Kuehne + Nagel “meltdown”


The now Chairman of Kuehne + Nagel, Klaus-Michael Kuehne, has given some quite alarming forecasts on the future of his company. Speaking to the German newspaper ‘Die Welt’ at the weekend he commented that the forwarder faced what he described as a “meltdown and redimensioning” (“ein Abschmelzungsprozess und eine Redimensionierung”).

Asked how Kuehne + Nagel had coped with the crisis so far, Mr Kuehne said that the “first quarter and especially March were better than expected. The moments of truth come from April to June. The transport volumes have decreased significantly. The key question is whether the global economy will gradually pick up from June”. He admitted that the profits of the company would be hit and that it would not be paying a dividend this year.

Klaus-Michel Kuehne is not too optimistic for a quick recovery, commenting that the “biggest problem at the moment is the uncertainty about how long the crisis will last and how deep it will go. We operate in more than 100 countries and are heavily dependent on the global economy. After the crisis, everything will be one size smaller than before and no longer at the high level. I expect economic output to decline for a few years”.

In such a scenario it is unsurprising that the Kuehne + Nagel will be hit hard; “The group might end up with 20-25% fewer employees than before. This is likely to affect commercial employment in the warehouses in particular. We will come out of the crisis smaller than we were before. There will be a meltdown and redimensioning”. He went on the say that he did not expect “layoffs in Germany. The situation is different in the USA, for example, where there is no short-time work benefit.”

Mr Kuehne also struck a note of pessimism for the longer-term, saying that “globalization will not go on like this, the global division of labour will be less pronounced. Regionalization will prevail simply out of caution before renewed crises. And all of this affects logistics.”

Klaus-Michael Kuehne’s investments outside Kuehne + Nagel have also suffered with his hotels and football club effectively closed although the Shipping Line, Hapag Lloyd, of which he owns 30%, has stood-up well so far. None-the-less Mr Kuehne claims not to be concerned with liquidity issues despite Kuehne + Nagel not paying a dividend. The forwarder apparently has a strong balance sheet and, Mr Kuehne comments that “our funds are well stocked for our plans in Asia”. This might raise questions about possible acquisitions in the medium-term if the short-term is not too catastrophic.

Source: Transport Intelligence, May 28, 2020

Author: Thomas Cullen