DHL profits plunge but is the market bottoming out

DEUTSCHE Post DHL has reported that its first quarter operating profit fell a dramatic 95 per cent, driven by the current economic gloom and its ongoing DHL Express debacle in the USA.
Global freight forwarding figures also reflected the dramatic downturn in global trade with revenue slumping by 18.2 per cent, caused mainly by a 26.2 per cent fall in airfreight volumes.
However, Deutsche Post chief executive officer, Frank Appel, says that early indicators show the huge declines in air and ocean volumes caused by the global downturn may be bottoming out.
“Our international express shipments stabilised in March, and April’s figures seem to point to a similar direction. In terms of airfreight volumes, we have been seeing a monthly improvement since January. However, momentary developments should not hide the fact that shipping volume still remains far below the previous year’s level in most areas.”
The pain has also been felt by the airlines. Lufthansa reported a first quarter net loss of US$290 million, compared to a $44 million profit for the same period in 2008.
Although the crisis is putting strain on Lufthansa’s and many other airline’s balance sheets, chairman and chief executive officer Wolfgang Mayrhuber believes that things will not get worse. He said that cargo was “bottoming out in terms of volume and revenue”.
Yet the most recent data from the Association of European Airlines (AEA) shows that any halt in the declines are fragile.
“As the crisis unfolds, the airfreight market has been a focus of attention as it has undergone a substantial collapse in volumes. The March traffic loss of 17.1 per cent was less extreme than in the three preceding months, but indicators for April are that the shortfall on last year’s volumes will again be in excess of 20 per cent,” the AEA said in a statement.
AEA secretary general Ulrich Schulte-Strathus also put pressure on airports to assist beleagured airlines and criticised the profiteering of some. He singled out BAA for attack following its Q1 results saying that “passengers down 10 per cent, cargo down even more, yet revenues up 16 per cent and profits up 28 per cent – that’s quite some business model, if one that has lost touch with its customers”.
If European airlines thought times were bad, several of the major cargo gateway hubs have suffered as bad, or even worse declines in volume.
According to first quarter results from the Airports Council International, there was a 23.3 per cent fall in volumes at Frankfurt, a 27.4 per cent fall at Amsterdam and a staggering 49.3 per cent fall at Brussels.
London Heathrow, in comparison, showed a 14.6 per cent fall, thanks to having less reliance on the heavily affected freighter traffic.

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