Open skies beckon
Market developments drove K+N’s strategy and results.
The notorious ruptures in supply chains couldn’t stop Kuehne + Nagel in 2021. On the contrary, the group generated a record result from organic growth, acquisitions and digitalisation, and is now pushing further ahead with its ‘Road Map 2024’.
Despite the very tense political and humanitarian situation in Eastern Europe, the mood in Schindellegi is bright, as the forwarder Kuehne + Nagel (K + N) set records across the board in 2021.
When asked directly about the company’s involvement in the Ukraine conflict, chief executive officer Detlef Trefzger said that just under 2% of the firm’s 78,000 employees are from Russia or Ukraine, and that there are no major K + N hubs in the country.
Results shine brightly
In the ocean freight segment, the corporation’s flagship division, K + N moved 2% more volumes than in the previous year, that is 4.6 million teu, despite “a challenging market environment.” It nevertheless managed to nearly double net sales to CHF 13.7 billion, up by 93% from the previous year.
In the airfreight sector the acquisition of Apex in the trans-Pacific region as well as high demand made figures soar, bringing them to 2.2 million teu of cargo (+55%). Net sales in this field stood at CHF 10.8 billion (+108%). The group handled 1,700 charter flights in 2021.
Overland transport, a former problem child, saw less buoyant but nevertheless solid growth of 13% more volumes, that is to say 24.4 million orders. Net turnover in the division rose by 15% to approximately CHF 3.7 billion. Only the contract logistics field, undergoing some realignment, lost slightly in terms of net sales (–6% to CHF 4.6 billion, after divestments, in the UK amongst others). It nevertheless managed to double its ebit to CHF 156 million.
CEO Trefzger highlighted the fact that demand for automated and 4PL solutions in the segment is growing. The specialisation of the division, which now has 100 distribution centres focused on the pharmaceutical and healthcare sectors and 175 on e-commerce fulfilment, reflects K + N’s strategic approach.
Highlights and trends
Despite CFO Markus Blanka-Graff’s sober presentation of the figures, it’s obvious that the group is bursting with health. With net sales jumping from CHF 20.3 billion to CHF 32.8 billion within a year, and net profit leaping from CHF 789 million in 2020 to CHF 2.16 billion last year, many things seem possible.
When asked, in the light of the corporation’s bulging coffers, about possible acquisitions, Trefzger emphasised that the potential size of a transaction isn’t the central issue; rather, “we’re interested in aviation and maritime specialists in certain trade lanes, as well as in niches, and perhaps also in entering into some technology partnerships.”
The digitalisation of K + N is also progressing well at many different levels, including a strong impact on improving the firm’s margins through the ‘e-touch’ programme. In total, almost 1.3 million manual working hours were automated, which corresponds to cutting costs by approximately 1.8% – “a very satisfactory long-term effect,” as Blanka-Graff underlined. The company has aligned itself with two big drivers. The e-commerce segment, with 210 million orders processed in 2021, and the pharmaceutical products and healthcare segment, in which K + N shipped more than 1.2 million vaccine doses to 90 countries in 2021.
Strategic ‘Road Map 2024’
Behind all this success is a “strategy that was developed by the company itself, not by consultants,” and it focuses clearly on placing customers at the centre of all planning processes, even if the immediate clients come from the B2B segment, from trade or production.
The company made much more progress in 2021 in the implementation of its ‘Road Map 2024’ strategy than it had dared to expect, and has clearly exceeded its financial targets.
For 2022, K + N is optimistic: not only will an aircraft chartered by Atlas Air take off in K + N livery from September onwards, but the business outlook is also positive, despite geopolitical uncertainties and scarce capacities, in view of expected growth of 4.3% worldwide.
CEO Trefzger, however, will pass on the baton for family reasons after ten years with the group.