All’s well – or not with the logistics indicator for the third quarter?

The good news conveyed by the logistics indicator for the 3rd quarter of 2021 is: Although the pandemic is still not over, the values for business situation, business expectations, and thus the business climate are at the level of the pre-Corona years 2018 and 2019 – provided that the survey results from the months of June, July, and August are aggregated into quarterly values.

Comment by Prof. Thomas Wimmer, Chairman of the Board, Federal Association of Logistics (BVL)

However, a look solely at the values for the month of August dampens the joy. Because especially in the last few weeks, the assessment of the situation and especially the expectations have deteriorated significantly – in industry, trade, and among logistics service providers.

The momentum from June is waning despite a very decent business situation. The smooth V-shaped course of the indicator curve, which promised a rapid recovery, is beginning to stutter – even though logistics service providers report good demand development, rising prices, and personnel expansion. Industry and trade also signal that they are looking for personnel. However, they simultaneously report that inventory levels have dropped to a low level and prices are rising.

The “epidemic situation of national significance” was confirmed by the German Bundestag at the end of August and is now valid until the fall. However, it is probably more tangible real economic challenges that are calling the recovery into question. For example, the Association of the Automotive Industry (VDA) lowered its sales forecast for 2021 from eight to three percent in July. The reason for this: the shortage of electronic components. But it is not just “chips” that are missing and occasionally leading to production stoppages. Shortages and price increases are being experienced across all industries for steel, wood, and other construction and raw materials as well as energy carriers.

Highest price increase since January 1975

As reported by the Federal Statistical Office in August, producer prices for industrial products in July 2021 were 10.4 percent higher than in July 2020. This was the highest increase compared to the same month of the previous year since January 1975 (+10.5%), when prices rose sharply in connection with the first oil crisis. Quantity and price fluctuations as well as uncertain forecasts have a particularly intense effect on the logistics sector.

Short-time work almost over – labor market stable

The positive news is: The time of short-time work is almost over, and the labor market is showing stability. In the second quarter, gross domestic product was only 3.3 percent below the last pre-Corona quarter at the end of 2019. Large parts of social and economic life are swinging back into old or altered normality.

The vaccination campaign is showing results, and health risks are decreasing with immunization and continued reasonable behavior. This makes familiar or slightly modified processes possible again. This also includes the gathering of people, the direct encounters and communication that we have missed for so long. The audits for the German Logistics Award and the MX Manufacturing Excellence Award were able to take place on-site at the companies whose concepts had been nominated.

The BVL is doing everything it can to hold a German Logistics Congress from October 20 to 22, which will convey information online with digital elements while simultaneously restarting live and lively at the usual location in Berlin – with familiar and new offerings.

Details on the Logistics Indicator Q3/21:

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Photo: © BVL / Caption: Prof. Thomas Wimmer, Chairman of the Board, Federal Association of Logistics (BVL)