Industry news

K+N, DSV expect freight volumes to drop but to maintain yields

THE world's largest logistics provider has cast doubts on the likelihood of a substantial rebound in cross-border freight transportation during the typically busy months leading up to Christmas shopping, reports New York's FreightWaves.

Both Kuehne+Nagel and its rival powerhouse, DSV, recently reported significantly lower earnings for the second quarter, reflecting the prolonged downturn in the broader industry.

To adapt to the more normalised market conditions, both companies have been focusing on cost-cutting measures.

For instance, DSV eliminated 1,900 office jobs in its Air & Sea division over the past seven months.

However, DSV has expressed slightly more optimism for potential improvements in the latter half of the year.

Despite the challenges, the reported results were still an improvement compared to the years before the Covid crisis struck.

The global economic upheaval caused by the pandemic led to a surge in demand for logistics services to address systemic delays.

Kuehne+Nagel achieved record profits in 2021 and 2022, while the second quarter of 2022 was the best in DSV's history.

To combat the decline in demand, Kuehne + Nagel, headquartered in Switzerland and ranking first in logistics by revenue, has taken measures to control costs, especially in the ocean and air shipping sectors. In the recent report, the company disclosed net revenue of US$6.9 billion, a 43 per cent decrease compared to the year-ago period, and a 51 per cent decline in operating profit, which now stands at $605 million.

"Unfortunately . . . there is no peak season to be expected in 2023. There are no signals either on air or sea, at least not for the time being, so we have to be very cautious on that," said K+N chief executive Stefan Paul.

"But we do believe that we may be near an inflection point with a potential to return to a positive year-on-year volume growth versus easier comps in the second half."

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