The results of Denmark’s DSV Group are a case in point. The company’s revenue fell by 34% year-on-year to DKK 150.7 billion. The operator’s gross profit also declined by 13.4% year-on-year to DKK 42.8 billion, and the EBIT result (profit before tax) plummeted by as much as 27.4%, amounting to DKK 17.7 billion.
Although DSV remained profitable, its net profit saw a decline of almost 30% year-on-year, totaling DKK 12.4 billion. The company attributes these weaker results to the “extraordinary results” that were achieved in 2022.
DSV’s latest results were largely influenced by the situation in maritime transport last year. 2023 was a year of significant declines in container rates, which, after the turbulence of 2020 and 2021, returned to pre-pandemic levels. The substantial decrease in rates in 2023 affected the maritime segment’s results and, consequently, the operator’s overall performance.
The company’s Air & Sea Division was the most affected by the slowdown in 2023, with revenues decreasing by 44.9% (more than the total revenues of the group) to DKK 92.9 billion.
Gross profit amounted to DKK 25.9 billion, reflecting a decrease of 22.4% year-on-year. EBIT also saw a decline of 33% year-on-year, dropping to DKK 13.3 billion. The segment’s total volume decreased from 2.66 million to 2.5 million TEU.
Better performance in roads and logistics services
DSV’s logistics and road transport divisions performed relatively better. The former saw revenues 2.4% lower year-on-year (DKK 23.1 billion), and although operating profit decreased by 10.7% compared to 2022, the company managed to improve its gross profit by 5%. In road transport, revenues were 6.4% worse than the previous year, but gross profit improved by 1.1%. The EBIT result remained at a similar level to the previous year, totaling DKK 2 billion.
It is worth noting that in 2023, DSV became the exclusive provider of logistics services for the construction of the Saudi future city of Neom. DSV emphasizes its commitment to developing faster than the market and highlights its strong foundation for organic growth, thanks to several acquisitions in recent years, which are integral to its strategy. The Danish operator has long been considered a potential buyer of DB Schenker.
Regarding forecasts for this year, the group estimates an EBIT result of DKK 15-17 billion, slightly lower than last year. This forecast assumes a 3% increase in global GDP in 2024 and a 3-4% growth in the Air & Sea markets. The road transport sector is expected to experience stagnation or minimal growth, while the Solutions segment (contract logistics) is expected to show the most development.
Challenges in the American market
Meanwhile, American operator CH Robinson also experienced year-on-year declines. The group’s revenues amounted to $17.6 billion, a decrease of 28.7% compared to the previous year. CH Robinson attributes this decline to “lower prices in ocean and road freight services.”
In 2023, gross profit decreased by 27.9% year-on-year, amounting to $2.6 billion, while operating profit dropped by 59.6% to $514.6 million. Net profit decreased even more significantly, by 65.4%, though the group remained profitable, with a profit of $325.1 million.
When presenting financial results, the company focused primarily on those related to the fourth quarter, during which revenues were almost 17% lower year-on-year, gross profit decreased by 20%, and net profit by 68%.
“Our fourth quarter results did not meet our expectations, and we continue to operate in an environment of low demand and prices. Low freight demand, combined with excess transport capacity, continues to make the market highly competitive,” said Dave Bozeman, CEO of C.H. Robinson, commenting on the results.
It is also worth noting that employment was reduced by 8.9% compared to 2022, with a significant reduction of 13.3% in the fourth quarter alone.
In the North American Surface Transportation segment, revenues in 2023 amounted to $12.47 billion, a decline of 21.2% compared to 2022. Gross profit reached $1.593 billion, a decrease of 27.4% year-on-year, and operating profit reached $459.96 million, down 44.8%. The market situation is evident in the fact that during the peak season in the fourth quarter, the volume of the road segment decreased by 1% compared to the previous year.
In the full truckload segment throughout 2023, gross profit decreased by 33.4% year-on-year, and in general cargo by less than 13%.
The Global Forwarding division also faced significant challenges, with revenues dropping by 56% compared to 2022, amounting to $2.997 billion. Gross profit decreased by 36.4% year-on-year to USD 689.4 million, and operating profit dropped by 80.9% to $85.8 million. This was 9.3% lower year-on-year, totaling USD 91 billion. Operating profit decreased by 28.7 to USD 9.1 billion, and net profit fell by nearly 42% to USD 6.7 billion.
Parcel delivery: UPS also had a tough year
Over in the last mile sector, UPS’s parcel delivery segment in the USA generated revenues of $59.95 billion, a 6.6% decline from the previous year. Operating profit decreased by 27.5% to $5.07 billion.
Similar declines were observed in the international shipment segment, with revenues down by 9.5% to $17.8 billion and operating profit dropping by 25.3% to $3.23 billion.
Last year was also challenging for UPS’s supply chain services, with revenues dropping by 19.9% and operating profit by 52.9%. Moreover, forwarding activity recorded a 38% decline in revenues, although logistics services did show an improvement compared to the previous year.
UPS has also presented a revenue forecast for 2024, expecting a slight increase compared to 2023, ranging between $92 billion and $94.5 billion. The company aims to achieve an operational margin between 10 and 10.6%, compared to 10% in 2023.
Featured image: Flickr / Lav Ulv / CC BY 2.0 DEED