Contract logistics companies report growth in latest earnings reports

After a decade of growth, the global contract logistics market contracted by 3.3% in 2020, as a strong H2 prevented worse outcomes.

Leading contract logistics companies have been reporting relatively strong results for their respective Q3 activities. There is revenue growth progression and the sentiment overall is bullish, although there are some less positive results. Taken across the board, the market does appear to be showing resilient growth in what are difficult economic conditions. 

GXO Logistics announced its Q3 results for 2022, reporting strong operating and financial results with its highest-ever quarterly revenue and 19% YoY growth in adjusted EBITDA. The company gained market share in consumer-packaged goods, technology, and industrials and received regulatory approval for its acquisition of Clipper Logistics, with plans to realize cost synergies in 2023 and 2024. The CEO of GXO stated that they expect to close the year on a high note and expect notable growth in 2023. GXO has secured nearly half a billion dollars of incremental revenue for next year and management are confident in their ability to drive superior returns for shareholders. Q3 2022 revenue increased to $2.3bn and net income was $63m.

Wincanton reported an update on its third quarter trading performance, including peak season retail activity. Revenue was lower year-on-year by 1.4%, with the grocery & consumer sector falling by 7.0% and the general merchandise sector remaining flat at 0.6%. The e-fulfilment sector saw an increase of 13.6%, driven by new wins, while the public & industrial sector decreased by 5.8%. Despite challenging external conditions, Wincanton expects to report a profit for 2022 in line with market expectations.

In the third quarter of 2022, DHL Supply Chain saw a revenue increase of 14.5% to €4,184m and had strong revenue growth in all regions and sectors. The division also secured new business worth €385m and had profit growth in the quarter, with an EBIT of €220m and a margin of 5.3%. This growth was attributed to strong revenue performance, productivity improvements and investments in digitalization and standardization.

Kuehne & Nagel’s Contract Logistics business unit for the company had a net turnover of CHF3.6bn and an EBIT of CHF139m for the 9 months ending September 2022. This represents a 7% increase in net turnover and a 22% increase in EBIT compared to the same period in 2021. Additionally, the data shows that gross profit and utilisation of warehouse space was high, and that growth in the 3rd quarter of 2022 was more pronounced year-on-year. 

Growth for the first 9 months of 2022 stood at 12.2% y-o-y for UPS’ Logistics segment, down from 19.6% y-o-y the previous 9 months. According to UPS, volume declines partially offset revenue increase in the division.

Evidencing a growth market, acquisition activity does not appear to be slowing down with major acquisitions still a feature of the market. GXO acquired Clipper Logistics in 2022, and CMA CGM acquired Gefco in 2022 and CEVA Logistics in 2021. This week, the CEO of GXO Logistics said that his company is open to acquisitions of more than US$1bn. The CEO said GXO mainly targets large companies in line with the size of Clipper or more, saying that nothing smaller is worth its while. It could consider a sizeable acquisition in Canada to fill geographical gaps, or verticals such as omni-channel retail and aerospace where GXO is not present in a specific country.

In 2023, Transport Intelligence’s interim projections indicate that the contract logistics market is expected to grow at a slighter slower pace than in 2022 as the economy enters a pronounced slowdown and market moderation seen in the second half of 2022 spills over into 2023. The market is projected to grow by 3.1% y-o-y and is expected to reach a value of €253,706.3m in 2023.

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