Status Report

Economic environment

 

The Kuehne+Nagel Group (the Group) delivered a strong result in 2020 despite the uncertainties of the COVID-19 pandemic. Once again, the Group confirmed its global leading position in Sea Logistics with 4.5 million TEUs managed in container traffic and its global number 2 market position with 1.4 million tons in Air Logistics. Despite the difficult market situation, Air Logistics reported significant growth and improved profitability. While the COVID-19 pandemic affected Road Logistics results overall negatively, a number of shipments rebound in the second half of the year. In Contract Logistics the Group has successfully completed the reorganisation in 2020.

Kuehne+Nagel is specialised in complex end-to-end supply chain solutions. They are managed in the global network through logistics control towers and executed by all Kuehne+Nagel business units. These integrated logistics solutions not only increase transparency and efficiency in the supply chain but also optimise information flows between the participating partners and customers. This allows Kuehne+Nagel to support its customers’ value chain, a key factor in a highly competitive and fast growing market.

In 2020, the world economy experienced a global recession caused by COVID-19 with an estimated negative growth of 4.3 per cent (2019: 2.3 per cent positive growth). While there are signs that global economic activity is recovering, COVID-19 lockdowns reduced overall activity and income below pre-pandemic levels. The global economic recovery with an initial rebound mid-2020 slowed down, however, while trade and activity in the goods sector has increased, the services sector remains weak. For 2021 global growth of 4.0 per cent is forecasted.

The deceleration of the economic growth in 2020 was widespread and affected emerging markets and developing economies as well as mature economies. In mature economies the growth rate in 2020 declined to an estimated –5.4 per cent in comparison to 1.6 per cent in 2019. Emerging markets grew by 3.6 per cent in 2019 and by an estimated –2.6 per cent in 2020. (Based on: World Bank, Global Economic Prospects, January 2021)

In 2020, the international logistics industry experienced world trade volume growth below the level of 2019. The world trade volume growth is estimated to have slowed down to –9.6 per cent in 2020 versus 1.0 per cent in 2019.

Advanced economies’ world trade volume grew by 1.4 per cent in 2019 and is estimated at –10.1 per cent in 2020. In emerging markets and developing economies these indicators were at 0.3 per cent in 2019 and estimated at –8.9 per cent in 2020. (Based on: IMF, World Economic Outlook Update, January 2021)

On the carrier side, the market in 2020 was characterised by a significant increase in freight rates caused by capacity shortage in Air Logistics but also Sea Logistics.

Kuehne+Nagel‘s volume growth was negative in line with the market, resulting in a 3.4 per cent lower net turnover. Gross profit reduced by 6.3 per cent. The Group was able to increase EBIT by 0.8 per cent in 2020 by applying strict cost control.

The Group’s strategy Roadmap 2022 was presented at the Capital Markets Day 2017 with the focus on creating additional value through customer excellence and expansion into new services and leveraging the Group’s strengths to extend from supply chain to value chain services. The ambition is formulated as growing twice as fast as the market in the Group’s core business over the entire timeline of the strategy programmes, creating sustainable growth in gross profit with new value chain services and selective acquisitions to leverage synergies and expertise. The overall aim is to reach an EBIT to gross profit margin (conversion rate) for the entire Group in excess of 16 per cent by 2022. The Group is well on track in the programme and will reach its ambitions through cost control to ascertain leverage benefits, digitisation as a game changer for productivity improvements, investments in new opportunities connected to value expansion and acquisitions as an accelerator.

As a pioneer in the industry, Kuehne+Nagel addresses proactively the CO2 footprint of the transportation services involving its suppliers – airlines, shipping lines and haulage companies. Kuehne+Nagel targets comprehensive CO2 neutralisation (Scope 3 of the Greenhouse Gas Protocol – GHG) by 2030. As a first step, all less-than-container-load (LCL) shipments are CO2 neutral since 2020.

Kuehne+Nagel’s Net Zero Carbon programme leverages three fields of action: detection, reduction and compensation of CO2. The Group has started its own nature projects and has invested in various nature-based CO2 compensation projects, where carbon is being taken from the atmosphere. The emission credits obtained are in accordance with the highest international standards.
 
The Group’s sustainability report addresses in detail Kuehne+ Nagel’s commitment to the principles of sustainable business practices and performance for the respective calendar year.