Kuehne + Nagel now an airfreight market leader, but had a poor Q4.

Kuehne + Nagel secured its position as a market leader in air freight with its 2022 annual results, but like its rivals, suffered a poor fourth quarter.

Despite its protestations of “very strong” results, which saw annual net turnover increase by 20%, to CHF39.4bn ($42bn), ebit by 28%, to CHF3.8bn, and net profit by 30%, to CHF2.8bn, its Q4 “was weaker”.

Ebit fell 50% in air logistics, to CHF260m, on turnover down 39% at CHF2.6bn.

“The market in 2022 was characterised by a significant increase in freight capacities caused by a slowdown in economic activities, particularly in the last quarter of 2022,” said the company.

However, it tried to remain upbeat, adding: “Airfreight volume was 2.2m tonnes at the end of December. The margin per 100 kg was at a very high level for the full year 2022. Demand for cargo capacity remained high on most trade routes. Following the turbulence in commercial aviation in the summer, supply of capacity remained volatile in the second half of the year.”

K+N’s acquisition of Apex Logistics, which it completed in July with the purchase of the remaining 11.6% of shares from Apex management, has made it a market leader in air freight.

It has invested heavily in the sector, taking three Atlas Air 747 freighters – the last ever to be made. It is not clear how long the contracts are for, but are thought to be between two and five years.

While forwarders may be regretting long-term commitments to full freighter capacity, one source said Atlas Air had not taken full advantage of the “crazy market highs” of the pandemic as it signed up long-term customers.

“But it also will not now renegotiate contracts downwards,” added the source. “The only way out is by built-in flight cancellations in the contract, but you don’t tend to get very many, just a few a year.”

However while some forwarders may struggle to fill aircraft, K+N, via Apex, is expected to be in a stronger position than others. And it continues to invest. Last week it said it was establishing its first presence at a secondary airport, Birmingham in the US. K+N will start operating weekly international flights on 2 April, with its first flight arriving from Stuttgart. K+N said the Birmingham, Alabama, route would help its automotive, aviation and pharma customers.

K+N will temporarily be housed in a Kaiser Aircraft Industries hangar before moving to a new air cargo facility developed by the airport at the end of the year. It will subcontract its warehouse management to AGI.

In sea freight, K+N reported Q4 ebit down 42%, to CHF310m, on turnover down 14% at CHF3.9bn. Road saw turnover fall just 2%, but ebit fell 37%, to CHF26m.

The group said little about its results in detail, although it is hosting a capital markets day today. But chair Joerg Wolle said the  company had “performed extremely well in the 2022 financial year, and took advantage of the opportunities that emerged from the challenging, extremely complex macroeconomic situation”.

Source: Theloadstar.