Kuehne+Nagel net turnover falls 40% in 2023

Swiss freight forwarder Kuehne+Nagel Group today reported CHF 23.8 billion ($26.9 billion) in net turnover for 2023, a decline of 40% year over year. [caption id="attachment_99165" align="alignright" width="300"] (Courtesy/Kuehne+Nagel)[/caption] THE BIG PICTURE: Kuehne+Nagel’s (K+N) earnings are in line with those reported by other freight forwarders. DSV saw its 2023 revenue fall 36% YoY to $21.9 billion and Expeditors reported a 46% drop YoY to $9.3 billion. K+N attributed its YoY performance to reduced freight rates and increased capacity, brought on by an economic slowdown and post-pandemic supply chain normalization, according to today’s earnings report. BY THE NUMBERS: K+N reported $6.4 billion in net turnover for the fourth quarter of 2023, a decline of 35% YoY. Also in Q4: K+N reported $320 million in earnings, down 43% YoY; EBITDA was $588 million, down 38% YoY; Sea logistics net turnover was $2 billion, down 54% YoY; Air logistics net turnover was $2.2 billion, down 27% YoY; Road logistics net turnover was $931.7 million, down 15% YoY; and Contract logistics net turnover was $1.3 billion, down 12% YoY. In full-year 2023: K+N reported $1.7 billion in earnings, down 48% YoY; EBITDA was $3 billion, down 41% YoY; Sea logistics net turnover was $9.7 billion, down 54% YoY; Air logistics net turnover was $7.8 billion, down 41% YoY; Road logistics net turnover was $4 billion, down 11% YoY; and Contract logistics net turnover was $5.4 billion, down 3% YoY. WHAT THEY’RE SAYING: K+N’s e-commerce and perishables segments performed particularly well in 2023, according to the company. “In contract logistics, we significantly strengthened our position in health care logistics and in e-commerce,” Joerg Wolle , chair of the board of directors, said in the earnings report. “In our air logistics unit, we put the last two Boeing 747s ever to be produced into service.” STATE OF PLAY: The years 2021 and 2022 were affected by favorable economic conditions, while 2023 saw a “business environment characterized by the continuous uncertainties of the Ukraine war, macroeconomic slowdown, interest rate increases and a surge of inflation,” according to the earnings report. The final half of 2022 saw strong demand for airfreight export capacity out of China due to surging e-commerce activities, according to the company. “Volume was weakest year-on-year in Q1 [2023], then improved progressively over the next three quarters,” Chief Executive Stefan Paul said on today’s earnings call. “This resulted in a more typical peak season pattern from Q3 to Q4, with a 6%-plus organic sequential volume uplift. This was strongly driven by perishables demand and rising e-commerce exports from Asia.” While analysts had predicted an increase in airfreight demand resulting from the situation in the Red Sea , where Houthi rebels have been firing on ships, that increase did not materialize. “The situation in the Red Sea triggered a wave of customer interest in exploring various options, including sea-air combinations,” Paul said. “However, to date, this has not resulted in a material uplift of air logistics demand.” Paul also said that airfreight has not been affected by the drought conditions limiting passage through the Panama Canal . FLASHBACK: K+N became the first logistics company listed on the Swiss Market Index (SMI) in June. “The SMI listing has brought greater attention in the public eye, which is a benefit when attracting new employees,” Wolle said. NOTEWORTHY: K+N ranked first on Air Cargo Next’s Power 25 list of top freight forwarders, having moved 2.23 million tonnes of airfreight i n 2022. “The group confirmed its No. 1 position globally [in 2023] for both sea logistics with 4 million TEUs managed in container traffic and air logistics with [nearly] 2 million tonnes of volume,” the report stated. Tonnage in 2023 was down 11.2% from 2022. FUTURE LOOK: K+N continues to lean on eTouch , a digitalization platform that aims to create seamless and efficient interactions between the forwarder and customers. “Digitalization and automation are the core drivers to increase efficiency in operation,” Chief Financial Officer Markus Blanka-Graff said on the earnings call. “We developed the eTouch methodology that addresses all aspects of operational processes, and we have selected only a few workflow areas for sea logistics and air logistics to demonstrate the relevance of eTouch.” K+N calculated that eTouch saved 1.7 million hours of human labor in 2023, saving about 11% more time than in 2022. This saved about $3.11 per 100 kilograms, according to the company. MARKET REACTION: Shares of Kuehne+Nagel ( OTCMKTS: KHNGY ) were down 13.21% from market open to $58.40 as of market close today. The company has a market capitalization of $35.1 billion. Editor’s note: All amounts have been converted to U.S. dollars. Register here for Air Cargo Next ’s free webinar, “The Role of Drones in the Future of Air Cargo,” on Tuesday, March 26, at 11 a.m. ET.

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