As Forwarder went to press revellers in many parts of the world were preparing for two weeks of celebrations to usher in the Lunar New Year. This signals the start of the Year of the Rooster in the Chinese zodiac calendar.

Chinese astrologers believe it will mean ‘the end of a confusing period’ and the start of a more rational and constructive year. Forwarders the world over will certainly hope so.

2016 was, to say the least, challenging. Ocean and air freight rates performed poorly for much of the first three quarters putting pressure on carrier, forwarder and 3PL margins.

The container shipping industry continued its period of consolidation, a trend that has gathered speed since the bankruptcy of Korea’s Hanjin Shipping in August.

New entrants steamed into freight markets led by Amazon and a slew of new digital supply chain service providers eager for a slice of the freight transaction pie.

And, finding its most obvious expressions in the UK’s ‘Brexit’ vote and the election of Donald Trump as the new US President, protectionist sentiment gained political traction, potentially threatening many of the trade liberalization gains of recent decades.

But amidst the gloom, it wasn’t all bad news. Q4 saw major gains in global ocean and air rates as retailers replenished inventories ahead of the holiday season. In the US, initial shock at Donald Trump’s surprise Presidential election triumph quickly turned positive for the transport sector due his perceived pro-business policies that many hope will boost exports.  There were also signs that demand from Europe is increasing, while growth in many emerging markets in Asia held up better than analysts had forecast.

Looking forward at prospects for 2017, the early timing of the Lunar Year has made reading freight market signals no easy task. The Chinese New Year celebrations traditionally see factories in the world’s workshop close for at least two weeks. Many only then reopen with a limited workforce while they wait for employees to return from extended family vacations. Freight markets traditionally dip around the turn of the year before enjoying a mini-peak ahead of the CNY shutdowns. But because Lunar New Year falls early in 2017, it is difficult to gauge whether the buoyancy of freight rates in the first weeks of the January is due to retailers restocking ahead of CNY, or a more general improvement in sentiment and demand.

Analysts diverge on their freight market forecasts for 2017, although most see more positives than negatives. For example, although many shippers have delayed signing new annual contracts ocean freight contracts with lines for Asia-Europe services in the hope that a decline in spot rates will give them more negotiating leverage post-CNY, it is generally anticipated that long-term rates will be significantly higher in 2017 than in 2016. A similar pattern is expected on the Trans-Pacific trades when contracts are negotiated in Q2.

At sea, post-Hanjin, there are signs that shippers are now less focussed on securing the lowest price and are instead also factoring in service quality and counter-party risk. Consolidation of the leading lines through mergers and acquisitions is a continuing process, and the realignment of the alliance system in Q2 should bring more stability to the market.

There is still substantial excess capacity in the box shipping market and more vessels due for delivery this year, many of them of 18,000 TEU+ capacity. If lines can resist a price war and the temptation to order more vessels, then supply and demand should find more balance in late-2017 and early 2018. But much depends on liner discipline and, if history is any guide, expect at least one or two carriers to break ranks in the search for market share and higher slot utilisation.

The picture in the skies is even murkier, not least because so much depends on growth in bellyhold capacity which is determined by demand for international passenger services. The International Monetary Fund (IMF) recently raised its estimate for global economic growth in 2017 from 3.1% to 3.4%, up from a projected 3.1% in 2016. But even this improved forecast after a buoyant peak season for air freight did not prevent the International Air Transport Association from proclaiming in January that world trade was still “stagnant”.

IATA called on the air cargo industry to “continue to improve its value offering by implementing modern customer-centric processes” in a bid to stay modally competitive.

So will the Year of the Rooster usher in a new year of economic growth and higher margins? For freight markets at least, the outlook will only become clearer after CNY, but early signs are optimistic. Let’s hope 2017 sees the crowing begin!