Riding out the turbulence
Any volatile year like 2015, however, is bound to have some rough spots to mendure. Although few companies on the Power 25 moved far up the list, Kintetsu World Express (KWE) stood out for all the wrong reasons, dropping six spots from No. 5 in the previous rankings to No. 11 today.
After seeing a healthy rise of 12.4 percent in annual airfreight tonnage from 2013 to 2014, last year’s totals fell 4.4 percent, despite significant growth on the trans-Pacific trade lane in the retail/garment sector, said Tom Smith, Kintetsu’s senior executive officer of administration and airline space procurement. “Our focus traditionally has been electronics, especially exports,” he said. “Post-tsunami, Japan witnessed a lot of manufacturing activities shift overseas, and KWE has been successful at leveraging its global network and relationships with Japanese manufacturers to continue working with these clients, even as the origin of certain commodities has moved out of Japan.”
KWE made a $1.2 billion purchase of APL Logistics last May and has been able to find some “great synergies and opportunities to add value,” Smith said. However, KWE and APL are continuing to operate as two separate entities. “With KWE, the focus is really on providing transportation,” he explained. “Singapore-based APL is more of a full-range logistics management service. It specializes in four key verticals: automotive, consumer, retail and industrials.”
Another 3PL that fell multiple slots on the Power 25 was Dimerco Express, which not only lost 1.1 percent in annual airfreight tonnage (202,000), but also saw gross revenues plummet 12.5 percent to $490 million. As a result, Taiwan-based Dimerco fell from No. 21 to No. 24 in 2015, but Armstrong, said the decline was not as serious as it may seem. “They have been able to diversify into oceanfreight and have built up their mainland China business,” he said.
In addition to airfreight forwarding, Dimerco has also built significant intra-Asia ground transportation and warehouse management operations in Mainland China, Armstrong added, which helped the company earn $73.8 million in gross profit in 2015.
CEVA Logistics also struggled in 2015, with revenues down 11.5 percent to $6.96 billion. Airfrieght tonnage dropped 9 percent, which helped knock it down a rung to the No. 12 spot this year. However, the company is beginning to see net losses shrink significantly, from $413 million in 2014 to just $195 million last year. CEVA said adjusted EBITDA in its freight management division was up sharply, to $70 million in 2015, compared to $22 million in 2014. The company attributed the growth to “trade lane management and process improvements.”
CEVA described Q4 2015 as “the latest in a series of strong quarters,” during which airfreight outperformed the market due to new customers CEVA gained on the Europe-to-China trade lane. “Of our 17 geographical clusters, 15 performed at or above expectations,” said Xavier Urbain, CEO of CEVA. “We also see a number of opportunities to further improve our EBITDA in 2016, driven by continued investments in our field sales teams.”
Hong Kong-based forwarder Kerry Logistics reported 2015 revenues and airfreight tonnage that were nearly unchanged from 2014 levels, at $2.72 billion and 282,000 tonnes, respectively. However, it still dropped one notch to the No. 18 position, switching places with GEODIS, which reported a big jump in tonnage. But Kerry reported that its net profit was up 9 percent, year-over-year, to $136.8 million, and said it expects to see more forwarding growth this year from acquisitions.
Kerry also said its freight-forwarding operations were insulated from falling business activity in China by growing e-commerce demand in Southeast Asia. “Despite global macroeconomic volatilities,” said William Ma, Kerry’s group managing director, “Kerry Logistics continued to implement its strategic plans and delivered sustainable growth for the seventh consecutive year,”