K+N airfreight volumes slide in Q1 as Covid-19 takes its toll

Kuehne+Nagel (K+N) saw its airfreight volumes, revenues and operating profits decline in the first quarter of the year as the coronavirus outbreak took its toll on performance.

The Switzerland-headquartered freight forwarder’s airfreight business saw first-quarter revenues fall 6.8% to SFr1.1bn. Meanwhile, earnings before interest and tax (ebit) was down 5.8% to SFr307m and air volumes slipped by 9% to 372,000 tonnes.

The company said volumes were particularly affected by the coronavirus pandemic from March onwards, when a large number of passenger flights were cancelled on the supply side. Global airfreight capacity fell by around 60% 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.

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

The company said that its airfreight ebit took a SFr5m hit because of coronavirus during the quarter. Currency affects knocked off another SFr4m.

K+N added that divisional performance was helped by the implementation of its business continuity plan and commodity mix.

The overall company saw revenues fall by 6.2% year on year to SFr4.9bn, ebit was down 24% to SFr184m and net profit declined 23.2% to SFr139m.

Detlef Trefzger, chief executive of Kuehne + Nagel International, said: “The coronavirus pandemic is an immense global challenge, also for Kuehne + Nagel. Industrial production and trade volumes weakened significantly.

“In this situation, Kuehne + Nagel maintained its operational performance, closely managed a number of specialty businesses and won new customers.

“In the case of basic commodities and pharmaceuticals, transport volumes were maintained at a respectable level.

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

Offering highlights of the year so far, K+N said that it has activated business continuity plans at 1,400 locations in 108 countries.

At the beginning of the lockdown, all office staff (approximately 45,000 employees) were able to access the Group’s internal systems remotely within a very short time.

Since the beginning of March, K+N has imported some 300m face protection masks for its customers via airfreight from Asia.

Contract Logistics handled twice as many e-commerce shipments as in the previous quarter. Food, coffee, beverages and toys were in particularly high demand.

The myKN customer platform recorded a 145% increase in active users in the first quarter compared with the same period of the previous year.