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Logistics Firms Predict Lower Volumes as Ocean Freight Market Softens

DP World
File image courtesy DP World

Published Oct 30, 2022 10:33 PM by The Maritime Executive

dAs market conditions remain bearish amid the ongoing war in Ukraine and inflation pressures, Q3 results published last week by key logistics companies prove the softening demand in the ocean freight sector.

In its recent update, DP World reported mixed third quarter results, posting a 2.1 per cent increase in gross container volumes while also warning of a near-term market decline and an uncertain outlook.

“We report another robust set of throughput figures, which is once again ahead of industry growth forecast of 1.1%. As expected, the growth rates have decelerated due to the more challenging market conditions,” said Sultan Ahmed Bin Sulayem, DP World Group Chairman and CEO.

At its peak performance in the first half of 2022, just before the shipping market started to slow down, DP World saw an astonishing jump of 52 percent in profit to $721 million, compared to $475 million in the first half of 2021.

Kuehne &Nagel, a global logistics company, also capture the softening demand in container shipping in the third quarter.

While the gross profit rose by seven percent to $2.7 billion, compared to $2.5 billion earned in a similar period last year, volumes went down by five percent. K&N handled 1,135,000 TEU in the last quarter, compared with 1,193,000 last year.

The Danish Logistics multinational DSV also posted a similar outlook, with Q3 revenue rising by 22 percent and EBIT up 45 percent to $800 million. However, sea volumes fell by about four percent.

In releasing the results, DSV Group CEO Jens Andersen predicted that there could be a decline in air and sea volumes in the range of 10- 15 percent.

Andersen went on to affirm that DSV would strive to retain volumes even in the midst of falling demand and spot rates observed in Q3 and possibly onwards.

“Volumes are dropping and our sales team will have to work extra hard. We don’t want to give up on volumes and we will have to be extra aggressive both to keep our volumes and take from competitors,” said Andersen.