  Near-term beneficiary of Red Sea rerouting, conflict-related disruption, and high ocean freight rates.

  Weaknesses

  Its core container shipping business faces an expanding orderbook, industry oversupply, and price-taker characteristics; its integration strategy is viewed as having failed to deliver revenue synergies.

  Comparison

  Compared with asset-light freight forwarders, Maersk is more sensitive to ocean freight rate cycles and supply volatility.

  Risks

  Restoration of Red Sea/Suez routes, new vessel deliveries, market share competition, and a sharp drop in freight rates.

• UNP、NSC、UPS、FDX

  North American transport and express beneficiaries, rated Outperform

  Strengths

  Tighter supply in North American ground transportation, fuel costs, and regulatory enforcement are driving freight rate improvement, while express companies can also benefit from higher airfreight substitution costs and fuel surcharge pass-through.

  Weaknesses

  Some demand improvement is still at an early stage, and supply factors remain the primary driver.

  Comparison

  Compared with the Market-Perform names, these companies are viewed in the report as having greater earnings improvement elasticity.

  Risks

  An unsustained demand recovery, falling fuel prices weakening supply rationalization, and regulatory effects unfolding more slowly than expected.

• CP/CP.CN、CNI/CNR.CN、CSX、JBHT、CHRW

  North American rail, intermodal, and brokerage-related names, rated Market-Perform

  Strengths

  Rising truck rates, positive domestic intermodal volume growth, and improving manufacturing readings provide some support.

  Weaknesses

  The trend is strongly supply-driven, while customer behavior and buy rates may remain under pressure, and the brokerage industry may face consolidation.

  Comparison

  Compared with the Outperform group, the risk-reward is more balanced, and the report does not present a clear excess return view.

  Risks

  The cyclical turning point being disproven, insufficient customer demand, limited cost pass-through, and behavior changes caused by rule changes related to brokerage liability.

Key data

• April ocean container volumes+4% YoYIn line with the upper end of Maersk’s full-year market growth guidance of 2%-4%.
• SCFI relative to pre-conflict level+134%Versus +61% a month ago, showing continued increases in ocean spot freight rates.
• WCI relative to pre-conflict level+109%Versus +34% a month ago, also reflecting a rapid rise in ocean shipping prices.
• Air freight rates relative to pre-conflict level+40%-50%Affected by Middle Eastern carrier capacity, fuel, insurance, and war-related surcharges.
• May/June air freight revenue+35%-45% YoYDriven jointly by higher yields and a recovery in chargeable weight.
• U.S. PMI54.0（+1.3）The May leading indicator remains in expansion territory.
• China PMI51.8（-0.4）Although down month over month, it remains in expansion territory.
• Europe PMI51.6（-0.6）Still in expansion territory, though momentum has slowed slightly.
• North American spot TL rates excluding fuel+48% YoYMonth-to-date growth is above May’s +34% and the roughly +20%-25% seen in the prior three months.
• Expected ocean shipping industry supply growth2026 +3%, 2027 +7%, 2028 +10%An expanding orderbook and low scrapping rates imply medium-term supply pressure.

Impact & implications

The investment implication is a short-term positive bias toward companies in the logistics chain with freight rate pass-through, capacity flexibility, or exposure to tightening supply, especially freight forwarders, express delivery, rail/intermodal, and North American ground transportation names; however, container shipping companies warrant greater caution because current high rates may be supported by conflict and rerouting disruptions, while added capacity, potential route normalization, and share competition could lead to the next phase of rate correction.

Risks

• New ocean shipping capacity and low scrapping rates could significantly increase supply in 2027-2028.
• If Red Sea/Suez routes are restored, capacity could be released and Asia-Europe freight rates could come under pressure.
• Demand could deteriorate in the second half, especially as consumption, housing, and parts of manufacturing-related demand remain weak.
• If oil prices fall, part of the freight rate upside and carrier exits driven by fuel costs could weaken.
• High air freight rates could attract capacity back into the market, easing pricing pressure.
• If shipping companies resume competing for market share while cash reserves remain ample, freight rate correction could be more severe.

What to watch

• Whether SCFI and WCI remain more than 100% above pre-conflict levels or fall back rapidly.
• Whether Maersk raises its second-quarter guidance and maintains its full-year market growth assumption of 2%-4%.
• Progress on Red Sea/Suez route normalization and the impact of Middle East peace talks on routes, fuel, and insurance surcharges.
• Whether air freight chargeable weight can remain in the 0%-5% growth range and whether IATA demand growth continues.
• Whether the YoY growth in North American spot TL rates excluding fuel shifts from being supply-driven to demand-driven.
• Whether PMI in the United States, China, and Europe continues to remain in expansion territory.
• Ocean shipping scrapping rates, orderbook deliveries, and net fleet growth in 2027-2028.
• Subsequent management commentary from companies such as JBHT on the freight cycle turning point.