Major transport group DHL says global demand for freight has begun to slip and there is no longer any doubt that the world economy is facing difficult times.

Deutsche Post DHL Group, the world’s largest logistics group, upgraded its full-year guidance to EUR 8.4bn on Tuesday, the highest level ever for the company.

But its key freight business, DHL Global Forwarding, has already been affected by the economic downturn for several months.

”As you saw in our air and ocean freight volumes in the third quarter, there is a slowdown and that is also what we anticipate for the fourth quarter and also going into next year,” Deutsche Post DHL Group Chief Financial Officer Melanie Kreis said Tuesday during a press conference alongside Group Chief Executive Frank Appel.

DHL’s assessment echoes that of Danish shipping major Maersk, which also recently warned that the European economy in particular looks weak.

Analyst firm Sea-Intelligence has gone a step further and this week spoke of a real collapse in demand for container feight.

Full inventories

The fact that fewer goods are being shipped on board planes and ships in general can be seen in DHL’s accounts, which came in on Wednesday morning.

Freight volumes fell 12 percent in DHL Global Forwarding’s air freight business in the third quarter, while sea freight volumes were down 9 percent, excluding the positive impact of the acquisition of logistics company Hillebrand.

Including the cargo volume that came from Hillebrand, DHL Global Forwarding’s total ocean freight volumes increased by 12 percent, though the coming quarters look anything but bright.

”Inventory levels are high in certain areas, there is clearly a fear of things getting worse leading to reluctance in new orders, so we are preparing for some slower quarters ahead,” Kreis said.

Could postpone investments

According to the Deutsche Post CFO, unpredictability in the global economy means ”that 2024 is currently linked to a very high degree of uncertainty.”

Whereas DHL Global Forwarding registered ”surprising resilience” in both Europe and North and South America during Q2, China is now a serious threat to the world economy because of the country’s Covid policy.

”The big drag on volumes was out of Asia and particularly out of China. That is obviously a challenge for the Chinese government and also for the economy overall. As you all know, it is linked to the Covid approach with continuous lockdowns,” said Kreis.

”It’s extremely difficult to predict, but we are preparing for a fourth quarter where there won’t be much help from a rebound in Chinese volumes,” she added.

Kreis points out that Deutsche Post DHL is prepared to adjust its network and potentially postpone certain investments, while also making it clear that the company still hasn’t taken such measures.

Regarding acquisitions of outside companies, the Deutsche Post DHL management’s expectation is that a weakened market is not only a limitation but also able to provide new opportunities.

English edit: Jonas Sahl Hollænder & Kristoffer Grønbæk

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