Kuehne + Nagel, one of the world’s largest logistics companies, experienced a strong decline in earnings during the first quarter as a result of low demand in the freight market, which is impacted by larger trends such as economic uncertainty and high inflationary pressure.

Kuehne + Nagel’s net revenue from ocean freight was almost halved with a drop of 45 percent compared to 2022’s first quarter. Within air freight, net revenue fell by 42 percent.

The company’s executive group highlights freight rate normalization in the wake of the coronavirus pandemic as a main reason for the decline, a development that comes as no surprise. General uncertainty across the global economy is another factor.

”The start of the 2023 business year was marked by geopolitical and inflation-related challenges worldwide,” the top management writes in a statement on the financial report.

Decline ”comes as no surprise”

Overall, Kuehne + Nagel’s net revenue decreased by 37 percent to CHF 6.7bn (USD 7.5bn) against CHF 10.2bn in the first quarter of 2022.

The operating result (EBIT) totaled at CHF 612m against CHF 1.1bn the year prior.

”This does not come as a surprise as signs of significant weakening emerged last autumn, following the period of extraordinary, pandemic-related demand for logistics services,” states Kuehne + Nagel CEO Stefan Paul in the press release.

He expects the company to remain strong and sets the stage for conquering new market shares.

”With our focus on cost control through the consistent exploitation of the asset light model, the Kuehne + Nagel Group was able to hold its own in this environment and expand its market share worldwide,” says Paul.

Kuehne + Nagel’s ocean freight business delivered net revenue of CHF 2.7bn and an operating result (EBIT) of CHF 344m.

Air freight revenue landed at CHF 1.9bn and an operating result of CHF 154m.

”Kuehne + Nagel Sea Logistics made significant market share gains, establishing leadership on the transpacific route for the first time,” reads the statement.

Similar to several competitors, including container liners Maersk and CMA CGM, Kuehne + Nagel is expanding its air cargo activities in spite of falling demand and plummeting rates.

New jumbo jet for freight purposes

Through a long-term charter deal with collaborator Atlas Air, Kuehne + Nagel has just received one of the US Boeing factories’ very last aircrafts of the Boeing 747 type.

”The jumbo jet will be used primarily for freight on the transpacific route for Kuehne + Nagel’s subsidiary Apex Logistics,” the financial statement reads.

The logistics giant’s top management points out that under normal circumstances – excluding the Covid period – the Q1 result ”represents a record result.”

Kuehne + Nagel’s major competitor DSV is also expected to present a large drop in earnings when the company puts forth its quarterly figures on April 27.

English edit: Kristoffer Grønbæk