Freight forwarder Kuehne & Nagel (K+N) reported 4Q 2017 revenues that climbed 18.5% on a year earlier, and were 5.1% better than analysts expected according to S&P Global data. In that regard it joins all the other forwarders that have reported so far, as outlined in Panjiva research of February 20, which have beaten by between 2.4% (DSV) and 7.6% (XPO).

In common with Expeditors a 31.7% increase in airfreight revenue was the largest driver of growth. A 15.4% rise in seafreight might not be continued given a 3% drop in volumes on U.S.-inbound routes in January, indeed the company expects volume growth for the market to slow to between 4% and 5% globally in 2018 though the company has seen the market “start strong”.

Chart compares revenues for freight forwarders. Total includes companies shown plus CH Robinson, K+N, Panalpina, Fedex, Deutsche Post, JB Hunt and XPO Logistics. Calculations based on company financial statements and average analysts’ forecasts gathered from S&P Global Market Intelligence on February 28 2018. Source: Panjiva

The growth in revenues came at a cost, with profitability (measured by the EBITDA margin) having fallen to 6.12% from 6.55% a year earlier. Analysts’ estimates implied a ratio of 6.26%, suggesting a slip in pricing discipline – a key concern discussed in our 2018 Outlook – even though the absolute level of profits was 2.6% better than expected. 

Chart compares EBITDA margin (earnings before interest, tax, depreciation and amortization) for freight forwarders. Total includes companies shown plus CH Robinson, K+N, Panalpina, Fedex, Deutsche Post, JB Hunt and XPO Logistics. Calculations based on company financial statements and average analysts’ forecasts gathered from S&P Global Market Intelligence on February 28 2018. Source: Panjiva

That’s a sector-wide issue with six of the eight forwarders having delivered margins below expectations, with six of the eight to report so far (Fedex and XPO being the outliers) having seen a drop in margins vs. a  year earlier.

Chart compares EBITDA margin (earnings before interest, tax, depreciation and amortization) for selected freight forwarders. Calculations based on company financial statements and average analysts’ forecasts gathered from S&P Global Market Intelligence on February 28 2018. Source: Panjiva