By Richie Lin

 Institute for Supply Chain Management (ISM) announced The Purchasing Managers' Index (PMI) in April was 47.10. This is the six consecutive months under the expansion line. The PMI is The Institute for Supply Management (ISM) conducts monthly questionnaires for manufacturing purchasing managers with complete 10 indicators, including new orders, production, employment index, supplier delivery, inventory, client inventory, price, export, future such as orders and raw material input, and finally aggregate them into the manufacturing Purchasing Managements' Index. The PMI is usually a number from 0 to 100. A PMI above 50 represents an expansion when compared with the previous month. A PMI number under 50 represents a contraction, and a number at 50 indicates no change. PMI 47.10 in April meant many companies are still negative on the future of economy and will keep deducting orders and productions. April’s PMI can show the economy is not good but we can use the comparative numbers of inventory between manufactures and customers to show how bad is the economy. In the context of the ISM Manufacturing Index, if both the manufacturer's and customer's inventories remain low, it suggests that manufacturers in the overall manufacturing sector may have the opportunity to increase orders and enter a phase of replenishing inventories. By subtracting one number from another, we can understand the inventory situation upstream and downstream. When the difference between inventories and customer inventories widens, it indicates that customer (end-user) inventories are at a low point, and the supply chain is in the phase of replenishing inventories. When the difference begins to decline or even becomes negative, it reflects a continuous increase in end-user inventories and a slowdown in the demand for goods, entering a digesting inventory phase, which also implies the end of the manufacturing expansion cycle. In April, the inventory of manufactures is 46.30 and the inventory of end-users is 51.30. The difference is negative 5 points, which meant the economy is in contraction period. The main target is to digest the inventory instead of manufacturing products for the future consumptions. This will also decrease the requirements of international ocean freight and airfreight. After reviewing the inventory numbers of manufacturers and end-users in latest PMI, we can definitely conclude that international ocean freight and airfreight will remain at low level.

FCL market rate reference in week 20:

• Asia main ports to USAWC USD 1500~1700 per 40GP; 
• Asia main ports to USAEC USD 2500~2700 per 40GP; 
• Asia main ports for IPI points of USA is USD 3500~4500 per 40GP. 
• Asia main ports to Europe base ports and West Mediterranean: USD 2000~3500 per 40GP.

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