Kuehne+Nagel Group reported a good set of results for the second quarter of 2020 despite the challenges posed by the coronavirus pandemic and the global lockdown.
Dr. Detlef Trefzger, chief exectutive officer, Kuehne + Nagel International AG, commented: “The crisis triggered by the coronavirus pandemic, which led to a lockdown in most countries, had profound and sudden negative impacts on international trade. We took the right measures early on and successfully managed Kuehne+Nagel under these difficult conditions. We expect the second half of the year to continue to be marked by major uncertainties, for which Kuehne+Nagel is well prepared thanks to its agile structure, rigorous cost management and high-quality service offerings.”
Dr. Joerg Wolle, chairman of the board of directors of Kuehne + Nagel International AG, added: “The strategic course we have set at Kuehne+Nagel in recent years is also having a positive effect in the midst of the coronavirus crisis. The company has been consistently digitalised and thus remained fully operational throughout the crisis. The successful performance in the second quarter is owed to the good market position of Kuehne+Nagel and the recovery of the Asian markets. The good work during these past months underlines today’s high level of resilience of Kuehne+Nagel.”
In the first half of the year, a clearly negative market environment translated to reduced shipping volumes and a decline in business for Sea Logistics. Kuehne+Nagel was able to gain market share in select, high-yielding industries including pharma, reefer transport and e-commerce. The good volume development in these areas and the cost management did not fully compensate the significant decline in the high-yielding SME customer portfolio.
In the second quarter of 2020, container volume declined by 11.7% year-on-year to 1.1 million TEU. Sea Logistics net turnover fell to almost CHF 1.7 billion and EBIT to CHF 88 million.
Customer interest in CO2-neutral sea freight solutions remained high despite the volatile market environment. The focus was primarily on complete solutions for climate-neutral supply chains.
A high demand for crisis goods in the second quarter 2020 led to a short-term, beneficial shift in the product mix. Furthermore, the air logistics business unit purchased charter capacity for its customers on a targeted basis as belly capacity on passenger flights was not available during the second quarter of 2020.
These factors, combined with active cost management, produced attractive profitability along with expanded market share. With the gradual resumption of passenger services since June, a slight normalisation of the general market conditions is visible.
At 315,000 tonnes, air freight volume in the second quarter of 2020 was 22.0% below the same period of the previous year. Net turnover rose to CHF 1.4 billion and EBIT to CHF 110 million.
Further progress was made in the automation of processes, especially in the implementation of AirLOG, Kuehne+Nagel’s proprietary transport management solution and key to digitalisation.
The months of April and May 2020 were characterised by a significant decline in road logistics order volume. However, demand noticeably revived since the month of June. In particular, the demand for domestic European transport has broadly improved to pre-crisis levels. In North America, demand for all product segments – with the exception of pharma and e-commerce – was significantly lower than in the previous year.
The business unit’s net turnover declined to CHF 721 million in the second quarter of 2020 and EBIT was down to CHF 9 million.
Due to the high level of market acceptance, the digital booking platform eTrucknow was extended to additional countries in Asia.
In contract logistics, the significant reduction in demand in the second quarter of 2020 was mitigated by stringent cost management.
Essential goods and e-commerce, which now account for around half of the contract logistics portfolio, recorded significantly higher demand. Securing operations, even during the lockdown, resulted in market share gains.
The business unit’s net turnover declined to CHF 1.1 billion and EBIT to CHF 28 million in the second quarter of 2020.
With tailor-made solutions, contract logistics will continue to expand its market position in the pharma and e-commerce fulfilment sectors.