DHL sees airfreight volumes decline despite revenue improvement

The world’s largest airfreight forwarder DHL Global Forwarding continued to see airfreight volumes tumble during the third quarter of the year, but still managed to record improvements in revenues and gross profits.
The Bonn-headquartered forwarder saw total airfreight volumes decline by 5.2% year on year during the third quarter to 529,000 tonnes.
This is the third quarter in a row that the company has seen airfreight volumes decline, while many of its major rivals have been recording increases.
For example, Kuehne+Nagel saw airfreight tonnages increase by 16% over the first nine months, Panalpina recorded a 4% improvement and there was a 10% increase at DSV Air & Sea.
The overall market is estimated to have increased by around 4% during the first nine months.
Deutsche Post DHL (DP DHL) said it had taken a “more selective approach” with regard to the profitability of certain contracts.
The company later admitted that it couldn’t continue to shrink volumes forever but said that growth was not expected to return this year and it was hard to predict exactly when it would return.
While airfreight volumes were down during the quarter, other figures reported by the forwarder were more positive.
Third quarter airfreight revenues increased by 8.4% year on year to €1.2bn and airfreight gross profit was up 9.4% on last year to €233m.
The overall forwarding division saw revenues for the period increase by 4.2% on last year to €3.7bn, and earnings before interest and tax (ebit) reached €106m, up 58.2% on last year.
“As in previous quarters, the division succeeded in translating its upward trend in gross profit into a significant EBIT increase in the third quarter,” the company said. “This shows that the initiatives to improve cost efficiency are taking effect.”
The overall DP DHL Group saw third-quarter revenues increase 1.4% year on year to €14.8bn, ebit was down 54.9% to €376m and net profit was down 72.2% to €186m.
“Notable increases at Express and Global Forwarding, Freight mainly contributed to the Group’s organic revenue, which continued to rise significantly thanks to the booming e-commerce business and continued momentum in international trade flows,” the company said.
“Earnings in the Post – eCommerce – Parcel (PeP) division were below last year, as expected.
“The decline was above all due to planned, previously communicated one-time charges relating to profitability improvement measures at PeP.
“Of the restructuring costs of around €500m announced for 2018 last June, the Group recognized the majority (€392m) during the third quarter.”
The company said that it had yet to notice any tangible effects on volumes of the China-US trade war, while Brexit had yet to effect the macro environment, although forecasts are coming down.
Chief executive of Deutsche Post DHL Group, Frank Appel, said: “Deutsche Post DHL Group remains in good shape with our fundamental growth drivers intact.
“This is especially evident in the continued good performance of our DHL Express, Global Forwarding, Freight, and Supply Chain divisions in the third quarter. We are tackling the challenges in our Post – eCommerce – Parcel division with determination and are making good progress in implementing the announced measures to improve productivity and the cost structure.
“The results of our efforts will already be clearly visible over the coming year. We are confident that we will reach our earnings targets for 2018 and 2020 despite the significant rise in macroeconomic risk factors in recent months due to trade disputes and currency fluctuations, for example.”