Kuehne + Nagel warned it faced significant challenges in the coming months as it reported sharp declines in first quarter profits, volumes and turnover due to the Covid-19 crisis.

Dr Detlef Trefzger, CEO of Kuehne + Nagel International, said the coronavirus pandemic was “an immense global challenge” which had “significantly weakened” industrial production and trade volumes.

Despite K+N describing its first quarter results as “resilient”, all key indicators lurched into the red.

Earnings before interest and tax (EBIT) totalled CHF184 million ($189 million), down 24% from CHF242 million in Q1 2019, net turnover fell 6.2% to CHF4,912 million and earnings per share fell 23.3%.

K+N’s Sea Logistics division suffering the bulk of the losses (see table below) as EBIT dropped from CHF112 million in Q1 2019 to CHF79 million in the first quarter of 2020. K+N blamed the loss on “significant double-digit decline in volume demand to and from China”.

Air cargo volumes also tumbled (see graph below) from March onwards when vast numbers of passenger flights were cancelled, taking out some 60% of global capacity in just a few weeks.

“On the demand side, the lockdowns in China, Europe and finally America led to a sharp drop in consumption resulting in lower airfreight volumes,” added the forwarder.

“In contrast, short-term charter solutions for pharma and time-critical transports were in greater demand.”

As a result, K+N handled 372,000 tonnes of air freight in the first quarter of 2020, 9% lower than a year earlier, while EBIT fell by 11.3% to CHF71 million.

K+N’s road logistics business also struggled in the latter part of the first quarter after a “solid” start to 2020. From March onwards, K+N said volumes in Europe (especially France, Great Britain and Italy) and North America (primarily the intermodal business) had declined significantly. “All sectors were affected, with the exception of e-commerce and pharma,” it added.

More positively, K+N reported that since the beginning of March it had imported some 300 million face protection masks for its customers via airfreight from Asia, while its Contract Logistics division handled twice as many e-commerce shipments in Q1 2020 than in the previous quarter.

The pandemic is also seemingly hastening the digitisation of freight logistics – K+N’s myKN customer platform recorded a 145% increase in active users in the first quarter compared with the same period of the previous year.

“Our company will face major challenges in the coming months, but is well positioned in view of its customer proximity, agility and digital offerings,” said Trefzger. “A high level of liquidity characterises the company's solid financial strength.”

Source: lloydsloadinglist