Air freight success boosts K+N’s second quarter

Switzerland-based forwarder and logistics services provider Kuehne + Nagel reported second-quarter net income up 2.1%, as gross profit (what some forwarders call net revenue) rose 3.9% to US$1.81 billion. EBIT for the quarter was up 2.1% to $200 million.

These low-single-digit financial numbers hide the fact that K+N’s Airfreight and Seafreight business units turned in dramatically different performances.

• Capitalizing on the worldwide increase in air freight demand, K+N’s Airfreight unit reported volume up 21% to 381,000 tonnes. Divisional gross profit rose 4.1% to $266 million, and EBIT increased even more strongly, up 6.8% to $83 million.
• The Seafreight unit also saw volume increase – up 9.0% to 1.09 million TEUs – but was unable to capitalize on the gain, reporting gross profit down 2.2% to $367 million and EBIT falling 7.9% to $110 million.

Despite the declines in gross profit and EBIT, it is important to note that K+N’s Seafreight unit is far from being in trouble. Its performance may have fallen somewhat compared to 2Q16, but divisional operating margin was still 30% — something most forwarders must envy.

Following the release of its second-quarter results, K+N announced the acquisition of two specialist air freight forwarders, one in Kenya and one in the US. Trillvane Ltd specializes in the export of flowers and vegetables through Jomo Kenyatta International Airport (NBO) in Nairobi, while Los Angeles-based Commodity Forwarders Inc has grown from a one-man operation specializing in shipping strawberries to Europe to operating fourteen locations in the US, dealing with import and export of seafood, flowers, and agricultural products.

K+N said the acquisitions will add more than 150,000 tonnes of annual perishables traffic to its Airfreight unit.