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DHL Provides Early 2018 Outlook Derived from its New Global Trade Barometer Tool

DHL has introduced the DHL Global Trade Barometer, intended to be a new early indicator for the current state and future development of international commerce.

The DHL Global Trade Barometer is based on large amounts of logistics data that are evaluated with the help of artificial intelligence. Since global trade fuels the world economy, the DHL Global Trade Barometer not only provides an outlook on future trade, but also on the prospects for the global economy. The indicator has been developed in cooperation between DHL and Accenture and will be published quarterly.

“As the world’s leading logistics provider, DHL has both a deep understanding of the driving forces behind global trade volumes and the industry expertise to analyze and interpret market data,” Tim Scharwath, chief executive officer of DHL Global Forwarding, Freight, said at a press conference in New York on Thursday. “Our network, knowledge and experience uniquely position us to understand global supply chains in order to derive a global trade outlook. The DHL Global Trade Barometer shows impressively how digitalization–with the use of Big Data and Predictive Analytics–opens up entirely new opportunities that we can use for the benefit of our customers.”

Scharwath said the main aspects of the DHL Global Trade Barometer will be available to the public, with more detailed information shared with its customers. Accenture will provide data modelling and predictive analytics to forecast future trade trends for DHL.

The DHL Global Trade Barometer is based on import and export data for a number of intermediate and early-cycle commodities that serve as the basis for further industrial production, such as brand labels for clothes or touch screens for mobile devices, Scharwath said.

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Sources for the index are aggregated market data from air and containerized ocean freight in seven countries–the U.S., China, Germany, the U.K., South Korea, India and Japan–which account for more than 75 percent of world trade. Using AI and various statistical methods, this data is compressed to a single index value, which is published on a global level and individually for the seven countries evaluated.

The barometer takes into account up to 10 industries per country, ocean and air freight, and imports and exports.

The DHL Global Trade Barometer index represents the weighted average of the current growth and the upcoming two months of global trade. An index value above 50 indicates a positive development, while values below 50 point to a decline in world trade. Tests with historical data have revealed a high correlation between the DHL Global Trade Barometer and real containerized trade, providing a three-month forward-looking estimate, Scharwath noted.

“The DHL Global Trade Barometer for January indicates that global trade will continue to grow within the next three months,” Scharwath said. “On its initial release, the index scored 64, which is slightly below the values calculated for previous months. That means that world trade is still considered to be in an expansive mode, but growth loses momentum. The decline is due to weakening prospects for Chinese and Japanese trade, which is only partially offset by improved prospects for India, South Korea and Great Britain.”

The global outlook for air trade has dropped by -2 points, but continues to predict positive growth with a value of 71. The drop is mainly due to a decline in US and German air trade with -4 and -3 points, respectively. With respect to worldwide trade in containerized ocean freight, a similar picture emerges. Compared to December, the index value is slightly down with -1 points. The main reason for this is a rather steep decline in Chinese ocean trade, with -7 points since November of last year; indicators for all other countries point upwards.

Scott Davidson, managing director at the Seabury Consulting unit of Accenture, said in addition to the findings on world trade in general, the DHL Global Trade Barometer provides deep insights into specific issues, such as the main macroeconomic factors that are affecting trade trends or the countries and regions that are driving global trade. By breaking down the global supply chain, volume trends within industry sectors could be identified, pointing to outperforming and declining sectors.

He said predictions for the coming three months allow early identification of turning points in global trade dynamics and economic growth.

Moreover, DHL itself will leverage the indicator to fine-tune its own resource planning for its international logistics operations. Due to the high quality of the data provided by Accenture, the company believes that the DHL Global Trade Barometer has a high significance also beyond logistics. Since it is an indicator for future trade and economic growth worldwide, the index could be integrated into forecast models by banks, associations or economic research institutes.

The executives noted that the barometer provides a better understanding of the current and future state of global trade. It also allows deep dives into specific fields of interest, such as which countries and regions are driving international trade dynamics, which macroeconomic factors are promoting international trade or are an obstacle, and which sectors are currently outperforming or are in decline.

Scharwath said the insights from the DHL Global Trade Barometer will help DHL customers to optimize their business processes, for example providing guidance for investment and supply chain decisions.

Scharwath did note that the barometer is not predictive of short-term trends such as strikes at ports or political decisions, but that it would quickly take them into account in its next quarterly report.

“In a world characterized by volatility and uncertainty, we are contributing to greater transparency and predictability for the benefit of our customers, our business and society,” Scharwath said.