The two large logistics service providers owned by European national rail companies, Geodis and Schenker, reported their results for the half-year over the past week.
The largest, Schenker, is owned by Deutsche Bahn, the somewhat indebted rail network that stretches beyond Germany and into much of central Europe. As usual financial visibility is far from perfect within the Deutsche Bahn Group but as far as can be ascertained Schenker remains what Deutsche Bahn’s management calls “the greatest driver of our profits”. For the half-year Schenker saw its Earnings Before Interest and Tax (EBIT) jump by 91% year-on-year to €1.2bn, whilst revenues rose by 36% to €14.2bn. Frustratingly all the management would say about the reasons for this growth was that it was “driven by DB Schenker’s air and ocean freight business. But all its other segments lifted profits as well”. So presumably air freight forwarding, which is a particular strength of Schenker, has exploited the exceptional market conditions as effectively as many of its large rivals whilst its sizeable contract logistics business remained in profit.
There is a similar story in France, where the SNCF subsidiary Geodis also reported higher profits. The diversified logistics provider saw revenue grow by 34% year-on-year over the first half of 2022 whilst EBIT increased by 53% to €309m. The management of Geodis attributed the performance to “the dynamism of the business and strict cost control in an inflationary environment”, however Geodis like Schenker admitted that the “sustained increase” in profits “was achieved in a context of extreme tension in maritime and air transport, reflected in high freight rates and shrinking market volumes”. The company also said that contract logistics, road transport and express parcels also saw good performances.
The clear suggestion in these numbers is that air and sea forwarding have remained highly profitable over the first two quarters of 2022. It might be suggested that the strength of businesses such as Schenker and Geodis ought to be assessed in relative terms, comparing profitability and market share with leading rivals. The big question is whether the market will allow these impressive performances to continue. There appear to be real signs in both the supply-side and the level of demand that markets could turn. This might be a test of the relative merits of large forwarding operations.
Source: Transport Intelligence, 2nd August 2022
Author: Thomas Cullen