GLOBAL FORWARDING, FREIGHT

Revenue growth and tight cost management boost freight forwarding business

In the first quarter of 2010, the GLOBAL FORWARDING, FREIGHT division increased revenue year-on-year by 13.5%, from €2,747 million to €3,117 million. The total included exchange rate gains of €57 million. Revenue grew organically by 11.4% in the reporting period. The freight forwarding business reflected the trend in the overall economy, which continued to recover in the first three months of 2010.

The Global Forwarding business unit generated €2,276 million in revenue, up 18.4% on the prior-year figure of €1,923 million. The increase was 16.5% after adjustment for exchange rate gains of €35 million. Freight rates remained at a very high level and therefore our transport costs were up. However, we were still able to improve gross profit by 1.0% from €494 million to €499 million. 

Air and ocean freight volumes up year-on-year

Transport volumes have stabilised since the second half of 2009 – a trend that continued in the first quarter of 2010. However, air and ocean freight transport services have become much more expensive as transport capacity was reduced considerably during this same period. We have not yet been able to pass on all of these higher costs to our customers. Freight rates have remained very high, especially on trade lanes from Asia. This continued to have an impact on our gross profit margin in the reporting period, particularly in air freight. We have responded to the new market conditions with price increases and we are now purchasing capacities at less expensive fixed rates.

Air freight volumes in the first quarter gained 34.2% on the previous year and are now only 3% below first quarter 2008 levels, i.e., pre-crisis levels. The air freight market benefited from low inventories in many industries because demand for fast-transit air freight products swelled. Volume and revenue increases came mainly from Asia due to high demand for technology-based products in North America and Europe. Air freight revenue was also up by 29.7% in the first quarter compared with the previous year.

Global Forwarding: revenue
€m
	Q1 2009 adjusted	Q1 2010	+/– %
Air freight	901	1,169	29.7
Ocean freight	656	703	7.2
Other	366	404	10.4
Total	1,923	2,276	18.4