Kuehne + Nagel, the second-largest logistics provider in the world, on Tuesday said a huge surge in air and ocean shipments propelled earnings to new highs in the second quarter.
The company generated 605 million Swiss francs (CHF) ($623 million) in pretax income, more than double last year’s performance for the quarter, thanks to a 48% jump in net revenues. First-half earnings before taxes and interest increased almost 150% to $1.1 billion.
The results reflect the soaring demand since the end of the pandemic recession last summer for international freight transportation and third-party freight managers who have the expertise and bulk capacity agreements with carriers to get shipments moved in the face of widespread supply chain disruptions.
Importers and exporters are waiting months to receive shipments because of factory and port backlogs, ocean equipment shortages and various events that temporarily slow productivity.
Kuehne + Nagel (CXE: KNIN), the largest wholesaler of ocean transportation, said container volumes in the second quarter were up 3% year-over-year to 2.2 million twenty-foot equivalent units. Revenues increased 70% to $2.9 billion.
(Source: K + N, American Shipper research)
The third-party logistics provider became the largest global air freight forwarder with the $1.1 billion acquisition of Hong Kong-based Apex Logistics in May. In 2020, Apex ranked seventh in terms of airfreight volume managed, with a heavy focus on the trans-Pacific and intra-Asia trade routes. On July 1, K+N sold a 24.9% stake in the Apex subsidiary to Partners Group. The private equity firm will provide resources to help K + N pursue new growth opportunities at Apex, including through the establishment of new freight forwarding routes, identifying new growth verticals such as health care, and mergers and acquisitions.
Airfreight volume at K+N soared 76% in the second quarter, with net revenue up 70% to $2.4 billion. During the first half, volumes increased 44% to 1.1 million tons. Air cargo rates are significantly higher than last year because of a 10% to 20% shortfall in capacity amid consistently strong shipping demand, helping to push up margins for airlines and logistics providers.
K + N was able to attract more air shippers with customized products such as its combined sea-air service in which ocean freight is transloaded to an airliner at an intermediate hub such as Dubai. Among the top commodities moving by air were pharmaceuticals and e-commerce. The company said it recorded strong gains in market share.
K + N handled a significant increase in truck volume, aided by strong customer acquisition for less-than-truckload service in Europe.
The contract logistics division lost revenue during the first half because the company divested a major portion of its portfolio in the U.K. but picked up new pharmaceutical and e-commerce customers around the world. The warehouse operation opened several highly automated facilities, including new distribution centers for the semiconductor and consumer goods industries.
Earlier this month, K + N agreed to acquire Salmosped AS, an Oslo, Norway-based freight forwarder specializing in seafood transportation. Last year it generated $121.5 million in net revenue and handled about 69,000 tons of goods. K + N has a large perishables business and the Salmosped acquisition complements its seafood operations in Halifax and Vancouver, Canada; London; and Santiago, Chile.
The acquisition is expected to increase K + N’s air shipments.