Logistics players face profits battle

Logistics players face profits battle

Leading logistics companies’ profit margins are just reaching pre-recession levels while revenues have grown by more than 7%, according to Transport Intelligence’s Global Transport and Logistics Financial Analysis 2013 report.

The report revealed that the world’s top 20 listed logistics companies saw pre-recession inflation adjusted revenues drop by more than 15% at the depth of the recession in late 2009. Today, revenues are 7% higher than the 2007 level.

The fastest growth levels over the past six years were posted by Norbert Dentressangle, which more than doubled its revenues, mainly through acquisitions.

Australian firm Toll was the fastest-growing company since the depths of the recession as it increased in size by about 50% thanks to its Asian expansion strategy. Similar growth rates were reported by US forwarder CH Robinson and AP Moller-Maersk-owned Damco.

Transport Intelligence said that profit margins over the six-year period had been on a “rollercoaster ride”.

Report author David Bagshaw said: “After a period of intense merger and acquisition activity, the major players were regrouping and the onset of the recession made their task more difficult and probably depressed profits further.

“Many players entered the recession with declining margins and, as the recession took hold, margins continued to fall.

“At the end of 2012, revenue levels in real terms are slightly above those at the beginning of 2007 when the recession set in, but profits are still below the levels achieved in 2007.

“Nor has the recovery of 2010 been sustained in 2011, with the mixed pattern continuing into 2012. The first half of the year saw growth recorded by a number of companies but towards the end of the year this has fallen away and for some companies margins have declined.”

The report revealed that from a peak in 2007, margins halved to 2.2% in December 2009 before regaining much of their ground.

“Worryingly though, margins have slipped for the last three consecutive quarters. The range of profitability is quite startling even for companies in the same sector. For instance, Expeditors achieved operating margins of 8.9% compared with Panalpina’s of just 0.6%.”

So far this year, forwarders have reported mixed first-quarter results. Ceva Logistics saw revenues slip 6% year on year, Kuehne + Nagel’s first-quarter turnover increased 5.4% year on year and DHL Global Forwarding reported a 2% decline in revenues.