BOSSES at logistics giant CEVA have praised airfreight for showing strong profitability in a weak market.
The news came with the firm’s third quarter figures, which painted a picture of a poor global freight market with continued modal shift to oceanfreight from air in key markets.
Marvin Schlanger, Ceva chief executive, says: “Weak economic conditions continued to weigh on customer sentiment in the third quarter.
“With no real prospect of a significant and sustained market recovery in the short term, we continue to focus our efforts on cost control to maintain our efficiency and on new business development to secure our future revenues and ensure we are ready to take advantage of any improvements in global markets.
“Our business development activity has accelerated, resulting in our best quarter for contract wins since 2009. This is an important endorsement from the market of our unique operational capabilities and excellent service and value proposition.”
He adds: “This was a disappointing quarter in terms of our profit performance. We are addressing the decline in profitability with a comprehensive plan to reduce overhead costs and improve contract performance. We are targeting a net benefit of approximately €100 million from these actions.”
Bosses singled out contract logistics as weak area: In the first nine months revenue for the Group increased 4.1 per cent to US$6935m. Freight Management revenues increased five per cent, while Contract Logistics grew 3.3 per cent.
A spokesman says: “Progress in freight management was largely due to strong growth in our ocean freight business, particularly out of Asia Pacific and the Americas where we saw customers shifting significant volumes from air to ocean. Despite this structural shift to oceanfreight, net revenue margins in airfreight remained strong.”
EBITDA declined 13.4 per cent to US$266m, mostly blamed on performance in CEVA’s contracts logistics business.
He added: “The Group is addressing the decline in profitability… (however)CEVA’s strong commitment to operations excellence and customer focus will remain unchanged.”
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