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Full-year 2023 results continue to show contract logistics shining amidst industry challenges

Further financial results recently released by logistics operators show a continuation of the pattern seen in the full-year 2023 releases published earlier this year. 2023 brought significant declines for companies operating in maritime logistics, and smaller decreases for those in the road transport segment. Contract logistics players performed the best.

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One of the companies to recently publish their results has been Swiss logistics giant Kuehne + Nagel, who achieved revenues of 23.85 billion Swiss francs in 2023. This represented a 40% decrease compared to 2022. Gross profit declined less (21%), reaching 8.78 billion francs. Operating profit EBIT (profit before tax) was 1.9 billion francs, marking a decline of 49% year over year. Despite significant declines, logistics companies from Switzerland were in the black last year. The group’s net profit amounted to 1.46 billion francs, 48% less than the previous year.

In the largest segment of maritime logistics (Sea Logistics), the declines were the strongest, obviously related to changing business conditions at sea. Last year saw significant declines in container rates, returning to pre-pandemic levels. Revenues deteriorated by 54%, falling to 8.6 billion francs in 2023. Operating profit was 50% lower than in 2022, slightly exceeding 1 billion francs.

However, the company emphasises that in the second half of 2023, it recorded record volume increases. During the year, Kuehne+Nagel organised the transport of 4.3 million TEU. The aviation division also recorded significant declines, similar to maritime transport, with revenues of 6.93 billion francs, 41% lower year on year. The operating result of 555 million francs meant a decline of as much as 61%.

The road transport division performed much better. Revenues were only 11% lower year on year, amounting to 3.54 billion francs. Operating profit amounted to 133 million francs, a decrease of 9%. The company reports that the volume it transported in 2023 was 23 million orders. After a successful first half of the year, the second half brought significant declines in the number of orders.

The only segment that could consider 2023 a successful year was contract logistics. This is a recurring case among logistics companies that have suffered from the deterioration of business conditions in maritime transport, focusing on providing a wide range of logistics services. Contract logistics revenues decreased by only 3% year on year, to 4.77 billion francs. However, the segment’s operating profit improved compared to the previous year, by 7%, reaching 200 million francs.

Contract logistics is booming

The results of the American company from this segment, GXO, also prove that it was a good year for contract logistics. “In 2023, GXO recorded strong increases in revenues, profit, and EBITDA (operating profit before interest on interest-bearing liabilities, taxes, and depreciation), as well as record cash inflows and free cash flows and significant increases in invested capital.

We have obtained new contracts worth USD 1 billion annually, of which almost 40% has been outsourced as more companies look to GXO to transform their supply chains,” said Malcolm Wilson, CEO of GXO. The company improved its revenue from $9 billion in 2022 to $9.8 billion last year. Operating profit also increased, from USD 242 to 318 million, and net profit from USD 197 to 229 million.

American logisticians expect that in 2024, revenues will increase between 2 and 5% compared to the result from 2023. The EBITDA result is expected to be approximately USD 760-790 million. In 2023, it amounted to USD 741 million, and in 2022, USD 728 million.

Moderate growth in the road transport sector

XPO Logistics, specialising in groupage road transport, did not have as successful a year as GXO, which is from the same family. However, by focusing on road transport, it performed better year on year than companies offering maritime services. XPO’s revenues improved marginally in 2023, by 0.3% year to year, amounting to USD 7.74 billion. In turn, operating profit increased by 16.2% to USD 438 million.

The groupage transport segment in North America (North American LTL) improved revenues by 5% to USD 3.8 billion. In turn, operating profit decreased by 13% year on year to USD 512 million, and the adjusted EBITDA amounted to USD 864 million, 7.3% lower year on year.

Regarding the results on the European continent, XPO’s revenues were at the same level as a year earlier, USD 3.07 billion. After an operating loss of $34 million in 2022, the company was $15 million positive last year. Adjusted EBITDA amounted to USD 163 million, up 3.6% year on year.

Impressive growth in French and Polish companies

In 2023, the French contract logistics operator ID Logistics also boasted good results. Last year brought the group revenues of EUR 2.74 billion, a solid increase of 10.7% year over year. In its home market, France, the group’s revenues increased by 4% year on year, to EUR 826.5 million. On the international market, including other markets, revenues increased much more dynamically, by as much as 18.6% (up to EUR 1.92 billion).

One of the markets where ID Logistics achieved the most impressive growth was Poland. While revenues in Poland reached PLN 984 million in 2022, in 2023, they reached nearly PLN 1.5 billion. The achieved result was mainly influenced by the integration with Spedimex, completed in the fourth quarter, taken over in June 2023 – one of the most important players in the Polish contract logistics market for fashion, e-commerce, and beauty.