Swiss logistics giant Kuehne+Nagel experienced a 23 per cent decline in operating profit during the second quarter, marking an improvement from the more significant drop in the first quarter. The company attributed the recovery to increased airfreight demand, which helped offset declines in other sectors, and expressed optimism for stronger profits in the latter half of the year.
Kuehne+Nagel’s earnings before interest and taxes (EBIT) fell to 402 million Swiss francs ($451 million) compared to the previous year. However, this was a better performance than in the first quarter, where EBIT plummeted by 39 per cent. Revenue for the second quarter reached $6.8 billion, down 9 per cent from the same period in 2023, but showed a positive trend compared to the 18 per cent revenue decline in the first quarter.
The company reported minimal impact from Red Sea diversions in ocean shipping but noted an indirect benefit to its airfreight forwarding business. Seasonal volume increases, yield management, and reduced sea and air operating costs contributed to the improved results.
CEO Stephen Paul highlighted expectations for stronger profits in the next six months, driven by a modest rise in ocean container demand, stronger yields, and a robust peak season for airfreight. K+N’s air cargo revenue grew by 9 per cent to $2 billion, with operating profit at $130 million, a 17 per cent year-over-year decline but an improvement from the first quarter’s 39 per cent drop. The air logistics division moved over 1.1 million tons in the first half of 2024, a 5 per cent increase from the previous year.
Subsidiary Apex Logistics played a key role in the air cargo volume upturn from the first to the second quarter, leveraging a surge in e-commerce orders from China. Apex’s block space capacity with airlines is already 70 per cent sold out for the third and fourth quarters, providing pricing power over the remaining capacity.
“We are well positioned to capitalise on any further market recovery and are cautiously optimistic that the second half will include a noticeable airfreight peak season,” Paul said.
The company also saw strong demand for hybrid sea-air services between Asia and Europe due to the Red Sea situation. Ocean shipping revenues fell by 3 per cent, with a 32 per cent drop in operating profit as ocean rates escalated sharply.
Contract logistics showed resilience, with revenue only down 1 per cent year-over-year and operating profit up 4 per cent. K+N expanded distribution centers for customers like BMW and Lego and opened new locations in the U.S. and UAE to meet growing e-commerce and healthcare service demands.
Kuehne+Nagel’s acquisition of Farrow Group and the upcoming acquisition of City Zone Express are expected to enhance their customs brokerage and cross-border logistics capabilities.
