DP DHL: air freight in Q3 surge

New business helped logistics giant Deutsche Post DHL record a 2.3 per cent growth in air freight volumes to 2.97m tonnes in the first nine months of 2014 versus prior year, outpacing sector revenues that edged ahead 0.6 per cent to E3.7bn.
However, third-quarter air cargo volumes climbed “significantly” by 4.8 per cent to just over one million tonnes thanks to new contracts gained in the first half, while quarterly revenues surged 7.5 per cent to E1.3bn.
The German-based parcels, freight and supply chain operator said that volumes in both air and ocean freight increased compared with the previous year.
Fuel prices remained stable. Air freight rates increased whilst ocean freight rates remained almost unchanged.
“At the same time, however, margin pressure increased, primarily because airlines are reducing their capacities and indirectly increasing rates as a result,” said DP DHL in its latest financial report.
It continued: “[Air freight] rates on the spot market are also increasing, particularly in anticipation of demand from Asia. Our revenue in the reporting period went up by 0.6 per cent; gross profit declined by 9.9 per cent.”
Cargo airline executives will be interested to note that ocean freight is faring  less well in the volume and revenue equation.
Said DP DHL: “[Sea freight] volumes in the first nine months of 2014 were up by 5.0 per cent year-on year, driven mainly by new customers acquired in the first half of the year. Asia remains the largest growth engine; the intra-Asian, trans-Pacific and Asia-Europe routes have performed the best.
“At the same time, however, our revenues have declined by 1.2 per cent as a result of negative currency effects. Despite the fact that new, larger vessels are being put into operation, ocean carriers continued to reduce effective capacity.
“In light of the increase in freight volume and limited capacities, margins remained under pressure. We are responding to this market situation with stricter operational cost control”.
The group’s supply chain arm reported that the automotive and life sciences and healthcare sectors – both key markets for air freight – represented a “higher proportion of revenue compared with the previous year”.
For the full year 2014, the group continues to anticipate “only slight improvement” in the global economic environment. In the period between 2013 and 2020, the global logistics leader wants to boost earnings by an average of more than eight percent per year.
"We continue to profit from our unique competitive position in emerging markets and our role as an eCommerce enabler. For this reason, we remain on track in spite of the current challenging environment," said Frank Appel, the chief executive of DP DHL.
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