Air freight carries Panalpina’s second quarter

The robust 2017 air cargo market continues into its sixth month, and there are clear indications that profitability has improved for air freight forwarders. As can be seen from the chart at right, Switzerland-based forwarder Panalpina reported 2Q17 net income of US$19 million, a significant improvement over net income of $5 million for 2Q16.  Operating income (EBIT) for the quarter rose substantially, up 136.4%, to $27 million 14.3 percent. And while these annual comparisons may seem decent in isolation, a look at the relation of gross profit to changes in cargo volume, or a comparison with some of Panalpina’s peers quickly dampens any major excitement.

Gross profit (what some forwarders call net revenue) dropped 8.4% y-o-y in 2Q17, to $357 million, even as air freight volumes jumped 6.7% to 240,000 tonnes, and as ocean freight rose 2.7% to 383,000 TEUs. Despite persistently rising volumes, Panalpina has been unable to boost gross profit accordingly.

Panalpina’s air freight forwarding division was by far the most profitable for the quarter, with EBIT up 47%, to $23 million. Ocean freight moved from a loss of $3 million for 2Q16, to EBIT of $1 million for the same period this year. Panalpina’s contract logistics division saw a decline in gross profit, which was 19.0% lower at $85 million. EBIT for the division meanwhile, was slightly improved from a loss of $2 million in 2Q16, to $3 million this year.

To put Panalpina’s second quarter result in perspective, fellow Swiss forwarder Kuehne + Nagel reported second-quarter improvements across the board—with net income up 2.1%, and gross profit up 3.9% to US$1.81 billion. A closer look at this $1.81 billion reveal that even as K+N’s air freight and ocean freight divisions improved, nearly half of the company’s net revenue ($924 million) was derived from Contract Logistics, indicating K+N’s significant diversification outside of traditional forwarding activities. Panalpina meanwhile, derived only about one-fourth of its revenue from logistics.

Panalpina CEO Stefan Karlen has previously outlined ambitious goals to boost margins, but is not expecting such improvements before the end of 2017. “While we are confident that we can improve unit profitability in ocean freight in the second half of the year, unit profitability in air freight will remain under pressure. We will therefore concentrate on what we can influence directly: controlling cost very effectively and pushing ahead with our operations transformation program.”

Those interested in learning more about trend in the air freight market are invited to join us at Cargo Facts Symposium, to be held  3-4 October at the Ritz-Carlton on Miami’s South Beach. For more information, or to register, visit

Exit mobile version