Slight improvements in the freight forwarding market


As noted from first quarterly earnings reports, there was a slight improvement in the freight forwarding market. However, it was a mixed bag as some forwarders reported positive gains, while others noted declines. Overall, the airfreight market continues to plague freight forwarders as shifts to ocean freight services continue.


Ocean freight revenue increased for DHL, Expeditors and Kuehne + Nagel, 4.5%, 2.5% and 8.5%, respectively however, gross profit declined 1.8% for DHL and increased 1.3% for Kuehne + Nagel.  Meanwhile, air freight revenue declined for DHL and Expeditors, 8.2% and 3.0% respectively. Airfreight gross profit declined 8.9% for DHL. Conversely, Panalpina reported for its Americas region, gross profits increased 4.6% thanks to “strong trade flows on the transpacific lane”.


Rate volatility continued in the first quarter of 2013 as capacity remained an issue. DHL noted declines in airfreight demand in the high tech, engineering and manufacturing industries. Panalpina also noted declines in demand from the high tech industry as well as the chemicals industry. There were some gains within the airfreight market. For example, Panalpina reported “double-digit” volume growth in the consumer and retail, healthcare and oil & gas industries, whereas Kuehne + Nagel “increased market share” in the pharmaceutical, perishables and aviation industries. Still, overall airfreight volumes declined for DHL (-5.9%), Panalpina (-3.0%) and Kuehne + Nagel (-2.0%). Expeditors noted a slight increase, thanks to a 16% increase in January; however, the company ended the quarter with only a 0.4% increase in airfreight volumes.


Despite an overall decline in volumes, Panalpina’s Americas region recorded a 5.0% increase in airfreight volumes. The Americas region makes up 24% of the company’s total airfreight volumes and was the only region to report a gain. Meanwhile, Kuehne + Nagel’s Americas region reported no change in volume.


Stagnation appears to be the best description for the overall ocean freight market. DHL noted volumes stagnated on east-west tradelanes, while Kuehne + Nagel noted a similar theme throughout the ocean freight market. Overcapacity and volatile rates remain issues with this market.


By volume, DHL, Panalpina and Kuehne + Nagel recorded gains in overall ocean freight. DHL volumes increased 2.1%, Panalpina volumes increased 7.0% – a first quarter volume record for the company – and Kuehne + Nagel reported a 2.3% volume increase. Expeditors, however, reported a 4% decline noting monthly declines throughout the quarter.


For the Americas region, Panalpina reported a 3.0% increase in volume while Kuehne + Nagel reported a 4.0% increase in volume for its Americas region.


The outlook for the freight forwarding market remains questionable. The need to right-size capacity and stabilize rates is important as well as improvement in the global economy to stimulate demand. Still, it appears the Americas region was a bright spot for several freight forwarders.

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