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European Logistics Update: Quo vadis, Europe? European logistics industry looks beyond the crisis

By Dagmar Trepins, European Correspondent
September 01, 2012

Carriers on course
Cost cutting and restructuring plans are part of the strategy for almost all leading European carriers. However, investments in acquisitions and sustainability are also on their agenda, as the following examples clearly illustrate.

Maersk: AP Moller-Maersk’s five-year plan of focusing on four core strategic businesses is starting to pay off, according to the company’s CEO Nils S. Andersen. Because the strategy was launched in August of last year, the Group invested more than $12 billion in its four core businesses.

“The strategy and the attention to the four core strategic businesses has brought encouraging results,” says Anderson. “Basically, Maersk Oil and APM Terminals are ahead of schedule and Maersk Drilling is progressing according to schedule. Of course, the development in container freight rates and profitability for Maersk Line has disappointed us, but we have taken a step back, initiated a restructuring plan, and are working to get freight rates back to sustainable levels.”

In 2008, Maersk Line streamlined its organization and increased its focus on the market. In 2009, costs were cut by two billion dollars, increasing competitiveness and leading to record results in 2010.

Hamburg Süd: Despite cost cuts, Germany’s carrier Hamburg Süd is going ahead with its commitment to environmental protection. The shipping group recently announced that it’s aiming to reduce the carbon dioxide equivalent (CO2e) emissions of its owned and chartered container vessels by 26 percent per unit of transport capacity by 2020.

Besides carbon dioxide, the unit of measurement CO2e takes account of other climate gases (e.g., methane) produced in the combustion process in line with their effect on the climate. To reach this ambitious target, Hamburg Süd is taking a variety of measures, such as investing in the energy efficiency of owned ships, increasing average vessel size, and chartering energy-efficient ships, accompanied by an improved and comprehensive environmental information system.

Air freight loosing altitude
The International Air Transport Association’s global air traffic results for June also show ongoing slowing of growth. Continued economic woes and waning consumer confidence in Europe led air freight in this region to decline 1.1 percent compared to June 2011, even as capacity grew 1.8 percent. This development also affected the leading European carriers and their first half-year results.

Lufthansa Cargo: Germany’s biggest cargo carrier transported 864,490 metric tons of freight and mail in the first six months of 2012, representing a 9.2 percent decline in volume compared to the same time last year. The load factor slipped marginally during the same period, falling 0.7 percentage points to 68.4 percent. “There can be no talk as yet of a real crisis,” says Executive Board Chairman & CEO Karl Ulrich Garnadt. “Extreme volatility has been a hallmark of our industry for some time now, and we know how we have to deal with it.”

Air France-KLM and Swiss: Europe’s Air France-KLM says restructuring charges were partly responsible for a first-half net loss of €1.26 billion, up from a loss of €564 million in the first six months of last year. Revenue increased 5.2 percent to €12.15 billion and the operating loss widened by €115 million to €663 million. The group also saw a 5.5 percent decrease in cargo volume in July. Capacity dropped 2.5 percent, while its load factor fell 2.5 percent from July 2011 to 61.6 percent.

Swiss International Air Lines (Group) also reported a big decline. Its operating profit fell 53 percent to CHF 61 million for the first six months of 2012. The decline is attributable to a still difficult economic and business environment, the continuing pressure on yields in Europe, the strength of the Swiss franc, and high fuel prices, the carrier explained.

The first half results for the air freight business of Swiss WorldCargo showed only slight changes from the prior year period. The cargo load factor by volume remained unchanged at 79.3 percent, while total cargo sales were up 3.4 percent in terms of revenue ton kilometers. “The crisis in our industry is hitting us, too, and we see no sign of upturn here anytime soon,” says Swiss CEO Harry Hohmeister.

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About the Author

Dagmar Trepins
European Correspondent

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